Railway Labor Executives' Ass'n v. U.S., s. 90-1484

• Decision Date: 12 March 1993
• Docket Number: 91-1024,91-1066,91-1272 and 91-1420,91-1261,91-1185,Nos. 90-1484,s. 90-1484
• Citation: 987 F.2d 806,300 U.S. App. D.C. 142
• Parties: 142 L.R.R.M. (BNA) 2715, 300 U.S.App.D.C. 142, 124 Lab.Cas. P 10,593 RAILWAY LABOR EXECUTIVES' ASSOCIATION, Petitioner, v. UNITED STATES of America and the Interstate Commerce Commission, Respondents, Boston & Maine Corporation, et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 806

987 F.2d 806

142 L.R.R.M. (BNA) 2715, 300 U.S.App.D.C. 142,

124 Lab.Cas. P 10,593

RAILWAY LABOR EXECUTIVES' ASSOCIATION, Petitioner, v. UNITED STATES of America and the Interstate Commerce Commission, Respondents Boston & Maine Corporation, et al., Intervenors.

Nos. 90-1484, 91-1024, 91-1066, 91-1185, 91-1261, 91-1272

and 91-1420.

United States Court of Appeals District of Columbia Circuit.

Argued Sept. 29, 1992.

Decided March 12, 1993.

On Petitions for Review of Orders of the Interstate Commerce Commission.

John O'B. Clarke, Jr., with whom Elizabeth A. Nadeau, Washington, DC, was on the brief, for petitioner Railway Labor Executives' Ass'n.

Clinton J. Miller, III, Cleveland, OH, for petitioner United Transp. Union.

John O'B. Clarke, Jr., Washington, DC, Clinton J. Miller, III, Cleveland, OH, and Elizabeth A. Nadeau, Washington, DC, were on the joint brief, for petitioners Railway Labor Executives Ass'n and United Transp. Union.

John P. Cronin, North Billerica, MA, John H. Broadley, and Roger W. Pincus, Washington, DC, were on the brief, for petitioners Boston & Maine Corp., et al.

Clyde J. Hart, Atty., I.C.C. (ICC), with whom Robert S. Burk, Gen. Counsel, Henri F. Rush, Deputy Gen. Counsel, John J. McCarthy, Jr., Associate Gen. Counsel, and Virginia Strasser, Atty., ICC, Washington, DC, were on the brief, for respondents. John J. Powers, III and Robert J. Wiggers, Attys., Dept. of Justice, Washington, DC, also entered appearances for respondents.

Before: MIKVA, Chief Judge, and D.H. GINSBURG and RANDOLPH, Circuit Judges.

Per Curiam:

These consolidated cases represent a broad range of challenges to decisions of the Interstate Commerce Commission surrounding the efforts of Guilford Transportation Industries to lease rail lines and trackage rights from four of its subsidiaries to a fifth subsidiary. For the reasons that follow, we remand to the ICC its decision affirming an arbitrator's award that modified the collective bargaining agreements of certain employees. We affirm all of the other challenged decisions of the ICC.

I. BACKGROUND

In 1986, Guilford Transportation Industries ("GTI") began implementing a plan to lease rail lines and related trackage rights from four of its subsidiaries--the Delaware and Hudson Railway Company ("D & H"), the Boston & Maine Corporation ("B & M"), the Maine Central Railroad Company ("MEC"), and the Portland Terminal Company ("PT")--to a fifth subsidiary, the Springfield Terminal Railway Company ("ST"). From late 1986 through late 1987, the five subsidiaries filed notices of the transactions with the Interstate Commerce Commission ("ICC" or "Commission") under the procedures set out in 49 C.F.R. § 1180.4. The Commission's regulations permit the use of these procedures, instead of the prior approval requirements of 49 U.S.C. § 11343, for "transactions within a corporate family that do not result in adverse changes in service levels, significant operational changes, or a change in the competitive balance with carriers outside the corporate family." 49 C.F.R. § 1180.2(d)(3).

These transactions were of great concern to rail labor, for they would make ST the de facto operator of the entire GTI system and subject the labor forces of the other subsidiaries to ST's less favorable rates of pay, rules, and working conditions. Consequently, rail labor (the Railway Labor Executives' Association ("RLEA") and the United Transportation Union ("UTU")) sought the maximum possible protection under the Interstate Commerce Act ("ICA"), which imposes labor protective conditions on such transactions in order to protect affected employees. 49 U.S.C. § 11347.

In order to comply with the requirements of § 11347, the Commission has developed a series of protective conditions appropriate to lease and trackage rights transactions, known as "Mendocino conditions" because of their origin in Mendocino Coast Ry. Inc.--Lease and Operate--California Western R.R., 354 I.C.C. 732 (1978), as well as in Norfolk and Western Ry.--Trackage Rights--Burlington Northern, Inc., 354 I.C.C. 605, 611 (1978), both modified, Mendocino Coast Ry. Inc.--Lease and Operate--California Western R.R. 360 I.C.C. 653 (1980), both aff'd sub nom., RLEA v. United States, 675 F.2d 1248 (D.C.Cir.1982). Labor challenged the application of the Mendocino conditions to these transactions, arguing that the leases had the cumulative impact of a merger or consolidation of carriers, which warranted the heightened procedural protections of the conditions set forth in New York Dock--Control--Brooklyn Eastern Dist., 360 I.C.C. 60 (1979). In its February 17, 1988 Decision, the Commission imposed a hybrid set of protective conditions on the transactions, including the substantive provisions of the Mendocino conditions and the increased procedural safeguards of the New York Dock conditions. Delaware and Hudson Ry. Co.--Lease and Trackage Rights Exemption--Springfield Terminal Ry. Co., 4 I.C.C.2d 322. These elevated procedural safeguards prohibited the railroads from implementing any unconsummated transactions until the parties reached an implementing agreement through negotiation or arbitration.

The parties were unable to reach an implementing agreement, primarily because they were unable to agree whether the employees of the lessor carriers should be allowed to follow their work to ST with their collective bargaining agreements ("CBAs") intact. They submitted the case to arbitration. On June 12, 1988, Arbitrator Richard Kasher issued an award setting forth the implementing agreement. The Kasher Award required ST, in operating the leased lines, to apply the rates of pay, rules, and working conditions contained in the lessor carriers' CBAs.

In response to ST's petition, the Commission stayed the Kasher award pending review. In its January 10, 1989 Decision, the Commission partially overturned the award, holding that the preservation of the lessor carriers' rates of pay and work rules would effectively foreclose the authorized transactions, since the purpose of the transactions was to achieve greater efficiency by applying the more economical ST collective bargaining agreements to the entire GTI system. The Commission returned the unsettled issues to the parties for negotiation and, if necessary, arbitration.

The parties were again unable to reach an agreement. On March 13, 1990, the second arbitrator, Robert O. Harris, issued his report and award. Under the Harris Award, the lessor carriers' collective bargaining agreements were modified to allow ST to create a single seniority system, to employ smaller crews than those used by the lessor carriers, and to require its employees to perform incidental work outside the scope of their duties as defined by their craft. Arbitrator Harris stated, however, that if "[I] were not bound by the ICC determination that Section 3 of the Kasher Implementing Award could not be approved, [I] too would have reconciled the competing interests involved in the approved transaction by imposing the lessor carriers' collective bargaining agreements." In its October 4, 1990 Decision, the Commission affirmed the Harris Award. UTU challenges the adoption of the Harris Award. RLEA instead disputes the previous partial override of the Kasher Award.

Another issue arose concerning a work stoppage by ST employees that commenced just as the leasing process began in November, 1987 and ended in June, 1988. UTU alleges that it called the strike because of safety hazards in the operation of the railroad, and that the strike was thus a protected activity under the Federal Railroad Safety Act ("FRSA"), 45 U.S.C. 441(a). ST contends that the striking employees were not engaged in a protected activity, and that they therefore constructively resigned their positions and thereby forfeited their rights to protective benefits under Mendocino Coast and the two arbitration awards. In its December 11, 1990 Decision, the Commission concluded that the employees who participated in the strike did not, by virtue of their participation, forfeit entitlement to these benefits. The carriers challenge that decision.

Still another dispute arose over the lack of continuity between two periods of benefit protection guaranteed by the protective conditions. Under the hybrid New York Dock/Mendocino Coast conditions imposed by the Commission, employees affected by the lease transactions are entitled to both a 75-day "make-whole" period and a six-year "benefit protective" period. The 75-day period commenced on the date the lease transactions began to affect the employees. Until 1991, all the parties agreed that the six-year period would not start until the effective date of the implementing agreement. Usually, these periods of protection are contiguous. Because of the drawn-out nature of the disputes in this case, however, it became apparent that there would be a "gap" between the two protective periods unless the 75-day make-whole period were expanded to cover the entire time until the date of implementation or the six-year "benefit protective" period were started before the completion of an implementation agreement.

Both the Kasher and Harris Awards provided that the six-year benefit protective period would commence on the effective date of the implementing agreement. RLEA asserted that the make-whole period should extend to the effective date of the implementing agreement to fill the resulting gap. In its April 2, 1991 Decision, the Commission rejected RLEA's claim. It limited the make-whole period to 75 days and the overall protective period to six years and 75 days. RLEA challenges this decision.

After the April 2 decision, UTU, which until that point had agreed that the six-year benefit protective period should commence on the effective date of the implementing agreement, argued instead that the start of the benefits period should be pushed back to 1988 so that the make-whole and benefits periods would be contiguous. The...