Burlington Northern R. Co. v. United Transp. Union

• Decision Date: 18 November 1988
• Docket Number: Nos. 88-2180,88-2181,s. 88-2180
• Citation: 862 F.2d 1266
• Parties: 129 L.R.R.M. (BNA) 3119, 57 USLW 2338, 110 Lab.Cas. P 10,914 BURLINGTON NORTHERN RAILROAD COMPANY, Plaintiff-Appellant, v. UNITED TRANSPORTATION UNION, et al., Defendants-Appellees. BROTHERHOOD OF LOCOMOTIVE ENGINEERS, Plaintiff-Appellee, v. WINONA BRIDGE RAILWAY COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1266

862 F.2d 1266

129 L.R.R.M. (BNA) 3119, 57 USLW 2338,

110 Lab.Cas. P 10,914

BURLINGTON NORTHERN RAILROAD COMPANY, Plaintiff-Appellant, v. UNITED TRANSPORTATION UNION, et al., Defendants-Appellees.

BROTHERHOOD OF LOCOMOTIVE ENGINEERS, Plaintiff-Appellee, v. WINONA BRIDGE RAILWAY COMPANY, Defendant-Appellant.

Nos. 88-2180, 88-2181.

United States Court of Appeals Seventh Circuit.

Argued Sept. 9, 1988.

Decided Nov. 18, 1988.

Richard J. Schreiber, Steptoe & Johnson, Chicago, Ill., for plaintiff-appellant.

Clinton J. Miller, III, Asst. Gen. Counsel, United Transp. Union, Harold A. Ross, Ross & Kraushaar Co., L.P.A., Cleveland, Ohio, for defendants-appellees.

Before CUMMINGS and EASTERBROOK, Circuit Judges, and GRANT, Senior District Judge. ^*

CUMMINGS, Circuit Judge.

Appellant Burlington Northern Railroad Company ("Burlington") appeals from the district court's order of June 9, 1988, granting appellees United Transportation Union ("UTU") and Brotherhood of Locomotive Engineers ("BLE") a preliminary injunction enjoining a proposed trackage rights agreement between Burlington and its wholly owned subsidiary, Winona Bridge Railway Company ("Winona Bridge"), pending resolution of a major dispute under the Railway Labor Act, and denying a preliminary injunction enjoining the Unions from striking as well as declaratory judgment relief. We have jurisdiction over this matter pursuant to 28 U.S.C. Sec. 1292(a)(1).

I. FACTS AND PROCEDURAL HISTORY

Burlington Northern is a Class I railroad subject to the jurisdiction of the Interstate Commerce Commission ("ICC") and the provisions of the Interstate Commerce Act ("ICA"), 49 U.S.C. Secs. 10101-11917, and the Railway Labor Act, 45 U.S.C. Secs. 151-163 ("RLA"). Its railroad system stretches throughout the western, midwestern and southeastern portions of the United States.

At all times relevant to this action, Burlington's crews were represented by the United Transportation Union, apart from the engineers who were represented by the Brotherhood of Locomotive Engineers. The collective bargaining agreements in effect at all times called for crews consisting of one engineer, one conductor and one or two brakemen.

In early 1980, Burlington, in an effort to compete with the lower-priced motor carrier industry, designed its Expediter Service system. The Expediter Service consisted of a locomotive and trailers-on-flatcars which could be operated by a crew of two, an engineer and a brakeman. Burlington believed the lower-priced Expediter Service would compete with motor carriers and attract business as yet unavailable to Burlington due to the higher costs associated with the existing rail transport systems.

Burlington undertook negotiations with local committees of UTU in an effort to implement the Expediter Service. Most of the local committees of UTU accepted the change in crew consist for the Expediter Service in exchange for special allowances and productivity gain-sharing. As a result, the Expediter Service is currently in operation on approximately two-thirds of Burlington's rail system.

Burlington has not been successful, however, in its negotiations with the local committees of UTU comprising its Northern Line, which stretches from St. Paul, Minnesota, to Seattle, Washington. The local committees of the Northern Line have refused to agree to the new crew consists involved in the Expediter Service.

Burlington, undaunted by its setback at the bargaining table, devised another means of accomplishing implementation of its Expediter Service on its Northern Line, one that avoids the necessity of union negotiations. Burlington granted its wholly owned subsidiary, Winona Bridge, trackage rights over the Northern Line. A trackage rights agreement essentially grants rights to a carrier to operate trains over the grantor's track. Such an agreement may limit the use of the track by withholding permission to serve customers along the track, limiting service to specified points on the track or granting unimpaired rights to service points on the track. See Illinois Commerce Comm'n v. Interstate Commerce Comm'n, 819 F.2d 311, 312 (D.C.Cir.1987). The Burlington-Winona Bridge trackage rights agreement ostensibly limited Winona Bridge's right to pick up and set out traffic to Burlington's trailers-on-flatcars hub centers in St. Paul, Spokane and Seattle. The trackage rights agreement could be modified, however, to include other such points as Burlington might authorize in writing. As a consequence, the only impediment to Winona Bridge's unfettered right to use the track as Burlington now does is written permission. The trackage rights agreement covers approximately 1,860 miles of track from Winona Junction, Wisconsin, to Seattle, Washington. The agreement calls for Burlington to supply the trains and all necessary equipment.

At the time of the trackage rights agreement and up to the present, Winona Bridge's assets consisted of an out of service bridge, accompanying operating equipment and 1.07 miles of track. Winona Bridge has five employees, none of whom had ever actually operated trains over the distance contemplated by the trackage rights agreement. Under the proposed plan Winona Bridge, which purportedly is not subject to the collective bargaining agreements with UTU and BLE, would be employing newly hired Expediter Service crews.

As required by statute, Winona Bridge sought ICC authorization to implement the trackage rights agreement. The trackage rights agreement fell within the reach of the ICC's expedited procedure for receiving approval of certain rail transactions. An applicant filing a notice of exemption under 49 U.S.C. Secs. 10505 and 11343 is essentially granted an automatic exemption from the typical ICC filing and hearing procedures; the exemption is routinely granted upon a filing received seven days in advance of the proposed transaction. See 49 C.F.R. Secs. 1180.2(d)(7) and 1180.4(g)(2).

In response, the Unions filed a petition to reject exemption as well as a petition to revoke exemption. The ICC denied the petition to reject exemption, finding no reason to void on its face the notice of exemption and declining to consider the underlying motivations behind the proposed transaction. ¹ Insofar as we have been advised, the ICC has yet to decide the petition for revocation.

After unsuccessfully moving for reconsideration by the ICC, UTU appealed to the Court of Appeals for the Eighth Circuit, which dismissed the appeal for want of a final order since the petition for revocation was still pending. Winter v. Interstate Commerce Comm'n, 851 F.2d 1056 (8th Cir.1988).

During this same time period, in December 1987 UTU and BLE each served notice on Burlington as provided by Section 6 of the Railway Labor Act ("RLA"), 45 U.S.C. Sec. 156, insisting that the trackage rights agreement with Winona Bridge constituted a unilateral change in the collective bargaining agreements with Burlington. Burlington argued that Winona Bridge's operations would not affect the working conditions of Burlington employees, and that in any event the ICC authorization relieved Burlington of any RLA-imposed responsibilities. Both disputes were submitted to the National Mediation Board, ² where they are still pending.

Burlington then filed this action on March 29, 1988, seeking injunctive relief against a threatened strike by the Unions, as well as declaratory relief that (1) RLA provisions antagonistic to the ICA as amended are superseded, and (2) bargaining was not required because the collective bargaining agreements implicitly authorized trackage rights agreements subject to mandatory labor protective conditions prescribed by the ICC. The Unions responded with a counterclaim seeking injunctive relief against unilateral changes in working conditions by the carriers as expected following implementation of the trackage rights agreement. ³ The Unions contend that despite the labor protective conditions for present Burlington employees imposed by the ICC, the collective bargaining agreement now in effect with Burlington should also apply to the new Winona Bridge operations. This would preclude Winona Bridge from negotiating an entirely new collective bargaining agreement governing, among other things, crew consists, job opportunities and future benefits, all of which, the Unions argue, could adversely affect Burlington employees. At the extreme, the Unions fear a complete diversion of business from Burlington to Winona after the expiration of the labor protective conditions, which terminate six years following implementation of the trackage rights agreement.

The district court denied the relief requested by Burlington and granted a preliminary injunction in favor of the Unions enjoining Burlington and Winona Bridge from implementing the trackage rights agreement and changing working conditions of employees represented by these Unions until Burlington exhausts the dispute resolution mechanisms set forth in the RLA. On appeals from orders granting or denying preliminary injunctions, we review questions of law de novo and set aside factual determinations only if shown to be clearly erroneous. Roland Machinery v. Dresser Industries, 749 F.2d 380, 392 (7th Cir.1984).

II. THE RAILWAY LABOR ACT: MAJOR OR MINOR DISPUTE

The Railway Labor Act is designed to channel labor disputes into constructive resolution proceedings as a means of avoiding interruptions to commerce among the states. Detroit & Toledo Shore Line R.R. v. United Transp. Union, 396 U.S. 142, 148-149 n. 13, 90 S.Ct. 294, 298-299 n. 13, 24 L.Ed.2d 325 (1969); Railway Labor Exec. Ass'n v. Pittsburgh & Lake Erie R.R., 845 F.2d 420, 423 (3d Cir.), cert. granted, --- U.S. ----, 109 S.Ct.489, 102 L.Ed.2d 526 (1988); 45 U.S.C. Sec. 152 (disputes are to be settled to "avoid any interruption to commerce or to the operation of any rail carrier").

In order to maintain equal bargaining ability while preserving uninterrupted commercial...