CSX Transportation v. United Transp ( 1996 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
CSX TRANSPORTATION,
INCORPORATED,
Plaintiff-Appellee,
v.
No. 96-1172
UNITED TRANSPORTATION UNION;
BROTHERHOOD OF LOCOMOTIVE
ENGINEERS,
Defendants-Appellants.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Frederic N. Smalkin, District Judge.
(CA-96-212-CCB)
Argued: May 6, 1996
Decided: June 7, 1996
Before WILKINSON, Chief Judge, and HALL and LUTTIG,
Circuit Judges.
_________________________________________________________________
Affirmed by published opinion. Chief Judge Wilkinson wrote the
opinion, in which Judge Hall and Judge Luttig joined.
_________________________________________________________________
COUNSEL
ARGUED: Richard S. Edelman, HIGHSAW, MAHONEY &
CLARKE, P.C., Washington, D.C., for Appellants. Ronald Maurice
Johnson, AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.,
Washington, D.C., for Appellee. ON BRIEF: William G. Mahoney,
Donald F. Griffin, HIGHSAW, MAHONEY & CLARKE, P.C.,
Washington, D.C.; Clinton J. Miller, III, General Counsel, UNITED
TRANSPORTATION UNION, Cleveland, Ohio; Harold A. Ross,
ROSS & KRAUSHAAR, P.A., Cleveland, Ohio, for Appellants.
_________________________________________________________________
OPINION
WILKINSON, Chief Judge:
This case requires us to assess the propriety of a district court's
anti-strike injunction, which was issued to enforce an arbitration deci-
sion made pursuant to the Interstate Commerce Act ("ICA"). CSX
Transportation sought to consolidate four separate railroads that it had
acquired. The unions representing the railroads' employees opposed
the consolidation. After the arbitrator's award in favor of CSX's pro-
posed consolidation was upheld by the Interstate Commerce Commis-
sion ("ICC"), the unions threatened a strike. CSX then obtained an
injunction prohibiting that strike. The unions now appeal this injunc-
tion, contending that the Norris-LaGuardia Act ("NLGA") prohibits
anti-strike injunctions to enforce arbitration awards under the Inter-
state Commerce Act. We disagree. The NLGA may not be used to cir-
cumvent the "final, binding, and conclusive" arbitration process that
is undertaken pursuant to the ICC's interpretation of the ICA, 49
U.S.C. § 11347 (now recodified at 49 U.S.C.§ 11326). New York
Dock Railway-Control-Brooklyn Eastern Dist. Terminal , 360 I.C.C.
60, 78, 88 (1979), aff'd sub nom. New York Dock Ry. v. United States,
609 F.2d 83 (2d Cir. 1979). We therefore affirm the judgment of the
district court.
I.
CSX Transportation, Inc. was formed from eleven rail carriers and
their subsidiaries, including the Baltimore and Ohio Railroad
("B&O"), the Chesapeake and Ohio Railroad ("C&O"), the Western
Maryland Railway ("WM"), the Louisville and Nashville Railroad,
Seaboard Coast Line Railroad, and the Richmond, Fredericksburg,
and Potomac Railroad ("RF&P"). The CSX network is one of the
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nation's largest, totaling 18,800 miles in 19 states, the District of
Columbia, and Ontario, Canada. Its employees are represented by the
United Transportation Union and the Brotherhood of Locomotive
Engineers ("unions").
CSX has attempted to merge these various operations into a single,
integrated network. It is one of these attempts at consolidation that
gave rise to the present dispute. CSX claimed that its attempts at inte-
gration were hindered by the existence of separate labor agreements
with the railroads' unions. The practical result of these separate agree-
ments was that CSX could not use its engineers and trainmen
throughout its system, but was forced to operate separate workforces
within the geographic confines of each former railroad. This appar-
ently caused train delays (as trains passing from one railroad to the
next had to switch crews) and frustrated CSX's ability to efficiently
allocate manpower across railroad boundaries.
On January 10, 1994, CSX gave notice to the unions that it
intended to consolidate train operations on the WM, RF&P, a portion
of the C&O, and then merge these into the B&O. This would create
a unified operation between southern Pennsylvania and southern Vir-
ginia called the Eastern B&O Consolidated District. The new territory
was to be governed by the collective bargaining agreement applicable
to the former B&O district, and the consolidation therefore would
require changes in the collective bargaining agreements for the WM,
RF&P, and the C&O. In particular, the working and seniority lists of
the various territories would be consolidated, there would be a tempo-
rary loss of positions (CSX anticipated adding more trains and posi-
tions after the consolidation), some supply points would be closed,
and reporting points would be changed for some employees, thus
requiring their transfer. Otherwise, the terms of the collective bargain-
ing agreements applicable to the employees on these lines would
remain unchanged in the new B&O district.
Pursuant to § 11347 of the ICA as interpreted by the ICC's deci-
sion in New York Dock, 360 I.C.C. at 60, a railroad must establish
protective conditions for employees who are adversely affected by a
consolidation. 49 U.S.C. § 11347. Because the unions claimed that
CSX's planned alteration of bargaining units would violate New York
Dock, the unions refused to participate in the negotiation of a protec-
3
tive agreement. Under the terms of New York Dock , the dispute was
then submitted to mandatory arbitration. Both the unions and CSX
agreed to Robert M. O'Brien as their arbitrator.
O'Brien held a hearing on March 28, 1995. At this hearing, both
parties presented extensive arguments and a "plethora of evidence."
On April 24, the ALJ, pursuant to New York Dock , 360 I.C.C. at 78,
issued his "final, binding, and conclusive" award. O'Brien agreed
with CSX, holding that CSX's proposed changes flowed from the
merger and were necessary to secure the public benefits of that
merger: "Were the Carrier required to continue operating this territory
as four separate railroads each with its own work force and seniority
district, the operating efficiencies contemplated by the coordination
would be illusory." O'Brien noted that the vast majority of the former
collective bargaining agreements would be preserved in the consoli-
dation and that this case was not an attempt by CSX to transfer wealth
from employees to CSX. Indeed, under the New York Dock protective
arrangement set forth by CSX, any displaced employees would con-
tinue to receive their full wages and fringe benefits for a period of
years--even if they were not working. In short, the arbitrator's
approval of CSX's consolidation was contingent upon CSX making
whole all displaced employees. See New York Dock , 360 I.C.C. at 60.
Both parties appealed aspects of O'Brien's decision to the ICC. On
November 22, 1995, the ICC affirmed O'Brien's findings of fact and
conclusions of law:
Because the proposed implementing agreements are neces-
sary to effect the proposed transaction and would not over-
ride any "rights, privileges, and benefits" that must be
preserved under our New York Dock labor protection condi-
tions, we conclude that those agreements satisfy the require-
ments of our labor protection conditions. The agreements
should therefore be adopted.
The unions then sought a stay from the United States Court of
Appeals for the District of Columbia Circuit. The court denied this
motion on January 5, 1996.
On January 15, CSX notified the unions that it would implement
the consolidation on January 30. Four days before the consolidation
4
was to take place, the unions announced that they would strike unless
CSX rescinded its plans. CSX then obtained a preliminary injunction
from the district court that barred the proposed strike. On January 30,
CSX implemented its consolidation. This appeal followed.
II.
Congress has bestowed significant powers on the ICC with respect
to rail mergers. The ICC is vested with the "exclusive authority to
examine, condition, and approve proposed mergers and consolida-
tions." Norfolk & Western Ry. Co. v. American Train Dispatchers'
Ass'n., 499 U.S. 117, 119 (1991). It is also responsible for ensuring
that "the employees of the affected rail carrier will not be in a worse
position related to their employment as a result of the transaction." 49
U.S.C. § 11347. Pursuant to the Congressional authority vested in the
ICC and § 11347, the ICC, in New York Dock , 360 I.C.C. at 60,
adopted "a comprehensive set of conditions and procedures designed
to meet its obligations under § 11347." American Train Dispatchers'
Ass'n., 499 U.S. at 120. These guidelines require consolidating rail-
roads to preserve displaced employees' pay, working conditions, ben-
efits, and rights to collective bargaining. New York Dock, 360 I.C.C.
at 77. For example, if an employee is forced to take a lower paying
job as a result of the consolidation, a displacement allowance pro-
vides the difference in pay between the old and new positions for a
period of years. Id. at 78.
New York Dock's interpretation of § 11347 has long been relied
upon in settling labor disputes that result from railroad consolidations.
See American Train Dispatchers' Ass'n., 499 U.S. at 120-21. New
York Dock provides for thirty days of negotiations between the con-
solidating railroad and its unions "for the purposes of reaching agree-
ment with respect to application of the terms and conditions" of the
labor protective compact. 360 I.C.C. at 77. If no agreement is reached
by the end of this period, either party may request arbitration. Once
arbitration is requested, the parties are called upon to "select a neutral
referee" and if they cannot agree upon one, the National Mediation
Board shall appoint one. Id. at 78. After the arbitration hearing, the
referee has thirty days to render a decision, which"shall be final,
binding, and conclusive." Id.
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Section 11347 and New York Dock seek to achieve a balance
between the interests of labor and management. Labor receives guar-
anteed wage protections while management benefits by avoiding a
strike. The avoidance of strikes is crucial to the public interest in
maintaining the nation's transportation system. International Ass'n. of
Machinists v. Soo Line Railroad Co., 850 F.2d 368, 371 (8th Cir.
1988) (an important goal of the ICA is "preventing labor strife"), cert.
denied, 489 U.S. 1010 (1989). "The peaceable settlement of labor
controversies, especially where they may seriously impair the ability
of an interstate rail carrier to perform its service to the public, is a
matter of public concern." Virginian Ry. Co. v. System Federation,
300 U.S. 515, 552 (1937). While both sides may thus contest the par-
ticulars of a proposed implementing agreement before an arbitrator,
the arbitrator's "final, binding, and conclusive" decision prevents
either the union or the railroad from holding the nation's transporta-
tion system hostage to its aims.
III.
The unions claim that the "final, binding, and conclusive" arbitra-
tion provided for by the ICC is unenforceable if the unions choose to
strike. The unions contend that because the NLGA generally prohibits
labor injunctions, see 29 U.S.C. §§ 101-107, unions may strike if they
choose and federal courts are without jurisdiction to enjoin them.
Such a strike, however, would unilaterally frustrate the arbitrator's
decision, undermine the ICC's efforts to "ensure the development and
continuation of a sound rail transportation system," 49 U.S.C.
§ 10101 (4), and shut down part of the nation's vital rail transporta-
tion network.
The NLGA does not command any such result. In fact, the
Supreme Court has clearly held that the NLGA will not be interpreted
to frustrate the results of binding arbitration. See Boys Markets, Inc.
v. Retail Clerks Union, 398 U.S. 235, 251 (1970); Brotherhood of
Railroad Trainmen v. Chicago River & Indiana Railroad Co., 353
U.S. 30, 34 (1957). And the Eighth Circuit has expressly recognized
that the NLGA may not operate to restrict the terms of § 11347 of the
ICA. Burlington Northern Railroad Co. v. United Transportation
Union, 848 F.2d 856, 862-63 (8th Cir.), cert. denied, 488 U.S. 969(1988); Missouri Pacific Railroad Co. v. United Transportation
6
Union, 782 F.2d 107, 111-12 (8th Cir. 1986). Based on the reasoning
of these precedents, we hold that the NLGA does not prohibit an anti-
strike injunction that is issued to enforce an arbitration award made
pursuant to § 11347 of the ICA.
A.
While the NLGA generally removes from federal courts the juris-
diction to enjoin labor strikes, its provisions are not absolute. The
NLGA allows for an injunction when "unlawful acts have been threat-
ened and will be committed unless restrained," 29 U.S.C. § 107, and
when such an injunction would not be "contrary to the public policy
declared in" the NLGA, 29 U.S.C. § 101. Moreover, the Supreme
Court has curtailed the sweeping nature of the NLGA in the face of
subsequent statutes:
As labor organizations grew in strength and developed
toward maturity, congressional emphasis shifted from pro-
tection of the nascent labor movement to the encouragement
of collective bargaining and to administrative techniques for
the peaceful resolution of industrial disputes. This shift in
emphasis was accomplished, however, without extensive
revision of many of the older enactments, including the anti-
injunction section of the Norris-LaGuardia Act. Thus it
became the task of the courts to accommodate, to reconcile
the older statutes with the more recent ones.
Boys Markets, 398 U.S. at 251.
Of substantial concern to courts faced with accommodating the
NLGA has been the conflict between the NLGA's prohibition of labor
injunctions and more recent statutes' arbitration provisions. If a fed-
eral court cannot enjoin a strike when a union deems an arbitration
award unfavorable, the practical result is that arbitration is meaning-
less. Id. at 247. Indeed, such a "``request for judicial enforcement may
be viewed as the final step in the arbitration process.'" Sea-Land Ser-
vice, Inc. v. International Longshoremen's Ass'n. , 625 F.2d 38, 41-2
(5th Cir. 1980) (citation omitted).
7
Recognizing these principles, the Supreme Court has held that the
NLGA cannot be used to circumvent the arbitration provided for by
the Railway Labor Act ("RLA"). Chicago River, 353 U.S. at 42.
Under the RLA, if parties are unable to reach agreement, the dispute
may be referred "by either party to the appropriate division of the
[National Railroad] Adjustment Board." Id. at 34 (quoting 45 U.S.C.
§ 153, 1st (i)). The arbitration awards of the Board "shall be final and
binding upon both parties to the dispute." Id. (quoting 45 U.S.C.
§ 153, 1st (m)). In Chicago River, the union contended that it could
avoid arbitration by striking because the NLGA prevented a court
from enjoining such a strike. Id. at 34, 39-40. The Supreme Court
squarely rejected this argument. It found that the union's interpreta-
tion of the NLGA "would render meaningless those provisions in the
[RLA] which allow one side to submit a dispute to the Board, whose
decision shall be final and binding on both sides," id. at 34, and that
"the specific provisions of the Railway Labor Act take precedence
over the more general provisions of the Norris-LaGuardia Act," id. at
42.
So too has the Court accommodated the NLGA to arbitration provi-
sions in collective bargaining agreements. In Boys Markets, the union
called a strike despite the existence of a clause in its collective bar-
gaining agreement requiring that labor disputes be resolved by arbi-
tration. 398 U.S. at 253. The district court entered an injunction
against the strike. The Supreme Court affirmed the district court's
determination that "the dispute was subject to arbitration under the
collective bargaining agreement and that the strike was in violation of
the contract." Id. at 240.
In Boys Markets, the Court focused on the purpose of the NLGA,
explaining that "a refusal to arbitrate was not``part and parcel of the
abuses against which the [NLGA] was aimed.'" Id. at 242 (quoting
Textile Workers v. Lincoln Mills, 353 U.S. 448, 458 (1957)). While
the NLGA was aimed at correcting "the abuses that had resulted from
the interjection of the federal judiciary into union-management dis-
putes on the behalf of management," arbitration raises no such con-
cern. Id. at 251-53. When a court enforces an arbitrator's award, that
court is not interjecting itself on behalf of either side. Sometimes
enforcement of a neutral arbitrator's award will benefit the railroads,
other times, the unions. See, e.g. Nursing H. & Hosp. Union v. Sky
8
Vue Terrace, 759 F.2d 1094, 1098 (3d Cir. 1985) ("an injunction pro-
hibiting the further distribution of Sky Vue's assets was necessary to
ensure that an arbitral award in the union's favor was more than a
``hollow formality'"). There is no risk, however, of the systemic bias
that motivated Congress to enact the NLGA in 1932. See 29 U.S.C.
§ 102. Moreover, the NLGA "manifests a policy determination that
arbitration should be encouraged." Boys Markets, 398 U.S. at 242.
Section 8 of the NLGA requires parties to make "``every reasonable
effort' to settle the dispute by negotiation, mediation, or ``voluntary
arbitration.'" Lincoln Mills, 353 U.S. at 458 (quoting 29 U.S.C.
§ 108).
While the NLGA's purpose provides the basis for limiting its
scope, strikes in the face of labor arbitration awards also fall within
the NLGA's exception for "unlawful acts." 29 U.S.C. § 107. Subse-
quent statutes, such as the Railway Labor Act, establish arbitration as
the remedy for certain labor disputes. See 45 U.S.C. § 153. If a union,
as in Chicago River, seeks to use a strike to violate such a law, this
should qualify as an "unlawful act" within the meaning of the NLGA
and should therefore preserve the jurisdiction necessary to grant an
injunction. The Supreme Court recognized as much when it stated
that there "is no substitute for an immediate halt to an illegal strike."
Boys Markets, 398 U.S. at 248 (emphasis added); see also Order of
Railroad Telegraphers v. Chicago & North Western Ry. Co., 362 U.S.
330, 338-39 (1960) ("the Chicago River case [ ] held that a strike
could be enjoined to prevent a plain violation of a basic command of
the Railway Labor Act").
Whether one accommodates the NLGA to arbitration clauses on
the basis of the NLGA's purpose or because of the NLGA's "unlaw-
ful acts" exception, the result is the same."[T]he Norris-LaGuardia
Act must be accommodated to the subsequently enacted provisions
. . . and the purposes of arbitration." Boys Markets, 398 U.S. at 250.
The district court thus has the jurisdiction to issue injunctive orders
to enforce compliance with arbitration awards notwithstanding the
provisions of the Norris-LaGuardia Act. See Pittsburgh & Lake Erie
Railroad Co. v. Railway Labor Executives' Ass'n., 491 U.S. 490, 513
(1989).
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B.
The same principles that mandate accommodation of the NLGA to
arbitration clauses in the RLA and in collective bargaining agree-
ments generally also apply to 49 U.S.C. § 11347. The unions seek to
distinguish the RLA provision at issue in Chicago River from § 11347
by arguing that the former is a labor statute deserving of accommoda-
tion and the latter is a transportation statute undeserving of accommo-
dation. But the arbitration procedures under both statutes are
indistinguishable provisions governing labor-management disputes.
The arbitration process under both statutes operates to protect inter-
state commerce (as well as labor and railroads) by prohibiting strikes.
Section 11347 also guarantees substantial benefits for labor--
presumably in exchange for the prohibition on the right to strike--
including wage maintenance for a period of years following a consoli-
dation. Accordingly, § 11347, like the RLA's arbitration provision, 45
U.S.C. § 153, is "part of a pattern of labor legislation." Chicago River,
353 U.S. at 42.
Moreover, the unions' argument that the NLGA should only be
accommodated to other statutes when the result furthers the interests
of labor, misses the point of both Chicago River and Boys Markets.
In both of those cases, the unions' proffered interpretation of the
NLGA was rejected by the Supreme Court because it would have ren-
dered arbitration involving labor unions meaningless. Such a result,
the Supreme Court held, was contrary to both the NLGA and subse-
quent statutes. See Boys Markets, 398 U.S. at 235; Chicago River, 353
U.S. at 30. The weakness of the unions' argument is made evident by
the fact that neither of the principal cases relied upon by the unions
involved arbitration. See Pittsburgh & Lake Erie , 491 U.S. at 490;
Railroad Telegraphers, 362 U.S. at 330. In fact, Pittsburgh & Lake
Erie actually supports our holding here: "Thus, a union may be
enjoined from striking when the dispute concerns the interpretation or
application of its contract and is therefore subject to compulsory
arbitration." 491 U.S. at 513 (emphasis added). In this case, a strike
by the unions would have prevented CSX from implementing changes
in bargaining agreements that O'Brien, after compulsory arbitration,
found were "necessary to implement the transaction proposed by
10
[CSX]" and that the ICC upheld as necessary to "effect that carrier's
coordination of operations in a new operating district."*
The "final, binding, and conclusive" arbitration at issue here is sim-
ply indistinguishable from the arbitration provisions at issue in
Chicago River and Boys Markets. Certainly when Congress enacted
§ 11347 and the ICC adopted the New York Dock conditions, neither
contemplated that the NLGA would frustrate a "final, binding, and
conclusive" arbitration that protects workers while obviating the con-
cern that a strike might hold hostage a portion of our national trans-
portation system. The Eighth Circuit recognized this in Burlington
Northern:
[W]hen a consolidation transaction [is] subject to 49 U.S.C.
§§ 11341, 11347, statutory provisions which specifically
exempt carriers from all other law and require mandatory
employee protective conditions, neither the RLA nor Norris-
LaGuardia could operate to restrict the terms of the ICA.
848 F.2d at 862-63; see also Missouri Pacific , 782 F.2d at 111-12.
To hold otherwise would thwart the operation of the arbitration
provisions in New York Dock. Like previous courts addressing these
issues, we too decline to create a conflict between the ICA and the
NLGA. See Railway Labor Executives' Ass'n. v. CSX Transportation,
938 F.2d 224, 230 (D.C. Cir. 1991) ("[u]se of the RLA's status quo
obligation to halt a sale approved by the ICC under section 11343
would short-circuit the functioning of the ICC and would bring the
two statutes into conflict"). After all, it was for Congress and the ICC,
pursuant to its delegated authority, "to make the choice of the means
by which its objective of securing the uninterrupted service of inter-
_________________________________________________________________
*As for the unions' argument that CSX lacked standing to seek the
injunction in the first instance, CSX (as the prevailing party in the arbi-
tration and the party that would be injured by the strike) is the logical one
to seek enforcement of the arbitration. See Chicago River, 353 U.S. at 30
(injunction granted to railroad to prevent strike that would have circum-
vented arbitration); Sky Vue Terrace, 759 F.2d at 1094 (injunction
granted to union to prevent the dilution of a company's assets necessary
to pay an arbitration award).
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state railroads was to be secured." Virginian Ry. Co., 300 U.S. at 553.
Given the "congressional policy in favor of the enforcement of agree-
ments to arbitrate grievance disputes," Lincoln Mills, 353 U.S. at 458-
59, we hold here that "Norris-LaGuardia's policy of nonintervention
by the federal courts should yield to the overriding interest in the suc-
cessful implementation of the arbitration process." Boys Markets, 398
U.S. at 252 (explaining the holding of Chicago River, 353 U.S. at 30).
As the Supreme Court explained:
the very purpose of arbitration procedures is to provide a
mechanism for the expeditious settlement of industrial dis-
putes without resort to strikes, lockouts, or other self-help
measures. This basic purpose is obviously largely undercut
if there is no immediate, effective remedy for those very tac-
tics that arbitration is designed to obviate.
Boys Markets, 398 U.S. at 249.
IV.
For these reasons, we affirm the judgment of the district court.
AFFIRMED
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