Bhd. of Locomotive Eng'rs & Trainmen v. Union Pac. R.R. Co.

• Decision Date: 17 November 2017
• Docket Number: No. 17-1563,17-1563
• Citation: 879 F.3d 754
• Parties: BROTHERHOOD OF LOCOMOTIVE ENGINEERS AND TRAINMEN (GENERAL COMMITTEE OF ADJUSTMENT, CENTRAL REGION), et al., Plaintiffs–Appellants, v. UNION PACIFIC RAILROAD COMPANY, Defendant–Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

879 F.3d 754

BROTHERHOOD OF LOCOMOTIVE ENGINEERS AND TRAINMEN (GENERAL COMMITTEE OF ADJUSTMENT, CENTRAL REGION), et al., Plaintiffs–Appellants,

v.UNION PACIFIC RAILROAD COMPANY, Defendant–Appellee.

No. 17-1563

United States Court of Appeals, Seventh Circuit.

Argued September 14, 2017

Decided November 17, 2017

As Amended on Petition for Rehearing January 11, 2018

Michael P. Persoon, Attorney, DESPRES, SCHWARTZ & GEOGHEGAN, Chicago, IL, for Plaintiff–Appellant.

Donald J. Munro, Attorney, JONES DAY, Washington, DC, for Defendant–Appellee.

Before Wood, Chief Judge, and Ripple and Hamilton, Circuit Judges.

Wood, Chief Judge.

Labor-management relations in the railroad industry have been subject to a distinctive regulatory regime ever since the Railway Labor Act (RLA or Act) took effect in 1926. See 45 U.S.C. §§ 151 – 88. No one wants to see the nation's transportation network brought to a standstill because of labor conflict. The RLA therefore is designed to substitute bargaining, mediation, and arbitration for strikes.

Embedded in the Act is a strong preference for arbitration, as opposed to judicial resolution of disputes. If a disagreement arises over the formation or amendment of a collective bargaining agreement (CBA), it is considered a "major" dispute under the Act, and it must be decided by a court. See Consolidated Rail Corp. v. Ry. Labor Execs.' Ass'n , 491 U.S. 299, 302–03, 109 S.Ct. 2477, 105 L.Ed.2d 250 (1989). If, on the other hand, it relates only to the interpretation or application of an existing agreement, it is labeled "minor" and must go to arbitration. Id. at 303, 109 S.Ct. 2477. In the case before us, the Union Pacific Railroad (the Railroad) issued a modified disciplinary policy for its engineers without first sitting down at the bargaining table with their union, the Brotherhood of Locomotive Engineers and Trainmen (the Union). The Union argues that the Railroad could not take this step before bargaining and that its unilateral action violates the RLA. It also contends that the dispute itself is a major one not suitable for arbitration.

Observing that the playing field is tilted heavily in favor of arbitration, the district court agreed with the Railroad that the dispute is minor, and it accordingly dismissed the lawsuit in favor of arbitration. Although the Union has made a number of good points, we conclude that there is at least a non-frivolous argument that interpretation of the agreement between the parties, not change, is at stake. We therefore affirm the district court's decision dismissing the suit for lack of subject-matter jurisdiction.

I

Our summary of the underlying facts can be brief. The Brotherhood of Locomotive Engineers and Trainmen is composed of three unions that represent engineers employed by the Railroad, which is itself an amalgamation of several former railroad carriers. As a result, the Railroad is a party to multiple overlapping CBAs with different groups of employees.

The current dispute originates from the Railroad's decision in 2015 to modify a set of disciplinary rules; the new policy was set forth in something called MAPS, which stands for Managing Agreement Professionals for Success. Before that time, the same subset of the Union's members was subject to disciplinary rules originating from several sources. One is a written agreement referred to as the 1996 System Agreement–Discipline Rule. Another is a mid-1990s agreement, known as UPGRADE. The parties do not agree on the genesis of UPGRADE, but the record indicates that it was developed with input from both labor and management. In the years before 2015, the Railroad made several changes to its disciplinary policies over the Union's objections. When it shifted to MAPS it again did not consult the Union. Around the time MAPS was being rolled out, however, the Railroad polled members of the Union about what changes they would like to see in the existing disciplinary rules.

Another subset of the Union's members is party to an agreement called the 1995 Southern Pacific Agreement, a CBA that also establishes disciplinary rules. The Railroad became subject to this agreement when it absorbed the former Southern Pacific Western Lines.

II

The RLA allows employers to use either of two methods for changing "rates of pay, rules, or working conditions of [ ] employees": first, they may act in any way permitted by an existing CBA; or second, they may go through the bargaining and negotiation procedure prescribed in section 156 of the Act. See 45 U.S.C. § 152 Seventh. In other words, the central topics of rates of pay, rules, and working conditions are subject to mandatory bargaining. Both parties agree that MAPS is a disciplinary policy that falls within the scope of "rules" and "working conditions" and is thus subject to these limits.

The Union sees this case as straightforward, in its favor. Since MAPS is subject to RLA section 152 Seventh and it was implemented without going through the section 156 procedures, the Union reasons, the Railroad changed a mandatory subject of bargaining without the necessary participation of the Union. But matters are not that simple. Critically, the Union overlooks the fact that even in the absence of negotiation, changes are permitted if authorized by contract. For the same reason, the primary case on which the Union relies is inapposite. That case holds that the courts, rather than arbitrators, are the proper forum for cases in which a carrier unilaterally changes conditions of employment. See Airline Pilots Ass'n Int'l. v. Nw. Airlines, Inc. , 199 F.3d 477, 479–80 (D.C. Cir. 1999) (airline industry, to which the RLA also applies). But a change is "unilateral" only if it was accomplished without contractual authority; if it is made under the aegis of a contract, it would not (by definition) be unilateral. Thus, Airline Pilots is helpful to the Union only if we find that the present dispute lies outside the boundaries of the agreements between it and the Railroad. If it is covered somehow by those agreements, any disputes concerning MAPS are properly characterized as minor and must be taken to an arbitrator.

Before moving to the relevant contractual issues, we must briefly change tracks. The Railroad also offers a simple way to resolve the case before us: silence in the CBA, it insists, is enough to give the carrier carte blanche. We cannot accept such a sweeping proposition. First, such a rule cannot be squared with the RLA. There is no ambiguity in the statute: any change to pay, rules, or conditions must be authorized by contract or as the result of bargaining. The Railroad tries to avoid the plain language of the statute by pointing to past arbitration awards that have found, in particular situations, that contractual silence equals authority. Even if the awards use this language, however, as a structural matter they cannot support any broad legal proposition. Arbitrators' jurisdiction is strictly limited to interpreting the contract before them, and the force of any decision can go no further than what the contract at issue allows. 45 U.S.C. § 153 First (i). Contractual silence may give carriers freedom to make changes to matters not affecting rates of pay, rules, or working conditions. See Chicago & N.W. Transp. Co. v. Ry. Labor Execs.' Ass'n , 908 F.2d 144, 151 (7th Cir. 1990). But contract and bargaining are the only options for subjects covered by section 152 Seventh.

The RLA casts federal courts in an unfamiliar role—that of taxonomist—when a railroad carrier claims contractual authority to make changes to one of the mandatory subjects of bargaining. Bhd. of Maint. of Way Emps. v. Atchison, Topeka & Santa Fe Ry. Co. , 138 F.3d 635, 638 (7th Cir. 1997). Whether the court has jurisdiction to resolve the underlying contractual dispute depends on whether it is "major" or "minor." These are terms of art. Chicago & N. W. Transp. Co. , 908 F.2d at 148.

As we indicated earlier, major disputes pertain to the creation of new contracts affecting any mandatory subject of bargaining or modifications of existing contracts that have the same effect. Federal courts have jurisdiction to enjoin a carrier from making that type of change if the change is neither authorized by a CBA nor the result of the statutorily defined bargaining and mediation procedures. Consolidated Rail , 491 U.S. at 302–03, 109 S.Ct. 2477. The injunction halts the proposed new rule from taking effect and thus preserves the status quo during bargaining. If bargaining is unfruitful, the union may resort to economic self-help. Id. at 311, 109 S.Ct. 2477. In contrast, minor disputes "aris[e] out of the grievances or out of the interpretation or application of agreements concerning rates of pay, rules or working conditions." 45 U.S.C. § 152 Sixth. Minor disputes are subject to compulsory arbitration before the National Railroad Adjustment Board, leaving federal courts without jurisdiction. Consolidated Rail , 491 U.S. at 303–04, 109 S.Ct. 2477. Critically, a minor change may take effect immediately, even if it must later be undone by order of the arbitrator.

A primary goal of the RLA is to avoid disruptions to commercial use of the railways. Accordingly, in making the choice between major and minor, there is a large thumb on the scale in favor of minor, and hence arbitration. Id. at 310–11, 109 S.Ct. 2477. The burden on a railroad to convince the court that its changes are only an interpretation or application of an existing CBA is quite low. If the railroad can articulate an argument that is "neither obviously insubstantial or frivolous, nor made in bad faith," the court lacks jurisdiction to do anything but dismiss the case and allow arbitration to go forward. Id. at 310, 109 S.Ct. 2477. And because a CBA, unlike a private contract, is a "generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate," id. at 311–12, 109 S.Ct. 2477 (internal citation omitted), the major-minor dichotomy treats interpretation or...