International Ass'n of Machinists and Aerospace Workers, Dist. Lodge No. 19 v. Soo Line R. Co.

Decision Date22 June 1988
Docket NumberNo. 86-5355,86-5355
Citation850 F.2d 368
Parties128 L.R.R.M. (BNA) 2826, 57 USLW 2056, 109 Lab.Cas. P 10,563 INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, DISTRICT LODGE NO. 19, an unincorporated labor organization, Appellee, v. SOO LINE RAILROAD COMPANY, a Minnesota corporation, Appellant.
CourtU.S. Court of Appeals — Eighth Circuit

I. Michael Greenberger, Washington, D.C., for appellant.

Roger A. Jensen, St. Paul, Minn., for appellee.

Before LAY, Chief Judge, HEANEY, McMILLIAN, ARNOLD, JOHN R. GIBSON, FAGG, BOWMAN, WOLLMAN, MAGILL and BEAM, Circuit Judges, en banc.

MAGILL, Circuit Judge.

In this case we examine whether an employee has the right to seek out his employer and voluntarily quit his job on terms agreeable to both him and his employer, or whether that basic right must be bargained for on his behalf by his union. The Soo Line Railroad Company (Soo Line) appeals from a decision of the United States District Court for the District of Minnesota, permanently enjoining the Soo Line from entering into voluntary separation agreements with individual members of the International Association of Machinists and Aerospace Workers, District Lodge No. 19 (IAM or Union).

The Soo Line contends on appeal that the district court did not have subject matter jurisdiction over the disagreement between the Soo Line and IAM because (1) the disagreement between them is not a dispute, as that term is used in the Railway Labor Act, 45 U.S.C. Secs. 151-188 (RLA); (2) even if the disagreement is a dispute within the ambit of the RLA, it is a minor dispute subject to resolution by the National Railroad Adjustment Board; and (3) the pertinent agreements between the Soo Line and IAM require arbitration of any dispute arising out of their interpretation or application, and this is such a dispute.

We discuss these sequentially. Section 2 of the Railway Labor Act, 45 U.S.C. Sec. 151a, sets out the disputes to which it applies as "all disputes concerning rates of pay, rules, or working conditions" and "all disputes growing out of grievances or out of the interpretation or application of agreements covering rates of pay, rules, or working conditions." As we explain more fully in Section II(B), numerous courts have assumed the presence of a labor dispute in situations similar to the one at issue. 1 We therefore base our decision on the Soo Line's second and third arguments. Accordingly, we conclude that the district court erroneously asserted equitable jurisdiction in this case, and we reverse and remand for arbitration. 2


This case has its genesis on February 19, 1985, when the Soo Line acquired the core rail assets of the Chicago, Milwaukee, St. Paul and Pacific Railroad Company (Milwaukee) from its trustee in bankruptcy. Two statutory regimes governed the Soo Line's acquisition of Milwaukee (Acquisition): the Milwaukee Railroad Restructuring Act, 45 U.S.C. Secs. 901-922 (the Restructuring Act), and the Interstate Commerce Act, 49 U.S.C. Sec. 10101 et seq. (ICA).

A. The Restructuring Act.

The Restructuring Act was passed as an emergency measure to restructure the financially ailing Milwaukee, in order to avoid the potential unemployment and economic damage that would result if the Milwaukee were to cease operating. 45 U.S.C. Sec. 901(b). The Restructuring Act primarily sets out procedures through which courts, the Secretary of Transportation, and the Interstate Commerce Commission (ICC) may supervise transactions pertaining to the Milwaukee, such as sales, transfers abandonments, and conversion plans. 45 U.S.C. Secs. 903-905, 915. The Restructuring Act also sets out a variety of protective measures for Milwaukee employees, 45 U.S.C. Secs. 907-914.

The Restructuring Act required the Soo Line, as a condition of the Acquisition of Milwaukee, to provide protections for potentially affected employees. Section 904(b)(1) of the Restructuring Act set out the level of protection required, and authorized the federal district court supervising the Acquisition (reorganization court) to decide for itself what specific labor protective conditions should be imposed. Section 904(b)(1) provides: "In authorizing any such sale or transfer, the court shall provide a fair arrangement at least as protective of the interest of employees as that required under section 11347 of title 49 of the United States Code." (Section 11347 of the ICA.) 3 This mandate brings us to the second of the two statutes governing the transaction, the ICA.

B. The ICA Protective Agreement.

As this court recently stated in Burlington Northern Railroad Co. v. United Transportation Union, 848 F.2d 856, 859-60 (1988), the goal of the ICA is to make commerce flow smoothly, to the benefit of both American industry and consumers. The ICA seeks to ensure fair shipping rates, safety and efficiency in transportation, and to preserve the viability of various modes of transportation. See 49 U.S.C. Secs. 10101, 10101a.

The ICA generally requires that before a railroad acquires an additional line, the rail carriers involved in the transaction must obtain the approval of the ICC. 49 U.S.C. Sec. 10901. In furtherance of the ICA's goal of preventing labor strife by "encourag[ing] fair wages and safe and suitable working conditions in the railroad industry," 49 U.S.C. Sec. 10101a(12), the ICC, before approving a particular transaction, has generally required the imposition of plans to compensate workers displaced by the transaction. See 49 U.S.C. Sec. 11347. These plans are called labor protective provisions or agreements. Under the authority granted by the ICA, the ICC has developed standard labor protective provisions for particular types of transactions. When the transaction involves the sale of a rail line, such as here, the ICC imposes the New York Dock conditions upon the parties. See New York Dock Railway--Control--Brooklyn E.D. Terminal, 360 I.C.C. 60 (1979), aff'd, 609 F.2d 83 (2d Cir.1979).

The New York Dock conditions provide essentially that any employee furloughed as a result of a merger or similar transaction must be paid, generally for six years, the equivalent of the wage earned at the time of the adverse action, unless he or she chooses instead to take a one-time payment of up to one year's pay (valued at approximately $38,000 per employee in this case); that issues pertaining to seniority and contract rights between the employees of the two merged railroads must be resolved by an implementing agreement with the consolidated railroad's unions; that existing collective bargaining agreements must be preserved; and that mandatory and binding arbitration be used to resolve "any dispute or controversy with respect to the interpretation, application or enforcement of any provision" of the New York Dock conditions. 4

The Soo Line informed both the ICC and the reorganization court that several hundred employees would lose their jobs as a result of the Acquisition. See Matter of Chicago, Milwaukee, St. Paul and Pacific Railroad Co., 799 F.2d 317, 328-29 (7th Cir.1986), cert. denied, --- U.S. ----, 107 S.Ct. 2460, 95 L.Ed.2d 869 (1987). The ICC recommended that the New York Dock conditions be imposed upon the Acquisition, and the reorganization court, except for making minor changes, 5 applied the New York Dock conditions.

Accordingly, on September 10, 1985, the Soo Line entered into an employee protective agreement (Protective Agreement) with Milwaukee and IAM. The Protective Agreement, which incorporated the New York Dock conditions in conformity with the reorganization court's order, was meant to provide standard labor protective provisions pursuant to section 11347 of the ICA and the Restructuring Act. As described in its preamble, the purpose of the Protective Agreement was:

to provide * * * for fair and equitable arrangements to protect the interests of Employees adversely affected by the Acquisition; and to provide for expedited changes in services, facilities, operations, seniority and existing collective bargaining agreements to enable the expanded railroad system created by the Acquisition to be operated in the most efficient manner, as one completely integrated railroad.

C. The RLA Collective Bargaining Agreement.

Before the execution of the Protective Agreement, as a result of negotiations entirely unrelated to the Acquisition, the Soo Line and IAM entered into a collective bargaining agreement (CBA) on March 1, 1985. The CBA was negotiated in accordance with the provisions of the RLA, which seeks among its aims to secure the "complete independence" of railroads and their employees in matters of self-organization to carry out the purposes of the RLA. See 45 U.S.C. Sec. 151a. The CBA set out rules concerning working hours and conditions, layoffs, promotions, seniority, grievances and employee discipline. The CBA made no explicit mention of an employee's right of voluntary resignation.

D. The Voluntary Separation Plan.

Post-Acquisition, in December 1985, the Soo Line decided to reduce the number of employees on its payroll. It offered voluntary separation pay plans to certain employees represented by unions other than IAM. Under these plans, employees who voluntarily resigned would receive $15,000 cash in a lump-sum severance payment and, if they were age sixty or older, would have their health benefits continued until they were sixty-five. To take advantage of the plan, each employee was required to:

Release all rights under labor protective conditions, including but not limited to, statutory, contract, or agreement labor protection and those conditions commonly referred to as Appendix B. * * * [R]esign and relinquish all rights of or claims to employment with the Soo Line Railroad * * * and release and discharge said railroad company, * * * from any and all claims of whatsoever kind and nature growing out of or in connection with said employment.

Soo Line Railroad Voluntary...

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