United Transp v. SC Public Railway

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED TRANSPORTATION UNION,
Plaintiff-Appellee,
v.
No. 97-1418
SOUTH CAROLINA PUBLIC RAILWAY
COMMISSION,
Defendant-Appellant.
Appeal from the United States District Court
for the District of South Carolina, at Charleston.
Patrick Michael Duffy, District Judge.
(CA-96-2501-2-23)
Argued: October 3, 1997
Decided: December 4, 1997
Before NIEMEYER and HAMILTON, Circuit Judges, and
BOYLE, Chief United States District Judge for the
Eastern District of North Carolina, sitting by designation.
_________________________________________________________________
Vacated and remanded by published opinion. Judge Hamilton wrote
the opinion, in which Judge Niemeyer and Chief Judge Boyle joined.
_________________________________________________________________
COUNSEL
ARGUED: Clinton Joseph Miller, III, General Counsel, UNITED
TRANSPORTATION UNION, Cleveland, Ohio, for Appellee. ON
BRIEF: Keating Lewis Simons, III, Derek Farrell Dean, LAW
OFFICES OF KEATING L. SIMONS, III, Charleston, South Caro-
lina, for Appellant.
OPINION
HAMILTON, Circuit Judge:
Under the Railway Labor Act (RLA), 45 U.S.C. §§ 151-188, fed-
eral district courts have subject-matter jurisdiction over "major dis-
putes" in railway labor relations, but lack jurisdiction over "minor
disputes." See Consolidated Rail Corp. v. Railway Labor Executives'
Ass'n, 491 U.S. 299, 303-04 (1989). Instead, minor disputes are sub-
ject to mandatory arbitration before the National Railroad Adjustment
Board. See id. See also 45 U.S.C. § 153. Generally, when a party to
a labor dispute is seeking to create contractual rights, the dispute is
a major dispute; however, if the parties are merely seeking to enforce
contractual rights, the dispute is minor. See Consolidated Rail, 491
U.S. at 302.
In this case, the South Carolina Public Railway Commission (Rail-
way Commission) asserts that the district court lacked subject-matter
jurisdiction to issue a preliminary injunction requiring the Railway
Commission to pay rate-of-pay increases, lump sum payments, and
health and welfare adjustments contained in a national collective bar-
gaining agreement, because its dispute with the United Transportation
Union (the Union) is a minor one. We agree with the Railway Com-
mission that its dispute with the Union is fundamentally a dispute
seeking to enforce contractual rights and is, therefore, a minor dispute
under the RLA. Consequently, we vacate the preliminary injunction
and remand the case with instructions to dismiss for lack of subject-
matter jurisdiction.
I.
A.
Collective bargaining in the railroad industry is conducted on both
the national and local levels. Local collective bargaining involves
negotiations between a single employer and an individual union,
whereas national collective bargaining (commonly referred to as "na-
tional handling") involves multiple employers and multiple unions.
Unions and employers typically participate in national bargaining by
2
conferring their bargaining authority to multi-union and multi-carrier
bargaining agents. These agents then negotiate a single national
agreement which is binding on all the parties. See United Transp.
Union v. Illinois Cent. R.R. Co., 731 F. Supp. 1332, 1333 (N.D. Ill.
1990).
Collective bargaining in the railroad industry, on both the national
and local levels, is covered by the RLA, 45 U.S.C.§ 151-188. In
Detroit & Toledo Shore Line R.R. v. United Transp. Union, 396 U.S.
142 (1969), the Supreme Court explained the objectives of the RLA:
The Railway Labor Act was passed in 1926 to encourage
collective bargaining by railroads and their employees in
order to prevent, if possible, wasteful strikes and interrup-
tions of interstate commerce. The problem of strikes was
considered to be particularly acute in the area of"major dis-
putes," those disputes involving the formation of collective
agreements and efforts to change them. Rather than rely
upon compulsory arbitration, to which both sides were bit-
terly opposed, the railroad and union representatives who
drafted the Act chose to leave the settlement of major dis-
putes entirely to the processes of noncompulsory adjust-
ment. To this end, the Act established rather elaborate
machinery for negotiation, mediation, voluntary arbitration,
and conciliation. It imposed upon the parties an obligation
to make every reasonable effort to negotiate a settlement
and to refrain from altering the status quo by resorting to
self-help while the Act's remedies were being exhausted.
Id. at 148-49 (internal quotations and citations omitted).
Another railroad-industry practice that influenced the RLA was
that of negotiating open-ended agreements. Railroad collective bar-
gaining agreements do not expire on a given date but remain in effect
until one party proposes modifications of the agreement, whereupon
a new round of negotiations takes place. When the parties conclude
an agreement on those issues, the contract is modified accordingly.
See Trans World Airlines v. Independent Fed'n of Flight Attendants,
640 F. Supp. 1108, 1113 (W.D. Mo. 1986), aff'd , 809 F.2d 483 (8th
Cir. 1987), aff'd, 485 U.S. 175 (1988) (quoting Beatrice M. Burgoon,
3
"Mediation Under the Railway Labor Act," in The Railway Labor Act
at Fifty, 71, 92 (1977)). This procedure of proposing and negotiating
contract modifications is incorporated into Section 6 of the RLA, 45
U.S.C. § 156.
Section 6 requires employers and unions to give the other party a
30-day notice of proposed changes in agreements affecting rates of
pay, rules, or working conditions. See id. The filing of a Section 6
notice commences a period of mandatory negotiation, during which
the existing rates of pay, rules and working conditions generally may
not be altered until the controversy is resolved. See id. If the parties
cannot agree between themselves, the negotiations then go to media-
tion, usually under the auspices of the National Mediation Board. See
45 U.S.C. § 155. Sometimes, it becomes necessary for the President
to appoint an Emergency Board to make a report and recommenda-
tions to resolve the dispute. See 45 U.S.C.§ 160. See also Detroit &
Toledo Shore Line, 396 U.S. at 145, 150-51.
In summary, neither party may change the status quo with respect
to existing agreements without first filing a Section 6 notice, and must
maintain the status quo until the collective bargaining process is com-
plete. See Detroit & Toledo Shore Line, 396 U.S. at 150. The goal of
this scheme is to prevent the unilateral imposition of new contractual
terms. See Consolidated Rail, 491 U.S. at 306. It "delay[s] the time
when the parties can resort to self-help[,] provides time for tempers
to cool, helps create an atmosphere in which rational bargaining can
occur, and permits the forces of public opinion to be mobilized in
favor of a settlement without a strike or lockout." Detroit & Toledo
Shore Line, 396 U.S. at 150.
B.
The Railway Commission is an agency of the State of South Caro-
lina which operates a railroad that transports goods in interstate com-
merce. The Railway Commission is therefore a rail"carrier" as
defined by the RLA. See 45 U.S.C. § 151 First. The Union is an unin-
corporated labor organization which represents railroad employees
throughout the United States and Canada. Consequently, the Union is
a "representative" under the RLA. See 45 U.S.C. § 151 Sixth. The
Union represents employees of the Railway Commission.
4
On July 2, 1973, the Union and Railway Commission completed
a round of local collective bargaining and signed into effect an
"Agreement Between The South Carolina Public Railways [sic] Com-
mission and its Yard Employees Represented by United Transporta-
tion Union" (the 1973 Agreement). (J.A. 24). Article 42 provides that
the agreement would "become effective as of July 2, 1973 and remain
in effect until changed in accordance with the provisions of the Rail-
way Labor Act, amended." (J.A. 27). Two other provisions of that
agreement are in dispute in this case:
Article 1. Rates of pay:
(a) Rates of pay will be governed by those agreed upon by
the national agreement.
....
Article 34. Health and welfare:
(a) The national Health and Welfare Agreement consum-
mated between the Carriers Conference Committee and the
United Transportation Union, subject to any extensions or
modifications by constituted authority of the United Trans-
portation Union, is part of this agreement.
(J.A. 25-26).
The two national agreements which Articles 1(a) and 34(a) incor-
porate had been previously negotiated and were in force at the time
the 1973 Agreement was enacted. However, in January 1977, August
1977, February 1981, and July 1988, the Union triggered new rounds
of national handling by serving Section 6 notices on"practically all
railroads in the United States," which notices expressed a desire to
change existing agreements. (See J.A. 28-31). In each instance, the
Railway Commission chose not to participate in the national handling.
Instead, the Railway Commission and the Union enacted local
"standby agreements" that adopted the terms of the national agree-
ments when they were finalized.1 All these standby agreements are
essentially identical in wording, and provide in their entirety:
_________________________________________________________________
1 In 1988, the Railway Commission first declined to enter into a
standby agreement with the Union, wishing instead to negotiate locally
5
In accordance with provisions of the Railway Labor Act, as
amended, a notice was served under date of [date differed
for each standby agreement], on practically all rail-roads in
the United States, including [the South Carolina Public Rail-
way Commission], by the accredited representative of
employees of such railroads who are represented by the
United Transportation Union, of a desire to change existing
agreements as set forth in an attachment made part of the
aforesaid notice.
The management of [the South Carolina Public Railway
Commission] has not authorized and will not authorize any
of the conference committees selected by the railroads to
represent it in the handling of these matters. Therefore, it is
hereby agreed between the SC Public Railways Comm. Rail-
road and the accredited representative of the employees
involved, signatories hereto, that any settlement or disposi-
tion of these matters reached through national handling
shall be adopted and applied by the said SC Public Rail-
ways Comm. Railroad and the employees involved in the
same manner and made effective as of the same date as it
is adopted and applied on the railroads, parties to such
national handling.
(J.A. 31) (emphasis added). In each case, when the Union served its
Section 6 notices on the Railway Commission regarding the national
handling, the Union enclosed a proposed standby agreement.
When the contract moratorium covered by the 1988 Standby
Agreement expired in 1995, the Union and the Railway Commission
served Section 6 notices on each other, requesting changes in various
aspects of compensation and working conditions. In its notice, the
Railway Commission stated it would not enter into another standby
_________________________________________________________________
rather than accept the national agreement. The Railway Commission later
changed its mind and entered into a standby agreement on August 9,
1988. The 1988 Standby Agreement incorporated the national agreement
that was finally completed in 1991.
6
agreement as it had previously. Instead, the Railway Commission pre-
ferred to negotiate wage and benefits locally.
On May 8, 1996, a new national agreement was finalized. As in the
case of all previous national handling, the Railway Commission was
not a party to the national agreement. In a letter dated May 22, 1996,
the Union requested that, pursuant to Articles 1(a) and 34(a) of the
1973 Agreement, the Railway Commission implement the rates of
pay, lump-sum payments and health and welfare benefits contained in
the 1996 national agreement. On June 11, 1996, the Railway Com-
mission responded that the existing rates of pay would remain
unchanged. The Railway Commission stated that its 1995 Section 6
notice served notice upon the Union that the compensation elements
were to be negotiated, and that the Railway Commission had not
agreed to be bound by the national agreement. After an additional
exchange of correspondence between the parties, the Union brought
this action seeking declaratory and injunctive relief under the RLA to
force the Railway Commission to apply the pay, health and welfare
provisions of the 1996 national agreement.
In the district court, the Union moved for a preliminary status quo
injunction against the Railway Commission, and the Railway Com-
mission moved to dismiss. The Railway Commission argued that the
dispute was a "minor dispute" under the RLA and subject to manda-
tory arbitration. Accordingly, the Railway Commission argued that
the district court lacked subject-matter jurisdiction to hear the dispute.
See Consolidated Rail, 491 U.S. at 303-04.
In considering the parties' motions, the district court assessed
whether the dispute was a "major dispute" or"minor dispute" under
the RLA. The district court rejected the Railway Commission's sug-
gestion that the parties' "past practice" of entering into standby agree-
ments was evidence that the 1973 Agreement was not intended to
incorporate the terms of all future national agreements. Instead, the
district court found the 1973 Agreement to unambiguously adopt the
terms of all national agreements. The district court concluded that the
Railway Commission's position was "not arguable" and, therefore,
the dispute was a "major dispute." See id. at 305-07. The district court
therefore granted the Union's motion to preliminarily enjoin the Rail-
way Commission from refusing to pay the rate of pay increases and
7
other adjustments contained in the 1996 national agreement. The Rail-
way Commission appealed that order to this court. 2
II.
A.
We review the grant of a preliminary injunction for abuse of dis-
cretion. See Manning v. Hunt, 119 F.3d 254, 263 (4th Cir. 1997).
However, a district court's action that is based on an error of law is
a per se abuse of discretion. See United States v. McHan, 101 F.3d
1027, 1040 (4th Cir. 1996) (citing Koon v. United States, 116 S. Ct.
2035, 2047 (1996)), cert. denied, 117 S. Ct. 2468 (1997). Whether a
dispute is "major" or "minor" under the RLA is a question of law
which we review de novo. See CSX Transp., Inc. v. United Transp.
Union, 879 F.2d 990, 995 (2d Cir. 1989); International Ass'n of
Machinists v. Soo Line R.R., 850 F.2d 368, 374 (8th Cir. 1988) (en
banc). Moreover, we review the exercise of subject matter jurisdiction
de novo. See Ahmed v. United States, 30 F.3d 514, 516 (4th Cir.
1994).
B.
The key question at issue in this appeal is whether the parties' dis-
pute is "major" or "minor" under the RLA. The answer to this ques-
tion determines whether the district court had subject-matter
jurisdiction to hear the case. See Consolidated Rail, 491 U.S. at 303-
04 (stating that the National Railroad Adjustment Board has exclusive
jurisdiction to review minor disputes) (citing 45 U.S.C. § 153 First).
Because we conclude that the dispute is a minor one under the RLA,
we hold that the district court lacked subject-matter jurisdiction to
issue the preliminary injunction.
The RLA does not explicitly use the terms "major dispute" or
"minor dispute." Rather, these are terms adopted by the courts from
the vocabulary of railroad management and labor as a shorthand
_________________________________________________________________
2 At oral argument, we granted the Railway Commission's motion for
a stay of the district court's injunction pending the outcome of this
appeal.
8
method of describing two classes of controversies Congress had dis-
tinguished in the RLA. As we will explain more fully below, "major
disputes" seek to create contractual rights, while "minor disputes"
seek to enforce those rights. See id. at 302.
The statutory basis of the major dispute category is found in § 2
Seventh and § 6 of the RLA, 45 U.S.C. § 152 Seventh and § 156. The
former states that "No carrier, its officers or agents shall change the
rates of pay, rules, or working conditions of its employees, as a class
as embodied in agreements except in the manner prescribed in such
agreements" or through the mediation procedures established in RLA
§ 6. See Consolidated Rail, 491 U.S. at 302. When a major dispute
arises, the RLA requires the parties to undergo a lengthy process of
bargaining and mediation. 45 U.S.C. §§ 155 and 156. Until they have
exhausted those procedures, the parties are obligated to maintain the
status quo, and the district courts have subject-matter jurisdiction to
enjoin a violation of the status quo pending the outcome of the proce-
dures. See Consolidated Rail, 491 U.S. at 302-03.
Minor disputes, on the other hand, are based on RLA§ 2 Sixth and
§ 3 First (i), 45 U.S.C. §§ 152 Sixth and 153 First (i). These sections
establish conference and compulsory arbitration procedures for dis-
putes arising out of "grievances or out of the interpretation or applica-
tion of agreements concerning rates of pay, rules, or working
conditions." Id. § 152 Sixth. See Consolidated Rail, 491 U.S. at 303.
See also Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 254-55
(1994) (holding that "grievances" is merely a synonym for disputes
involving the interpretation or application of collective bargaining
agreements). When a minor dispute arises, it is subject to compulsory
and binding arbitration, and the jurisdiction of the National Railroad
Adjustment Board is exclusive. See 45 U.S.C.§ 153. See also
Consolidated Rail, 491 U.S. at 303-04. As a consequence, district
courts lack subject-matter jurisdiction over minor disputes. See id.The difficulty is, of course, determining whether any given dispute
is a major or minor one. In Consolidated Rail , the Supreme Court
addressed the standard for differentiating between the two, see id. at
300, explaining that major disputes are
disputes over the formation of collective agreements or
efforts to secure them. They arise where there is no such
9
agreement or where it is sought to change the terms of one,
and therefore the issue is not whether an existing agreement
controls the controversy. They look to the acquisition of
rights for the future, not to assertion of rights claimed to
have vested in the past.
Id. at 302 (quoting Elgin, Joliet & E. Ry. Co. v. Burley, 325 U.S. 711,
723 (1945)) (emphasis added). Minor disputes, on the other hand,
contemplate[ ] the existence of a collective agreement
already concluded or, at any rate, a situation in which no
effort is made to bring about a formal change in terms or to
create a new one. The dispute relates either to the meaning
or proper application of a particular provision . . . or to an
omitted case. . . . In either case the claim is to rights
accrued, not merely to have new ones created for the future.
Id. at 303 (quoting Burley, 325 U.S. at 723) (emphasis added).
The Supreme Court concluded that the demarcation between major
and minor disputes is, therefore, neither the importance of the issue
nor the likelihood one party would resort to self-help. Instead, the line
drawn is whether one of the parties asserts that the terms of an exist-
ing agreement either establishes or refutes the presence of a right to
take the disputed action. "The distinguishing feature of such a case is
that the dispute may be conclusively resolved by interpreting the exist-
ing agreement." Id. at 305 (emphasis added). In other words, "major
disputes seek to create contractual rights, [while] minor disputes
[seek] to enforce them." Id. at 302.
The test the Supreme Court therefore creates in Consolidated Rail
is that "[w]here [a party] asserts a contractual right to take the con-
tested action, the ensuing dispute is minor . . . ." Id. at 307. However,
to prevent that party's characterization of the dispute from undercut-
ting the RLA's prohibition against unilateral imposition of contractual
terms, the Supreme Court added that the party's action must be "argu-
ably justified by the terms of the parties' collective-bargaining agree-
ment. Where, in contrast, the employer's claims are frivolous or
obviously insubstantial, the dispute is major." Id. at 305-07.
10
The Supreme Court stated that the railroad has the burden of estab-
lishing the exclusive arbitral jurisdiction under the RLA (and, conse-
quently, the lack of jurisdiction in the district court), but added that
the railroad's burden is "relatively light." Id. at 307. Relying on this
light burden and the language of the test, this court has concluded that
the Consolidated Rail test is "deliberately tilted toward finding a dis-
pute minor." Railway Labor Executives Ass'n v. Chesapeake W. Ry.,
915 F.2d 116, 119 (4th Cir. 1990). Moreover,
[a] district court need not, indeed should not, assess the rela-
tive merits of the parties' competing interpretations of the
contract in order to find the dispute "minor." If the railroad's
assertion that the collective bargaining agreement controls
the dispute rises above the "frivolous or obviously insub-
stantial," then the court must dismiss the action for lack of
subject matter jurisdiction.
Id. Finally, as the Supreme Court noted in Consolidated Rail,
although the union's interpretation could conceivably carry the day in
arbitration, that does not mean that the railroad's contractual interpre-
tation is frivolous or insubstantial. See Consolidated Rail, 491 U.S. at
317.
C.
Applying the above rules to the facts of this case, we must decide
whether the Railway Commission's position is "arguably justified by
the terms of the parties' collective-bargaining agreement" or, rather,
"frivolous or obviously insubstantial." See Consolidated Rail, 491
U.S. at 305-07. The Railway Commission is, of course, trying to char-
acterize the dispute as minor, to avoid the imposition of the injunc-
tion. The Railway Commission asserts that the dispute turns on the
interpretation of the 1973 Agreement, particularly in light of the par-
ties' "past practice" of enacting standby agreements. The Union, on
the other hand, is trying to characterize the dispute as major, by
asserting it is about adding new terms (those of the new national
agreement) to the 1973 Agreement. At first blush, the Union's charac-
terization appears to have merit: if the Union's interpretation of the
1973 Agreement prevails, the terms of the 1996 national agreement
would be added to the parties' 1973 Agreement. Thus, the dispute
11
may appear to be about the creation of contractual rights and, there-
fore, may appear to be major. However, on more careful examination,
it becomes clear that such a result is necessarily founded on the inter-
pretation of the 1973 Agreement. Indeed, the crux of the Union's
position is that the 1973 Agreement incorporates the compensation,
health and welfare benefits of all future national agreements. Thus,
the Union is, in reality, seeking to enforce the 1973 Agreement.3
The Consolidated Rail Court held that "[t]he distinguishing feature
of [a minor dispute] is that the dispute may be conclusively resolved
by interpreting the existing agreement." Id. at 305. Such is the case
here. The obligations and benefits of the parties cannot be determined
without first determining whether the parties incorporated all national
agreements into the 1973 Agreement. Incidentally, this determination
would also determine what the status quo currently is. If the 1973
Agreement is interpreted for the Railway Commission, then the Rail-
way Commission has no duty to provide the new wage and health
benefits. If, however, the 1973 Agreement is interpreted for the
Union, the benefits from the 1996 national agreement would already
be a part of the 1973 Agreement. In either case, no formal changes
in the existing 1973 Agreement would be required. See id. at 303(stating that minor disputes involve no efforts to bring about a formal
change in an agreement or to create a new one).
_________________________________________________________________
3 Counsel for the Union admitted at oral argument they are seeking to
enforce the existing contract, not to form a new agreement. However,
counsel still characterized the case as a major dispute because the Union
was seeking to maintain the status quo. In so arguing, counsel cited to
the Supreme Court's decision in Detroit & Toledo Shore Line, 396 U.S.
142.
The Union's argument merely begs the question. If the dispute is a
major dispute, then the parties are obligated to"preserve and maintain
unchanged those actual, objective working conditions and practices,
broadly conceived, which were in effect prior to the time the pending
dispute arose and which are involved in or related to that dispute." See
id. at 153. However, the Supreme Court has never recognized the obliga-
tion to maintain the status quo during a minor dispute. See Consolidated
Rail, 491 U.S. at 304. Thus, "maintaining the status quo" has no meaning
until the dispute has been classified as major or minor.
12
In reality, the district court's decision turned entirely on the inter-
pretation of the 1973 Agreement and standby agreements. The district
court examined the provisions of all these local agreements and the
parties' alleged past practices, and found that the Railway Commis-
sion's interpretation was not arguable. Consequently, the district court
concluded that the Railway Commission was attempting to unilater-
ally alter the terms of the 1973 Agreement, constituting a major dis-
pute. This demonstrates that even the district court implicitly
recognized that this dispute was fundamentally about contract inter-
pretation. However, we believe the district court erred in concluding
the Railway Commission's interpretation was not arguable.
Examining the facts of this case, we believe the Railway Commis-
sion's position is "arguably justifiable" in light of the 1973 Agree-
ment and the standby agreements and, therefore, the Railway
Commission has met its light burden of establishing exclusive arbitral
jurisdiction. See id. at 307. First, the 1973 Agreement was entered
into at a time when a national agreement was already in existence,
and the 1973 Agreement refers to "the national agreement." (J.A. 25).
Moreover, every standby agreement was entered into at a time when
a national agreement was being negotiated, and each states that "any
settlement . . . reached through national handling shall be adopted [by
the Railway Commission and Union]." (J.A. 28-31). It is reasonable
to assume the parties to these local agreements knew that the national
agreement under consideration at the time would not be the last;
future rounds of national handling would be inevitable. Therefore, the
natural inclination, if the parties meant to incorporate all future
national agreements in the 1973 Agreement, would have been to refer
to "national agreements."4 Likewise, in the standby agreements, the
parties would have been naturally inclined to state that "all
settlements . . . reached through national handling will be adopted" by
the parties. (Compare J.A. 28-31). Instead, because there was a partic-
_________________________________________________________________
4 In other words, we believe the parties would have more naturally
stated in Article 1(a) of 1973 Agreement words to the effect that "Rates
of pay will be governed by those agreed upon by national agreements."
(Compare J.A. 25). Furthermore, in Article 34(a) the parties would have
naturally stated that "National Health and Welfare Agreements to be con-
summated between the [parties] . . . are a part of this agreement."
(Compare J.A. 26).
13
ular national agreement in contemplation by the parties, their natural
inclination was to state "the national agreement" and imply that par-
ticular agreement. See Consolidated Rail, 491 U.S. at 311 (stating that
collective-bargaining agreements may include implied, as well as
express, terms). The district court should have considered the implied
meaning of "the national agreement" in context with the history of the
1973 Agreement and the standby agreements.
However, in response to questions at oral argument, counsel for the
Union maintained it was entirely proper for the 1973 Agreement to
refer to the national agreement. Counsel argued that, since collective
bargaining agreements under the RLA never expire but are modified
only after Section 6 notice and negotiations, there is in reality only
one national agreement. Although this argument could conceivably
carry the day in arbitration, it only serves to further emphasize that
the parties dispute the meaning of the 1973 Agreement. It does not,
however, do anything to convince us that it is "frivolous or obviously
insubstantial" for the Railway Commission to interpret "the national
agreement" as being a particular agreement in effect or under consid-
eration at the time. See id. at 317 (stating that although the union's
interpretation could conceivably carry the day in arbitration, that does
not mean that the railroad's contractual interpretation is frivolous or
insubstantial).
Moreover, the record clearly shows that the parties used standby
agreements for every subsequent round of national handling. If the
1973 Agreement truly incorporates all future national agreements,
each of these standby agreements would be superfluous. If, on the
other hand, the 1973 Agreement only incorporated the national agree-
ment in effect at the time, each subsequent standby agreement would
have been necessary in order to adopt subsequent national agree-
ments. The record clearly shows it was the Union that instigated
adoption of each standby agreement. Although not determinative,
these facts are evidence that the parties' past practice was to incorpo-
rate new national agreements only through standby agreements, rather
than automatic incorporation into the 1973 Agreement. See generally,
id. at 311-20 (permitting, in appropriate instances, past practices of
the parties to be used as implied terms of their agreement).
14
Next, the first paragraph and the first sentence of the second para-
graph of each standby agreement explains the purpose of the standby
agreement:
In accordance with provisions of the Railway Labor Act, as
amended, a notice was served under date of [date differed
for each Standby agreement], on practically all rail-roads in
the United States, including [the South Carolina Public Rail-
way Commission], by the accredited representative of
employees of such railroads who are represented by the
United Transportation Union, of a desire to change existing
agreements as set forth in an attachment made part of the
aforesaid notice.
The management of [the South Carolina Public Railway
Commission] has not authorized and will not authorize any
of the conference committees selected by the railroads to
represent it in the handling of these matters. Therefore, it is
hereby agreed [that the national agreement will be adopted
by the parties].
(J.A. 28-31). These provisions, contained in every standby agreement
(and entirely ignored by the district court in its order), clearly explain
that: (1) the Railway Commission was not a party to the national han-
dling; and (2) the Railway Commission did not merely acquiesce to
the results of the national handling, but specifically agreed to adopt
that particular national agreement. This is additional evidence of the
parties' past practice which the district court should have considered
in interpreting the terms of the parties' agreement. See Consolidated
Rail, 491 U.S. at 311-20.
Finally, the record shows that the Union has admitted the standby
agreements were the parties' usual practice. When the Union initiated
the process leading up to the 1988 Standby Agreement, the Union's
General Chairperson, John W. Coulter, stated in a letter to the Rail-
way Commission that "[t]he standby agreement has always been the
norm concerning our seniority, work rules and rates of pay." (J.A.
32). He went on to explain why that was the case:"This agreement
is in alignment with South Carolina State Law 54-3-210 which pro-
vides for our work rules and rates of pay to be``in force relative to
15
like employees of interstate railroads operating in the same territory
with the terminal railroads authorized hereby.'" (J.A. 32) (emphasis
added). In other words, instead of merely accepting the national
agreement, the parties left open the possibility of agreeing locally to
more regional rates and rules.
The district court, relying on United Transp. Union v. Gateway W.
Ry., No. 95-0908-CV-W-1, 1995 WL 842729 (W.D. Mo. Nov. 14,
1995), discounted the Union's admission in this letter by holding that
the Railway Commission could not establish past practice with a sin-
gle letter. However, the district court failed to consider the other evi-
dence of past practice mentioned above, the implied and express
terms and meaning of the parties' various local agreements, and the
circumstances surrounding the enactment of these agreements. In
light of the above, we believe the Railway Commission has an "argu-
ably justifiable" right under the 1973 Agreement not to adopt the
1996 national agreement, because the 1973 Agreement arguably does
not automatically incorporate the new national agreement. However,
it is ultimately the arbitrator's role to decide that question. We merely
hold that the Railway Commission has met its "relatively light bur-
den" of establishing exclusive arbitral jurisdiction, see Consolidated
Rail, 491 U.S. at 307, given that the Consolidated Rail test is "delib-
erately tilted toward finding a dispute minor." Railway Labor
Executives, 915 F.2d at 119.
This conclusion may well result in a delay of the bargaining pro-
cess between the Railway Commission and the Union until the arbi-
tration process has interpreted the 1973 Agreement and the standby
agreements. Nevertheless, the Supreme Court has explicitly allowed
such a consequence to occur. The Consolidated Rail Court stated:
The effect of this ruling, of course, will be to delay collec-
tive bargaining in some cases until the arbitration process is
exhausted. But we see no inconsistency between that result
and the policies of the RLA. In most cases where the Board
determines that the employer's conduct was not justified by
the contract, the Board will be able to fashion an appropriate
compensatory remedy which takes account of the delay.
16
Consolidated Rail, 491 U.S. at 310 and n.8. In the meantime, the Rail-
way Commission need not pay the increased wage and health benefits
pending resolution of this minor dispute. See id. at 304 (stating that
the Supreme Court has never recognized in a minor-dispute situation
a statutory obligation on the part of an employer to maintain the
alleged status quo pending the arbitration board's decision).5
III.
Because we conclude that the present dispute is a"minor dispute"
under the RLA, we hold that the district court abused its discretion in
issuing the preliminary injunction against the Railway Commission.
See McHan, 101 F.3d at 1040; Manning, 119 F.3d at 263. We there-
fore vacate the preliminary injunction and remand with instructions
to dismiss the Union's action for lack of subject-matter jurisdiction.
See Railway Labor Executives, 915 F.2d at 119 (stating that if the rail-
road's assertion rises above the "frivolous or obviously insubstantial,"
then the court must dismiss the action for lack of subject matter juris-
diction).
VACATED AND REMANDED
_________________________________________________________________
5 Because of our disposition of the case on this issue, we need not reach
the other issue the Railway Commission raises in its appeal, namely
whether the district court's injunction deprives the Railway Commission
of selecting its own bargaining representatives.
17