Zapp v. United Transp. Union

• Decision Date: 06 February 1984
• Docket Number: No. 81-3072,81-3072
• Parties: 115 L.R.R.M. (BNA) 2939, 100 Lab.Cas. P 10,782 Larry ZAPP, et al., Plaintiffs-Appellants, v. UNITED TRANSPORTATION UNION and Consolidated Rail Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 617

727 F.2d 617

115 L.R.R.M. (BNA) 2939, 100 Lab.Cas. P 10,782

Larry ZAPP, et al., Plaintiffs-Appellants, v. UNITED TRANSPORTATION UNION and Consolidated Rail

Corporation, Defendants-Appellees.

No. 81-3072.

United States Court of Appeals, Seventh Circuit.

Argued Dec. 3, 1982.

Decided Feb. 6, 1984.

Dean E. Richards, Indianapolis, Ind., for plaintiffs-appellants.

John P. Price, Bingham, Summers, Welsh & Spilman, William A. Wick, White, Raub, Wick & Riegner, Indianapolis, Ind., for defendants-appellees.

Before CUMMINGS, Chief Judge, CUDAHY, Circuit Judge, and TIMBERS, Senior Circuit Judge. ^*

CUDAHY, Circuit Judge.

Plaintiffs appeal from the judgment of the district court dismissing their Third Amended Complaint against their Union, the United Transportation Union (the "UTU"), and their employer, the Consolidated Rail Corporation ("Conrail"). We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

I. The Parties

Plaintiffs are 126 individual engineers and trainmen (this is not a class action) formerly employed by the Indianapolis Union Railway Company (the "IU"), a "beltline" industry and interchange railroad circling Indianapolis. The IU was originally a wholly-owned subsidiary of the Pennsylvania Railroad. On February 1, 1968, the New York Central Railroad was merged into the Pennsylvania to form the Penn Central Transportation Company (the "Penn Central"), and the IU became a subsidiary of the Penn Central by virtue of the change in name of the parent. The parties agree that, despite the intercorporate ties, the IU at all times operated as a unit separate from the Pennsylvania and the Penn Central. Defendant Conrail, an entity created by the Regional Rail Reorganization Act of 1973 (the "3R Act"), 45 U.S.C. Sec. 701 et seq., was formed to acquire the assets of a number of bankrupt railroads. On April 1, 1976, the assets of the Penn Central and the IU were conveyed to Conrail, and employees of both railroads were offered employment with Conrail. ¹ Defendant UTU was formed in 1969 by the merger of various craft unions, and thereafter represented ground service employees on the IU; from 1969 to 1976 the Brotherhood of Locomotive Firemen and Engineers represented IU firemen and engineers, and, since 1976, the UTU has represented the firemen, while the engineers have been represented by the Brotherhood of Locomotive Engineers. The UTU denies any responsibility for plaintiffs who are locomotive engineers.

II. The Claims

Prior to the conveyance of the various rail properties to Conrail, the UTU and Conrail signed a collective bargaining agreement dated December 18, 1975, consolidating the seniority rosters of the various acquired railway lines. Plaintiffs allege that as a result of this agreement, they received a seniority date of April 1, 1976 (the date of the conveyance to Conrail), while employees of the former Penn Central received a February 1, 1968 seniority date (the date of the merger of the New York Central into the Pennsylvania). Plaintiffs further allege that as a result of the disparity in seniority dates, former IU employees are consistently bumped by former Penn Central employees with later dates of hire and are more often furloughed or awarded less favorable job assignments. Plaintiffs therefore seek to have the seniority provisions of the collective bargaining agreement between Conrail and the UTU reformed to give them February 1, 1968 seniority throughout their Conrail seniority district.

Plaintiffs assert three discrete complaints against the Union: ² (1) The Union violated a 1974 Interstate Commerce Commission ("ICC") order protecting the rights of employees of subsidiaries of railroads involved in the Penn Central merger. (2) Section 504(b) of the 3R Act, 45 U.S.C. Sec. 774(b) requires that local unions be involved in negotiations relating to the seniority rights of employees affected by mergers, and this requirement was not met. ³ (3) The Union breached its duty of fair representation by failing to protect the seniority rights of plaintiffs, who were employees of a small railroad and a numerically small contingent within the UTU.

The district court dismissed the first claim on alternative grounds. First, if the claim is construed as a suit to enforce an order of the ICC, the claim is jurisdictionally defective on account of plaintiffs' failure to join the United States, a necessary party under the Urgent Deficiencies Act, 28 U.S.C. Sec. 2321 et seq. Second, even if the enforcement claim were properly in federal court, the ICC order could not be enforced until plaintiffs' rights under the order are clarified, and that is a matter appropriately referred to the ICC under the doctrine of primary jurisdiction.

The claim under Section 504(b) of the 3R Act was dismissed for failure to state a claim since neither the statute nor the cases interpreting it provide support for plaintiffs' contention that local rather than system-wide bargaining over seniority rights is required. The duty of fair representation claim was dismissed on the ground that plaintiffs had made only conclusory allegations of discrimination.

Two claims were advanced against Conrail: (1) Conrail violated the 1974 ICC order in establishing the consolidated seniority rosters. (2) Conrail failed to follow the requirements of Sections 4 and 5 of the 3R Act. In addition there was a general allegation that Conrail had acted "in concert with" the Union in negotiating seniority. The first claim is essentially the same as the first claim raised against the Union, and Judge Dillin dismissed it on the same alternative jurisdictional grounds. The second claim was dismissed for vagueness; the 3R Act contains no Section 4 or 5. ⁴

On appeal, plaintiffs argue that the duty of fair representation claim was improperly dismissed, that the 1974 ICC order may be enforced without clarification by the ICC, that the United States either is not a necessary party to an enforcement action or should have been joined by the district court under Rule 19, FED.R.CIV.P., and that for purposes of a motion to dismiss, plaintiffs' allegations about the meaning of the ICC order and the 3R Act must be taken as true. Plaintiffs also argue both that the district court should have converted defendants' motion to dismiss to a motion for summary judgment and that the court improperly considered matters outside the pleadings in ruling on the motion to dismiss. ⁵

III. Background

While there is at least a superficial appeal to plaintiffs' claim that there is an obvious injustice in the disparity between the February 1, 1968 and April 1, 1976 seniority dates, plaintiffs' claims must be evaluated in the context of twenty years of rail consolidations within the Northeastern United States. In each successive merger or acquisition culminating in the formation of Conrail, redundant lines and facilities--and, unfortunately, jobs--have been eliminated. Such streamlining is frequently an element of consolidation into a more economically viable unit, and the ICC is charged with determining when such consolidation, appropriately hedged with labor protective conditions, is in the public interest. As an integral part of these organizational changes, previously independent seniority rosters have been consolidated.

Inevitably, at least some workers will be less well off than they were prior to facility or seniority consolidation, not because of legally cognizable wrongdoing, but because they had the ill fortune to be part of a declining industry. And, of course, a union cannot, in a situation of job contraction, easily satisfy all its members. Plaintiffs seem undoubtedly to be less well off than they were prior to the acquisition by Conrail. But the question for us in reviewing the dismissal of their complaint is whether they have alleged cognizable injury (and whether they have sued appropriate parties). Accordingly, some delving into the history of the ICC orders and the successive rail and seniority consolidations is necessary in order to determine whether plaintiffs have enforceable claims under the ICC orders or have adequately alleged that the UTU discriminated against them.

A. Seniority and Facility Consolidation

As we understand it, the present consolidated seniority system is the end result of a succession of mergers and acquisitions under which each employee retained seniority rights on his prior seniority district and acquired new seniority rights, as of the date of merger, throughout the new consolidated seniority district formed. ⁶ Such a procedure for consolidating seniority rosters seems, on the face of it, one acceptable approach to the problem. ⁷

An agreement dated December 21, 1966 between the Pennsylvania and the New York Central Railroads and their employees represented by the Order of Railway Conductors and Brakemen and the Brotherhood of Railway Trainmen provided for the establishment, in the event of merger, of new Penn Central seniority districts, to be arranged so that employees in the new districts would retain prior rights to employment in their preexisting seniority districts. A November 16, 1967 Implementing Agreement between the same parties specifically provided for the creation of Penn Central Seniority District No. 2, Southwestern, which was to encompass the Indianapolis Terminal Yards of the Pennsylvania and New York Central Railroads (and three other Pennsylvania and fifteen other New York Central prior right districts). Geographically, District No. 2 is roughly described as a triangle with vertices at Indianapolis, Peoria and Cairo, Illinois. The effect of this agreement was to give former employees of the Pennsylvania and New York Central Railroads seniority throughout Penn Central Seniority District No. 2, effective as of the date of merger, February 1, 1968, while such employees would at the same time retain prior rights within their respective former seniority districts. Priority...