National R. R. Passenger Corp. v. Chesapeake & O. Ry. Co.

• Decision Date: 04 March 1977
• Docket Number: No. 76-1472,76-1472
• Citation: 551 F.2d 136
• Parties: The NATIONAL RAILROAD PASSENGER CORPORATION, Plaintiff-Appellee, v. The CHESAPEAKE AND OHIO RAILWAY COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 136

551 F.2d 136

The NATIONAL RAILROAD PASSENGER CORPORATION, Plaintiff-Appellee, v. The CHESAPEAKE AND OHIO RAILWAY COMPANY, Defendant-Appellant.

No. 76-1472.

United States Court of Appeals Seventh Circuit.

Argued Oct. 29, 1976.

Decided March 4, 1977.

Robert E. English, Chicago, Ill., Joseph C. Wallace, Indianapolis, Ind., for defendant-appellant.

Sheldon A. Breskow, Deputy Atty. Gen., Indianapolis, Ind., for intervenor.

Andrew J. Valentine, Washington, D. C., Karl J. Stipher, Indianapolis, Ind., for plaintiff-appellee.

Before HASTINGS, Senior Circuit Judge, ^* MOORE, Senior Circuit Judge ^** and SPRECHER, Circuit Judge.

SPRECHER, Circuit Judge.

The sole issue on this appeal is whether there exist any grounds for vacating an arbitration award confirmed by the district court pursuant to 9 U.S.C. §§ 9, 13.

I

The Rail Passenger Service Act of 1970, 45 U.S.C. § 501 et seq. (hereinafter referred to as the "Amtrak Act" or the "Act") authorized the creation of the National Railroad Passenger Corporation (hereinafter referred to as "Amtrak" or "NRPC") for the purpose of providing intercity rail passenger service.

The Act authorized Amtrak to contract with railroads to relieve them of their responsibility for the provision of such service, 45 U.S.C. § 561(a)(1), and to obtain "the use of tracks and other facilities and the provision of services on such terms and conditions as the parties may agree." 45 U.S.C. § 562(a). Amtrak and the Chesapeake and Ohio Railway Company (hereinafter referred to as "C & O") entered into two contracts dated April 16, 1971: the National Railroad Passenger Corporation Agreement (hereinafter referred to as the "Basic Agreement") and the National Railroad Passenger Corporation Arbitration Agreement (hereinafter referred to as the "Arbitration Agreement").

Section 3.1 of the Basic Agreement, Right to Services, provides:

Subject to and in accordance with the terms and conditions of this Agreement, Railroad hereby agrees to provide NRPC, over Rail Lines of Railroad, with the services requested by NRPC for or in connection with the operation of NRPC's Intercity Rail Passenger Service, including the carrying of mail and express on Intercity Rail Passenger Trains to the extent authorized by the Act. The initial services with respect to Railroad shall be as provided in Appendix B . . . .

Section 3.2 of the Basic Agreement, Modification of the Services, provides in pertinent part:

NRPC shall have the right from time to time to request, and subject to and in accordance with the terms and conditions of this Agreement Railroad hereby agrees to provide, modified or additional services. Such requests shall be made by filing an amendment to Appendix B with Railroad on a date sufficiently in advance of the date upon which such amendment is to become effective to permit adequate joint planning and joint preparation for the modified or additional services provided for in such amendment.

Also, Article Six of the Basic Agreement, Arbitration, provides that "any claim or controversy between NRPC and Railroad concerning the interpretation, application, or implementation of this Agreement shall be submitted to binding arbitration in accordance with the provisions of the Arbitration Agreement. . . ." Finally, Section 4.5 of the Arbitration Agreement provides that "the arbitrators shall, in reaching a decision, be governed by the provisions and language of the . . . Basic Agreement."

Pursuant to the Act, 45 U.S.C. §§ 521, 522, on January 28, 1971 the Secretary of Transportation designated a basic system within which intercity rail passenger service would be provided. Under the basic system, passenger trains were to be operated between Chicago and Cincinnati. The routes between these two mandatory service points over which Amtrak operated its trains until August 1, 1974 involved the use of Penn Central trackage. The initial services which C & O had agreed to provide Amtrak under Section 3.1 and Appendix B of the Basic Agreement did not include trackage for Amtrak's trains between Chicago and Cincinnati.

However, on August 1, 1974, the Federal Railroad Administration condemned as unsafe portions of the trackage along the Penn Central route and ordered that all passenger and freight service along the route be terminated on the morning of August 2, 1974. Thereupon, Amtrak filed a request under the Basic Agreement to have its trains between Chicago and Cincinnati operated over C & O trackage at the Basic Agreement rate for such services. C & O, however, contended that it was not required by the Basic Agreement to provide the requested service, and, therefore, the terms of the agreement, including its method of compensation, were inapplicable.

On August 2, 1974, Amtrak obtained a temporary restraining order requiring C & O to provide the requested service pending a preliminary injunction hearing. On August 22, 1974, following the hearing, the district court directed the parties to proceed with arbitration and, pending a decision by the arbitrators, issued a preliminary injunction requiring C & O to provide the requested service under the terms and methods of compensation in the Basic Agreement.

On November 7, 1974, the National Arbitration Panel, one member concurring in part and dissenting in part, filed its award. The decision provided in pertinent part:

1. The panel finds that "modified or additional" service under Section 3.2 of the NRPC Agreement includes service over the Rail Lines of the contracting railroad, whether or not such service is of the kind that has been characterized by . . . (C & O) as "expanded," "substituted," or "emergency" service.

2. The Panel finds that request for "modified or additional" service under Section 3.2 of the NRPC Agreement must be made so as to allow appropriate time for joint planning of the requested service. The Panel finds that the request of the National Railroad Passenger Corporation (Amtrak) on August 1, 1974, did not allow time for proper planning as to a start-up on August 2, 1974, of service of the scope to be provided by Chessie, but did, in view of the consultations and trial run undertaken in the preceding months, allow for proper planning for a start-up of service as of September 1, 1974. The Panel concludes, therefore, that Amtrak is, and has been since September 1, 1974, entitled to the provision of the requested services in accordance with the terms of the NRPC Agreement. . . .

3. As to the period between August 1, 1974, and September 1, 1974, the Panel feels that, in view of the complex and confusing situation which developed, Chessie should be awarded greater compensation than that specified in the NRPC Agreement, and that such compensation should be at a rate equivalent to that of the Standard Detour Agreement.

On March 24, 1974, after a confirmation hearing, the district court confirmed the Panel's decision pursuant to Section 9 of the United States Arbitration Act, 9 U.S.C. § 9, and judgment was entered in accordance with 9 U.S.C. § 13. It is from this decision that C & O appeals.

II

We begin our inquiry with C & O's contention that the parties' contract, the Basic Agreement, rendered the instant trackage dispute nonarbitrable, ¹ and therefore the district court's confirmation of that award must be vacated.

It is, as C & O argues, "well settled that arbitration is a matter of contract, and a party cannot be required to arbitrate any dispute which he has not agreed to arbitrate." Butler Products Co. v. Unistrut Corp., 367 F.2d 733, 735 (7th Cir. 1966) (citations omitted). However, in making a determination as to whether a particular dispute is subject to arbitration, "the courts have been assigned the limited role of 'ascertaining whether the party seeking arbitration is making a claim which on its face is one governed by the agreement.' " Galt v. Libbey-Owens-Ford Glass Co., 376 F.2d 711, 714 (7th Cir. 1967) (citation omitted).

Moreover, our power in making even this limited determination is rigidly circumscribed. "An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage." United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 1353, 4 L.Ed.2d 1409 (1960) (footnote omitted). See also Carey v. General Electric Co., 315 F.2d 499 (2d Cir. 1963). The Supreme Court elaborated on the rationale underlying the limited role of the judiciary in the arbitral context in United Steelworkers of America v. American Manufacturing Co., 363 U.S. 564, 567-68, 80 S.Ct. 1343, 1346, 4 L.Ed.2d 1403 (1960) (footnotes omitted, emphasis added):

The function of the court is very limited when the parties have agreed to submit all questions of contract interpretation to the arbitrator. It is confined to ascertaining whether the party seeking arbitration is making a claim which on its face is governed by the contract. Whether the moving party is right or wrong is a question of contract interpretation for the arbitrator. In these circumstances the moving party should not be deprived of the arbitrator's judgment, when it was his judgment and all that it connotes that was bargained for.

The courts, therefore, have no business weighing the merits of the grievance, considering whether . . . there is particular language in the written instrument which will support the claim. The agreement is to submit all grievances to arbitration, not merely those which the court will deem meritorious.

Accordingly, where there is a broad arbitration clause covering all disputes involving the "interpretation, application, or implementation" of a contract, "(i)n the absence of any express provision excluding a particular grievance from arbitration, we think only the most forceful evidence of a purpose to exclude the claim from...