Brotherhood of Ry., Airline & S.S. Clerks, Freight Handlers, Exp. & Station Employees v. Atchison, Topeka and Santa Fe Ry. Co.

• Decision Date: 20 May 1988
• Docket Number: No. 87-1313,87-1313
• Citation: 847 F.2d 403
• Parties: 128 L.R.R.M. (BNA) 2425, 56 USLW 2708, 109 Lab.Cas. P 10,541 BROTHERHOOD OF RAILWAY, AIRLINE & STEAMSHIP CLERKS, FREIGHT HANDLERS, EXPRESS & STATION EMPLOYEES, an association, and BRAC Santa Fe Systems Board of Adjustment, Plaintiffs-Appellants, v. The ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 403

847 F.2d 403

128 L.R.R.M. (BNA) 2425, 56 USLW 2708,

109 Lab.Cas. P 10,541

BROTHERHOOD OF RAILWAY, AIRLINE & STEAMSHIP CLERKS, FREIGHT HANDLERS, EXPRESS & STATION EMPLOYEES, an association, and BRAC Santa Fe Systems Board of Adjustment Plaintiffs-Appellants, v. The ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, Defendant-Appellee.

No. 87-1313.

United States Court of Appeals Seventh Circuit.

Argued June 5, 1987.

Decided May 20, 1988.

John A. Edmond, Guerrieri & Sweeney, P.C., Washington, D.C., for plaintiffs-appellants.

John J. Fleps, Santa Fe Southern Pacific Corp., Legal Dept., Chicago, Ill., for defendant-appellee.

Before COFFEY and FLAUM, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

COFFEY, Circuit Judge.

This appeal requires the court to determine the breadth of federal courts' jurisdiction over a dispute between a railroad, the Atchison, Topeka & Santa Fe Railway Company ("Santa Fe"), and a union, the Brotherhood of Railway, Airline & Steamship Clerks, Freight Handlers, Express & Station Employees ("BRAC"). BRAC sued Santa Fe in federal district court, asking that the court enjoin a Santa Fe program or plan to purchase the resignations of certain BRAC-represented clerical employees. The parties refer to the compensated resignations as "buyouts." BRAC alleges that the buyout program constitutes impermissible direct dealing with union members as well as an unauthorized unilateral change in working conditions, in violation of section 152, paragraphs Third and Fourth and section 152, paragraphs Second and Seventh, respectively, of the Railway Labor Act ("the RLA"). See 45 U.S.C. Sec. 152, paragraphs Second, Third, Fourth, Seventh (1982). The district court dismissed BRAC's suit for lack of subject matter jurisdiction, finding that the dispute was minor and thus within the exclusive jurisdiction of the National Railroad Adjustment Board ("the NRAB"). BRAC appeals.

FACTS

BRAC is the certified representative of the clerical workers of Santa Fe. Santa Fe is an interstate carrier by rail within the meaning of the RLA and their labor relations are governed by the RLA. Over the years, Santa Fe and BRAC have entered into several collective bargaining agreements. The agreement now at issue, effective June 1, 1981, includes a "Mediation Agreement." Among other things, the Mediation Agreement provides that any BRAC-represented "protected" employee who is involuntarily furloughed (laid off) will continue to receive "protective payments" from Santa Fe. Protected status is achieved through seniority and is specifically defined in the Mediation Agreement. The Mediation Agreement also recites that Santa Fe may reduce the number of protected employees if its business declines, but must restore the benefits of those workers if business subsequently improves. Both the reduction and the restoration of protective benefits is carried out by Santa Fe pursuant to a seniority-based formula provided by the Mediation Agreement. The Mediation Agreement is silent with regard to voluntary resignations.

In 1981, Santa Fe's business declined substantially and, pursuant to the Mediation Agreement, Santa Fe reduced the number of protected employees. By mid-1983, however, Santa Fe's business rebounded and Santa Fe faced increased protective payments under the Mediation Agreement. Santa Fe officials immediately became concerned with the cost of those payments. On August 19, 1983, B.J. East, Santa Fe's Assistant to the Vice President--Labor Relations, concluded that "the company may want to give consideration to some type or form of payoff to employees in return for their resignations in order to avoid these continuing monthly protective payments."

During 1984, Santa Fe and BRAC attempted to negotiate a buyout program designed to reduce the carrier's protective payments, but failed to reach agreement. In January 1985, Santa Fe unilaterally began to offer various individual clerks a cash payment of $3,500.00 in exchange for their resignations and waivers of all BRAC-negotiated rights. In February 1986, Santa Fe offered clerks whose seniority allowed them regular job assignments $10,000 for their resignations. In April 1986, Santa Fe offered clerks at certain locations varying amounts to resign, depending upon their status and seniority: currently assigned clerks were offered $20,000, furloughed clerks with at least six years of service were offered $10,000, and furloughed workers with less than six years of service were offered $4,000.00.

BRAC contends that it did not acquiesce in any of the buyout offers, but protested them vigorously whenever information concerning the offers came to its attention. For example, BRAC argues that it informally protested the buyouts, both orally and in writing, from the time it learned of the first Santa Fe program in 1985. BRAC also filed grievances protesting the buyout program in March 1985, but it did not pursue the grievances further. In January and March 1986, BRAC protested the Santa Fe programs by mailgram and letter. Finally, on May 2, 1986, BRAC filed this suit.

Santa Fe, on the other hand, alleges that BRAC knew of and impliedly agreed to its buyout programs. In support of its claim, Santa Fe contends that a BRAC official signed as witness on resignation forms executed by several clerks pursuant to Santa Fe's first offer and that two other BRAC officials accepted Santa Fe buyout offers and resigned in 1986. Furthermore, Santa Fe cites several instances in which it has solicited clerks to resign in exchange for cash payments under a variety of circumstances without protest by BRAC. For example, for many years Santa Fe had solicited resignations of employees represented by BRAC and other unions in settling personal injury and employment discrimination claims. Also, in December 1983 and January 1984, the railroad used a plan similar to the one before us to encourage attrition after a merger. Santa Fe claims that BRAC knew of these programs, but did not challenge them and explicitly acquiesced in the post-merger buyout program. Similarly, Santa Fe contends that it purchased the resignation of a BRAC-represented clerk in June 1984 with BRAC's full knowledge and acquiescence. Accordingly, the railroad contends that the parties had developed an established practice allowing Santa Fe to buy voluntary resignations, a practice well enough defined by the parties' course of dealing to become a part of their collective bargaining agreement.

The district judge examined the evidence and determined that Santa Fe's contention that buyouts were an established past practice was neither frivolous nor obviously insubstantial. As a result, the court characterized the dispute before it as minor--one involving the interpretation of an existing collective bargaining agreement. Thus, the dispute fell within the exclusive jurisdiction of the NRAB and the district judge declined to reach the merits. The court did not discuss whether it could exercise jurisdiction based on BRAC's allegation of statutory violations. Bhd. of Ry., Airline & Steamship Clerks v. Atchison, T. & S.F. Ry., No. 86 C 3793, slip op. (Feb. 12, 1987)

DISCUSSION

Federal courts determine whether they may exercise jurisdiction over labor disputes involving interstate rail and air carriers by analyzing the nature of the dispute at hand. Two separate grounds may allow federal jurisdiction. First, federal courts may entertain suits involving major disputes. Major disputes are those that involve formation, rather than interpretation, of collective bargaining agreements. Ry. Labor Executives Ass'n v. Norfolk & W. Ry., 833 F.2d 700, 704 (7th Cir.1987). Second, federal courts may exercise jurisdiction over some disputes which involve violations of specific provisions of the RLA. See Ry. Labor Executives' Assoc. v. Boston & Maine Corp., 808 F.2d 150 (1st Cir.1986). But cf. Int'l Ass'n of Machinists v. Alaska Airlines, 813 F.2d 1038, 1040 (9th Cir.1987) (jurisdiction over RLA violations limited to "exceptional circumstances"). On appeal, BRAC initially argues that this is a major dispute and next contends that its allegation of RLA violations confers jurisdiction on the federal courts without regard to whether the dispute may be characterized as major or minor. We disagree and affirm the decision of the district court. ¹

I Jurisdiction Over Major and Minor Disputes

The RLA does not refer to "major" or "minor" disputes. The Supreme Court supplied those labels to distinguish the disputes governed by section 2 of the RLA from those decided under section 3. Norfolk & W. Ry., 833 F.2d at 704.

The first [major disputes] relates to disputes over the formation of collective agreements or efforts to secure them. They arise where there is no such agreement or where it is sought to change the terms of one, and therefore the issue is not whether an existing agreement controls the controversy. They look to the acquisition of rights for the future, not to assertion of rights claimed to have vested in the past.

The second class [minor disputes], however, contemplates the existence of a collective agreement already concluded or, at any rate, a situation in which no effort is made to bring about a formal change in terms or to create a new one. The dispute relates either to the meaning or proper application of a particular provision with reference to a specific situation or to an omitted case. In the latter event the claim is founded upon some incident of the employment relation, or asserted one, independent of those covered by the collective agreement, e.g., claims on account of personal injuries. In either case the claim is to rights accrued, not merely to have new ones created for the future.

Elgin, J. & E. Ry. v. Burley, 325 U.S. 711, 723, 65 S.Ct. 1282, 1290, 89 L.Ed. 1886 (1945), aff'd upon reh'g, 327 U.S. 661, 66 S.Ct. 721, 90 L.Ed. 928 (1946). In essence, a major dispute involves the creation of a contract or a change in the terms of an...