MT Properties, Inc. v. Transportation-Communications Intern. Union

• Decision Date: 31 October 1990
• Docket Number: No. 89-5061,TRANSPORTATION-COMMUNICATIONS,89-5061
• Citation: 914 F.2d 1083
• Parties: 135 L.R.R.M. (BNA) 2443, 116 Lab.Cas. P 10,315 MT PROPERTIES, INC., Appellee, v.INTERNATIONAL UNION, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1083

914 F.2d 1083

135 L.R.R.M. (BNA) 2443, 116 Lab.Cas. P 10,315

MT PROPERTIES, INC., Appellee, v. TRANSPORTATION-COMMUNICATIONS INTERNATIONAL UNION, Appellant.

No. 89-5061.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 13, 1989.

Decided Sept. 20, 1990.

Rehearing and Rehearing En Banc

Denied Oct. 31, 1990.

Elizabeth A. Nadeau, Washington, D.C., for appellant.

R. Scott Davies, Minneapolis, Minn., for appellee.

Before McMILLIAN, JOHN R. GIBSON and BOWMAN, Circuit Judges.

McMILLIAN, Circuit Judge.

Transportation-Communications International Union (TCU) appeals from a final order entered in the United States District

Court ¹ for the District of Minnesota, granting MT Properties, Inc.'s (MT) motion for summary judgment. The district court issued a declaratory judgment that the Special Board of Adjustment established pursuant to the Railway Labor Act, 45 U.S.C. Secs. 151-188 (1982 & Supp. V 1987) (RLA), lacked jurisdiction under the Washington Job Protection Agreement of 1936 (WJPA) or the Job Stabilization Agreement of February 7, 1965 (Stabilization Agreement) to arbitrate a dispute between TCU and MT. For reversal, TCU argues that the district court erred in holding that MT was relieved of its duty to arbitrate, and, assuming MT was relieved of this duty, the employees represented by TCU were deprived of contractual rights without just compensation in violation of the fifth amendment. We affirm the order of the district court, but for different reasons than those relied on below.

I.

The Minnesota Transfer Railway Co. (Minnesota Transfer) was formed over 100 years ago by several rail companies to operate terminal rail service in the Minneapolis-St. Paul metropolitan area. As of 1986, Minnesota Transfer employed approximately 30 employees, 10 of whom were represented by TCU. On December 11, 1986, Minnesota Transfer changed its corporate name to MT Properties, Inc., but continued to operate as Minnesota Transfer. Like its predecessor Minnesota Transfer, MT was a "carrier" within the meaning of the RLA. See 45 U.S.C. Sec. 151 First.

On February 1, 1987, all of MT's rail assets were acquired through a 50 year lease (the acquisition) by the Minnesota Commercial Railway Co. (MCRC). After the acquisition, MT merged with the St. Paul Union Depot Co. The surviving company kept the name of MT Properties, Inc. ² In conjunction with leasing its rail assets, MT eliminated its rail operations and abolished all 30 rail-connected jobs, including the jobs of the 10 employees represented by TCU. MT is now solely a real estate holding company.

The Interstate Commerce Act, 49 U.S.C. Secs. 10101-11917 (1982 & Supp. V 1987) (ICA) confers broad authority on the Interstate Commerce Commission (ICC) to regulate the railroad industry. At the time of the acquisition, MCRC applied for an exemption from the ICC's acquisition regulations pursuant to Ex Parte 392 (Sub. No. 1), Class Exemption for the Acquisition and Operation of Rail Lines Under 49 U.S.C. Sec. 10901, 1 I.C.C.2d 810 (1986) (Ex Parte 392 ), review denied sub nom. Illinois Commerce Comm'n v. ICC, 817 F.2d 145 (D.C.Cir.1987). Ex Parte 392 exempts rail line sales to new carriers from full compliance with ICC regulations, including those regulations which permit the ICC to impose labor protection conditions on transactions. MCRC's Application for Exemption was published in the Federal Register on February 20, 1987. The exemption became effective seven days after publication. ³ In accordance with the exemption, no labor protection conditions were imposed on the acquisition.

After the exemption, the Brotherhood of Maintenance of Way Employees (BMWE) filed a petition for revocation of the exemption with the ICC. The BMWE claimed that the acquisition constituted an abandonment and sale of a rail line between two carriers and argued that labor protection conditions should be imposed on the MT-MCRC transaction. The ICC denied BMWE's petition for revocation, stating that BMWE had not offered any evidence that the acquisition was a transaction between two carriers.

In a November 4, 1987, letter, TCU requested the National Railway Labor Conference (NRLC), MT's designated representative under the WJPA and the Stabilization MT subsequently filed suit in the United States District Court for the District of Minnesota, requesting a declaratory judgment that the Special Board lacked jurisdiction and a permanent injunction prohibiting TCU from arbitrating this dispute under the WJPA and the Stabilization Agreement. Both sides moved for summary judgment. After hearing arguments, the district court granted MT's motion for summary judgment as to Count I on January 19, 1989, issuing a declaratory judgment that the Special Board had no jurisdiction under the WJPA or the Stabilization Agreement to resolve the dispute. The district court held that the ICC exemption issued pursuant to Ex Parte 392 preempts the Special Board's jurisdiction to arbitrate this dispute under the RLA. This appeal followed.

Agreement, to order its Dispute Committee to decide the proper interpretation and application of the collective bargaining agreements. The NRLC referred the dispute to Special Board of Adjustment No. 605 (Special Board), an arbitration panel established pursuant to the RLA, the WJPA, and the Stabilization Agreement. Both sides have presented their respective positions to the Special Board.

II.

This case requires us to reconcile the competing statutory requirements and policy objectives of the RLA and the ICA in the context of a rail carrier's decision to transfer its assets by a long-term lease and leave the railroad business. TCU argues that the Supreme Court's recent decision in Pittsburgh & Lake Erie R.R. v. Railway Labor Executives' Ass'n, --- U.S. ----, 109 S.Ct. 2584, 105 L.Ed.2d 415 (1989) (Lake Erie ), controls this case and mandates reversal of the district court's order. TCU contends that the Lake Erie decision undercuts the district court's holding that the ICC exemption preempts the jurisdiction of the Special Board. According to TCU, the district court's holding that the ICA supersedes the RLA is at variance with Lake Erie's holding that the interests of the RLA and the ICA are to be harmonized to the fullest extent possible. TCU argues that Lake Erie provides a framework under which the employees' interest in arbitration under the RLA and the agreements must prevail. TCU further argues that the ICA does not give the ICC the authority to abrogate existing collective bargaining agreements when approving transactions. TCU also contends that if the analysis of the district court is upheld, the unionized employees will be deprived of property without compensation.

In response, MT claims that Lake Erie buttresses rather than undermines the district court's ruling that the ICC exemption strips the Special Board of jurisdiction. MT contends that its duty to arbitrate under the RLA was extinguished when MCRC was granted an exemption from ICC regulation several months before TCU declared its intent to arbitrate. While MT acknowledges that Lake Erie interpreted the RLA's mandatory bargaining provision rather than its arbitration provisions, MT argues that compelling policy reasons support extending Lake Erie to relieve railroads of their duty to comply with RLA arbitration obligations after an exemption from ICC regulation has been granted. MT further contends that even if Lake Erie is not dispositive, arbitration is not proper in the case because neither the WJPA nor the Stabilization Agreement apply to this case and the Special Board consequently has no contractual authority to hear the dispute.

A. Relationship Between ICA and RLA

In order to properly consider what becomes of the RLA duty to arbitrate after an exemption from regulation has been granted pursuant to Ex Parte 392, it is necessary to briefly examine the statutory frameworks of the RLA and the ICA, the policy objectives of each, and how the statutes collide in the case before us. Congress has exercised its power under the commerce clause to regulate rail transportation for over a century and has granted the ICC plenary authority over rail transactions. See Lake Erie, 109 S.Ct. at 2596. For example, the ICC regulates rate and Because of increased competition, high costs, and extensive regulation, the railroad industry declined in the 1970s. In an effort to deregulate and revitalize the railroad industry, Congress enacted the Railroad Revitalization and Reform Act of 1976, Pub.L. No. 94-210, 90 Stat. 129, and the Staggers Rail Act of 1980, Pub.L. No. 96-448, 94 Stat. 1895 (Staggers Act). The Staggers Act granted the ICC broad authority to exempt rail line acquisitions by noncarriers from the regulatory approval process in order to facilitate the acquisition and preservation of financially troubled rail lines. See 49 U.S.C. Sec. 10505 (Section 10505). Pursuant to the authority conferred upon it by Section 10505, the ICC issued Ex Parte 392, which declared all noncarrier acquisitions presumptively exempt from Section 10901 regulation and provided that labor protection conditions would be imposed in individual cases only upon a showing of exceptional circumstances. See Lake Erie, 109 S.Ct. at 2591 n. 9.

tariff increases, see 49 U.S.C. Secs. 10701-10766, the construction and operation of rail lines, see id. Sec. 10901, and railroads' proposed abandonments of rail lines, see id. Sec. 10903. The ICA also provides for ICC regulation of proposed acquisitions of rail lines by noncarriers under Title 49 U.S.C. Sec. 10901 (Section 10901). See Railway Labor Executives' Ass'n v. United States, 791 F.2d 994, 1003 (2d Cir.1986) ("section 10901 governs single line acquisitions by noncarriers") (citing cases), cert. denied, 479 U.S. 1054, 107 S.Ct. 927, 93 L.Ed.2d 978 (1987). Under Section 10901(a)(3), a noncarrier may "acquire or operate an extended or additional railroad line only if the [ICC] finds that the...