Chicago & North Western Transp. Co. v. Railway Labor Executives' Ass'n

• Decision Date: 21 August 1990
• Docket Number: 89-3436,Nos. 89-3265,s. 89-3265
• Citation: 908 F.2d 144
• Court: U.S. Court of Appeals — Seventh Circuit
• Parties: 134 L.R.R.M. (BNA) 2854, 116 Lab.Cas. P 10,202, 17 Fed.R.Serv.3d 465 CHICAGO & NORTH WESTERN TRANSPORTATION COMPANY, Plaintiff-Appellee, Cross-Appellant, v. RAILWAY LABOR EXECUTIVES' ASSOCIATION, et al., Defendants-Appellants, Cross-Appellees.

Page 144

908 F.2d 144

134 L.R.R.M. (BNA) 2854, 116 Lab.Cas. P 10,202,

17 Fed.R.Serv.3d 465

CHICAGO & NORTH WESTERN TRANSPORTATION COMPANY Plaintiff-Appellee, Cross-Appellant, v. RAILWAY LABOR EXECUTIVES' ASSOCIATION, et al Defendants-Appellants, Cross-Appellees.

Nos. 89-3265, 89-3436.

United States Court of Appeals Seventh Circuit.

Argued June 12, 1990.

Decided July 17, 1990.

Rehearing and Rehearing En Banc Denied

Aug. 21, 1990.

Stuart F. Gassner, Myles L. Tobin, James P. Daley, Ronald J. Cuchna, Chicago Northwestern Ry., Co., Law Dept., Chicago, Ill., Ralph J. Moore, Jr., D. Eugenia Langan, John R. Cooke, Shea & Gardner, Washington, D.C., for plaintiff-appellee.

Solomon I. Hirsh, Dale D. Pierson, Baum & Sigman, Chicago, Ill., John O'B. Clarke, Jr., Janet K. DeCosta, Highsaw, Mahoney & Clarke, Washington, D.C., for defendants-appellants.

Before POSNER, EASTERBROOK, and MANION, Circuit Judges.

POSNER, Circuit Judge.

These appeals, which pit the owner of a large midwestern railroad against the unions that represent its workers, present intricate questions under the Railway Labor Act, 45 U.S.C. Secs. 151 et seq., as well as a difficult question of appellate jurisdiction.

Like many American railroads, the C & NW in recent years has been busy discontinuing service on unprofitable lines. Until 1986 it did this by abandoning lines pursuant to the standards for abandonment established by the Interstate Commerce Commission; among these standards is the requirement that the abandoning railroad "protect" the workers adversely affected by the abandonment by giving them generous severance pay. Through abandonments the C & NW shrank to half its former size and laid off 6,000 employees. But beginning in 1986 the railroad took a different tack, selling abandoned lines (however cheaply) rather than abandoning them, and doing so under new procedures that not only enabled the ICC's approval for the transaction to be obtained swiftly but also, and much more important, excused the railroad from having to protect employees affected by the sale. Ex Parte No. 392, 1 I.C.C.2d 810, 815 (1985), review denied without opinion under the name Illinois Commerce Commission v. ICC, 817 F.2d 145 (D.C.Cir.1987). See generally Pittsburgh & Lake Erie R.R. v. Railway Labor Executives' Ass'n, --- U.S. ----, 109 S.Ct. 2584, 2590-91, 105 L.Ed.2d 415 (1989).

The unions had not claimed that the abandonments violated their collective bargaining agreements, and had not otherwise objected. For in addition to the protective conditions imposed by the ICC in abandonment cases, the collective bargaining agreements protected the seniority rights of the affected employees. An employee laid off by reason of an abandonment could "bump" an employee elsewhere in the C & NW system who had less seniority, provided the senior employee was qualified to perform the junior's job. Unions tend to favor older over younger workers. This is because, for a variety of reasons including the fact that job mobility tends to lessen with age, older workers tend to support unions more strongly than younger workers do. Between bumping rights and severance pay, older workers--especially those near retirement--were well protected against the disemployment effect of line abandonments. But when the C & NW switched from abandonment to sale, this happy picture changed. Gone was the generous severance pay. The senior workers were still protected in their bumping rights, but with the C & NW system shrinking rapidly there were fewer jobs for either the bumpers or the bumped. Moreover, older workers, with stronger ties to the local community on average than younger ones (which is why older workers tend to have less job mobility), are reluctant to pull up stakes and move to a different geographical area; yet moving will often be necessary to take advantage of bumping rights.

A partially offsetting consideration is that the purchaser of the line may decide to retain the workers who have been working on it. Despite this possibility, the unions were upset when the C & NW abandoned abandonments for sales, and the first thing they did was file a notice under section 6 of the Railway Labor Act, 45 U.S.C. Sec. 156, which provides that "carriers and representatives of the employees shall give at least thirty days' written notice of an intended change in agreements affecting rates of pay, rules, or working conditions." The notice, as section 6 goes on to provide, obligates the parties to meet and negotiate over the proposed change and, if the negotiations fail, to submit the dispute to mediation. Only after all means to a peaceful resolution have been exhausted may the party who filed the section 6 notice strike, if it is the union, to coerce the other party to comply with its demands, or, if it is the employer, implement the proposed change. The notice that the unions served on the C & NW demanded that the collective bargaining agreements be modified to impose protective conditions on line sales similar to the protective conditions that the ICC imposes on abandonments.

At the time the notice was filed (1987), the C & NW had announced its intention to sell its 208-mile-long "Duck Creek South" line in Wisconsin to another railroad, but had not completed the transaction. Although the C & NW took the position that it was not required to bargain over the right to sell parts of its system, it did meet with the unions' representatives to discuss the effects of the sale on the employees, and that matter is now in mediation. But it refused to delay the sale's consummation. The unions threatened to strike if the sale was consummated. They argued that consummation would violate the provision of section 6 that during the negotiating process kicked off by the section 6 notice "rates of pay, rules, or working conditions shall not be altered by the carrier." The railroad then filed this suit. It sought preliminary and permanent injunctive relief against the unions' striking over the Duck Creek South sale, plus an order directing the union to submit the dispute to an adjustment board, which is an arbitral body ordained by the Railway Labor Act.

In support of these requests the railroad contended that the dispute was "minor" rather than "major." These terms are not to be taken in their ordinary sense; they are terms of art in the case law under the Railway Labor Act (they do not appear in the Act itself). Consolidated Rail Corp. v. Railway Labor Executives' Ass'n, --- U.S. ----, 109 S.Ct. 2477, 2479-82, 105 L.Ed.2d 250 (1989); Pittsburgh & Lake Erie R.R. v. Railway Labor Executives' Ass'n, supra, 109 S.Ct. at 2589 n. 4; Air Line Pilots Ass'n v. UAL Corp., 874 F.2d 439, 443-44 (7th Cir.1989). It would be more informative to call a major dispute a "modification" dispute and a minor dispute an "interpretation" dispute. But it may be too late to change the terminology.

In any event, a major dispute is a dispute to which section 6 procedures are applicable--a dispute kicked off by the filing of a notice of desire to modify existing collective bargaining agreement. The terminus of such a dispute, if the procedures set forth in section 6 fail to produce agreement between the parties, is a strike. A minor dispute is a dispute "growing out of grievances or out of the interpretation or application of agreements concerning rates of pay, rules, or working conditions." 45 U.S.C. Sec. 153 First (i). Hence it is one that can be resolved conclusively by interpretation of the collective bargaining agreement. Consolidated Rail Corp. v. Railway Labor Executives' Ass'n, supra, 109 S.Ct. at 2481; General Comm. of Adjustment v. CSX Railroad Corp., 893 F.2d 584, 586 (3d Cir.1990). In other words, a minor dispute is one over the interpretation or application of the collective bargaining agreement (for a grievance is merely a complaint that arises under the agreement, Lancaster v. Norfolk & Western Ry., 773 F.2d 807, 814 (7th Cir.1985)), while a major dispute is one in which the carrier or employer wants to change the agreement.

Minor disputes are governed by the procedures for compulsory arbitration established by section 3 of the Act precisely to enable conclusive resolution of interpretive disputes. Compulsory arbitration is the statutory substitute for strikes and other work action by which unions in other industries have often tried to enforce their interpretation of a collective bargaining agreement (in the absence of a no-strike clause), but which are thought unduly disruptive in the transportation industry. Unlike manufacturing industries and even some service industries, the transportation industry does not produce a storable commodity, and so it cannot produce for inventory in anticipation of a strike or accelerate production afterward to make up for lost production during the strike. It is therefore peculiarly vulnerable to a strike.

Agreeing that the dispute over the protective conditions was minor and therefore that the union's only remedy lay with arbitration, the district court granted the preliminary injunction sought by the railroad. We affirmed, Chicago & North Western Transportation Co. v. Railway Labor Executives' Ass'n, 855 F.2d 1277 (7th Cir.1988), and the sale of the Duck Creek South line was then consummated. But the lawsuit was not over. The railroad wanted the injunction made permanent, so that it would not expire when the arbitration ended. The parties also disgreed as to how the district judge should frame the issue for arbitration in the order directing the parties to arbitrate. (Whether the district judge has the power to frame the issues for arbitration under the Railway Labor Act is an issue we discuss later.) The railroad wanted the issue to be: Had the Duck Creek South sale violated the collective bargaining agreements? The unions wanted it to be: What entitlements did the former workers on the Duck Creek South line have, in light not only of the provisions of the collective...