United Transp. Union v. Gateway Western Ry. Co.

• Decision Date: 12 March 1996
• Docket Number: No. 95-2004,95-2004
• Parties: 151 L.R.R.M. (BNA) 2753 UNITED TRANSPORTATION UNION, Plaintiff-Appellant, v. GATEWAY WESTERN RAILWAY COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1208

78 F.3d 1208

151 L.R.R.M. (BNA) 2753

UNITED TRANSPORTATION UNION, Plaintiff-Appellant, v. GATEWAY WESTERN RAILWAY COMPANY, Defendant-Appellee.

No. 95-2004.

United States Court of Appeals Seventh Circuit.

Argued Sept. 27, 1995.

Decided March 12, 1996.

Appeal from the United States District Court for the Southern District of Illinois, East St. Louis Division, No. 94 C 185; William D. Stiehl, Judge.

Norton N. Newborn, argued, Clinton J. Miller, III, Daniel R. Elliott, III, United Transp. Union, Cleveland, OH, F. Lance Callis, Callis, Papa, Hale, Jensen, Jackstadt, Bailey & Halloran, Granite City, IL, for plaintiff-appellant.

Robert H. Wheeler, argued, Thomas J. Litwiler, Oppenheimer, Wolff & Donnelly, Chicago, IL, for defendant-appellee.

Before WOOD, Jr., ROVNER and EVANS, Circuit Judges.

ILANA DIAMOND ROVNER, Circuit Judge.

The United Transportation Union ("UTU"), which represents certain train service employees of the Gateway Western Railway Company ("GW"), alleges that GW violated the Railway Labor Act ("RLA"), 45 U.S.C. § 151 et seq., when its wholly-owned subsidiary began operating with non-union employees. The district court dismissed UTU's complaint for lack of subject matter jurisdiction, finding that UTU had alleged a representation dispute that fell within the exclusive jurisdiction of the National Mediation Board ("NMB") under section 2 Ninth of the RLA, 45 U.S.C. § 152 Ninth. UTU appeals that dismissal, contending that under Burlington Northern Ry. Co. v. United Transp. Union, 862 F.2d 1266 (7th Cir.1988), its complaint alleges a "major" dispute over which the district court should have exercised jurisdiction. Because we agree with the district court, however, that the instant claim is not justiciable in federal court, we affirm the judgment below.

I.

In considering a motion to dismiss for lack of subject matter jurisdiction, the district court must accept the complaint's well-pleaded factual allegations as true and draw reasonable inferences from those allegations in the plaintiff's favor. See Rueth v. EPA, 13 F.3d 227, 229 (7th Cir.1993). The parties here, however, also submitted evidentiary materials addressed to the jurisdictional question. Such evidence is properly considered at the dismissal stage when the question raised is one of subject matter jurisdiction. See Capitol Leasing Co. v. FDIC, 999 F.2d 188, 191 (7th Cir.1993) ("The district court may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists." (internal quotation omitted)); Bowyer v. United States Dep't of Air Force, 875 F.2d 632, 635 (7th Cir.1989), cert. denied, 493 U.S. 1046, 110 S.Ct. 846, 107 L.Ed.2d 840 (1990); Crawford v. United States, 796 F.2d 924, 927-29 (7th Cir.1986). ¹

The complaint alleges that since at least 1990, UTU and GW have been parties to a series of collective bargaining agreements negotiated under the RLA. Each of those agreements required that GW use crews on its trains comprised of a conductor and one or two brakemen. In March 1993, GW attempted to negotiate a change in this requirement that would enable it to operate with conductor-only crews. UTU rebuffed those attempts to alter the crew consist requirement in the collective bargaining agreement.

UTU alleges that when the negotiations failed, GW devised an alternative means of implementing conductor-only operations. It formed a wholly-owned subsidiary, Gateway Eastern Railway Company ("GE"), that apparently would not be subject to the GW-UTU collective bargaining agreement. Through that subsidiary, GW proposed to purchase a new rail line over which the subsidiary would operate. On June 1, 1993, GE filed a notice of exemption with the Interstate Commerce Commission ("ICC") in connection with its proposed acquisition from the Consolidated Rail Corporation ("Conrail") of a twenty-two mile stretch of track between East St. Louis and East Alton, Illinois (the "East Alton line"). At the same time, Wertheim, Shroder & Co., Inc. ("Wertheim"), a non-carrier investment company that controlled GW, filed a petition for exemption pursuant to 49 U.S.C. § 11343 that would enable it to control multiple carriers. The two railways also filed with the ICC separate notices of exemption addressed to GW's acquisition of overhead trackage rights to a short segment of the East Alton line, and to the construction of a connecting track between the GW and GE lines in East St. Louis. UTU alleges that after the completion of these transactions, GE would operate as a "switching carrier" for GW.

The complaint alleges that while GW and GE are technically separate entities, they essentially operate as a single carrier. In that regard, UTU maintains that the two railways coordinate management, crew operations, and dispatching, and that they otherwise share facilities and equipment, including computer capabilities, maintenance of way equipment, and overhead functions such as accounting and engineering.

In July 1993, GW again attempted to bargain with UTU for permission to use conductor-only crews on the GE line, and it apparently reached a tentative agreement to that effect with a UTU official. That agreement, however, was subsequently rejected by the GW-UTU membership. In December 1993, UTU served notice on GW under section 6 of the RLA, 45 U.S.C. § 156, ² that it was seeking changes in existing rates of pay, rules, and working conditions in connection with the negotiation of a new collective bargaining agreement. The proposed changes did not include conductor-only operations on the East Alton line. The parties met at least once to discuss these disputed matters, but they failed to reach an agreement. UTU alleges that GW then unilaterally implemented its plans by commencing to operate GE trains on the East Alton line with conductor-only crews. According to the union, this had the effect of depriving unionized employees of a work opportunity, and thereby constituted a change in working conditions subject to the status quo and mandatory bargaining requirements of section 2 First, section 2 Seventh, and section 6 of the RLA, 45 U.S.C. §§ 152 First & Seventh, & 156. ³ In its complaint then, UTU requests a declaration that GW in fact is violating the referenced RLA provisions, and an injunction requiring that the status quo under the existing GW-UTU collective bargaining agreement be maintained.

In moving to dismiss UTU's complaint for lack of subject matter jurisdiction, GW established the following additional facts. GW is a class II rail carrier that operates over lines extending between Kansas City, Missouri and East St. Louis and Springfield, Illinois. It primarily operates as a line-haul carrier between Kansas City and St. Louis, Missouri. GE is GW's wholly-owned subsidiary and was formed for the purpose of acquiring and then operating over Conrail's East Alton line. At the north end of this twenty-two mile line is a small section of track that is subject to a paired track agreement dating back to 1906. GW and several other railroads are parties to that agreement, and when it purchased the East Alton line, GE succeeded to Conrail's interest in the paired track. GW also has acquired trackage rights from GE over a short segment (less than two miles) at the south end of the East Alton line. It is at this section of the line that GW intends to construct a new connecting track. When this track is completed, GW will have direct access to Conrail's Rose Lake Yard and will be capable of interchanging traffic with Conrail there. GW currently lacks that capability and therefore uses a switching carrier like GE to interchange traffic with Conrail.

Whereas GW is primarily a line-haul carrier, GE operates as a switching carrier, moving traffic between industries located on the East Alton line and Conrail's Rose Lake Yard interchange in East St. Louis. GW does not directly serve any of the industries located on the East Alton line. It thus does not participate in the East Alton-East St. Louis-Conrail interchange market.

According to GW, the employees of its new subsidiary are not currently unionized. GE crews operating over the East Alton line do not perform any service that was previously performed by GW crews under the GW-UTU collective bargaining agreement. The work performed by GE employees substitutes instead for that previously performed by Conrail employees. Thus, operations on the East Alton line have not deprived any UTU-represented employee of previously-performed work. Even over that section of the East Alton line subject to the paired track agreement, GE's operations have not affected those of GW. Moreover, once GW's connecting track at the south end of the line is completed, GW and GE will conduct distinct operations into Conrail's Rose Lake Yard.

As UTU alleges, Wertheim petitioned the ICC for an exemption under the Interstate Commerce Act's multi-carrier control provision, 49 U.S.C. § 11343. Because the ICC had not ruled on that petition when GE began operating in January 1994, all of GE's stock was placed in an independent voting trust, which vested control in an independent trustee in order to avoid a violation of the Act. While this appeal was pending, the ICC granted Wertheim's multi-carrier control petition and approved the transactions discussed above. Gateway Eastern Railway Co.--Acquisition and Operation Exemption--Lines of Consolidated Rail Corp., slip op., 1995 WL 394470 (I.C.C. June 21, 1995). The ICC's decision permitted dissolution of the GE voting trust on July 27, 1995.

Based on the allegations in UTU's complaint and on the evidence submitted in connection with the motion to dismiss, the district court believed that the dispute alleged in the complaint was properly characterized as a representation dispute under section 2 Ninth of the RLA, 45 U.S.C. § 152 Ninth. Because such a dispute falls within the...