United Transportation Union v. Burlington Northern Santa Fe Railroad Company and Longview Switching Company

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED TRANSPORTATION UNION, 
GENERAL COMMITTEE OF
ADJUSTMENT GO-386, J.D.
Fitzgerald, General Chairman, No. 07-35066
Plaintiff-Appellant,
v.  D.C. No.
CV-06-5441-RBL
BURLINGTON NORTHERN SANTA FE OPINION
RAILROAD COMPANY and LONGVIEW
SWITCHING COMPANY,
Defendants-Appellees.

Appeal from the United States District Court
for the Western District of Washington
Ronald B. Leighton, District Judge, Presiding
Argued and Submitted
April 11, 2008—Seattle, Washington
Filed June 9, 2008
Before: Carlos T. Bea and Milan D. Smith, Jr.,
Circuit Judges, and Joseph M. Hood*, Senior District Judge.
Opinion by Judge Hood
*The Honorable Joseph M. Hood, Senior United States District Judge
for the Eastern District of Kentucky, sitting by designation.
6551
6554 UNITED TRANSPORTATION UNION v. BNSF
COUNSEL
David S. Straton, Eugene, Oregon; David J. Hollander, Hol-
lander, Lebenbaum & Gannicott, Portland, Oregon for the
plaintiff-appellant.
Donald J. Munro, Goodwin Procter LLP, Washington, DC,
for the defendants-appellees.
OPINION
HOOD, Senior District Judge:
In its Complaint, Plaintiff-Appellant United Transportation
Union, General Committee of Adjustment GO-386 (“Union”)
alleged that Defendants-Appellees Burlington Northern Santa
Fe Railroad Company (“BNSF”) and Longview Switching
Company (“LSC”) violated the Railway Labor Act (“RLA”),
45 U.S.C. § 151, et seq., by implementing a trackage rights
agreement approved through the process prescribed by the
Interstate Commerce Act (hereinafter, “ICA”), 49 U.S.C.
§ 10101, et seq., without bargaining with the Union. The
Union objected to the unilateral transfer of certain work to
employees of LSC and the cancellation of BNSF jobs, which
effected a change in the “terms and conditions of employ-
ment” of individuals represented by the Union. In the present
appeal, the Union challenges the district court’s grant of
BNSF and LSC’s motion to dismiss on grounds that the court
lacked subject matter jurisdiction. We have jurisdiction pursu-
ant to 28 U.S.C. § 1291, and we affirm.
I. BACKGROUND
LSC is a Class III rail carrier, jointly owned by BNSF and
another, non-party railroad, Union Pacific (“UP”). BNSF and
UNITED TRANSPORTATION UNION v. BNSF 6555
UP are Class I rail carriers. LSC has a separate corporate
structure, its own employees, and distinct labor agreements
from BNSF. The Union represents conductors and other oper-
ating employees (except engineers) of all three railroads.
Longview and Longview Junction are railyards that are part
of a joint facility owned by BNSF and UP. Longview Junc-
tion is adjacent to the BNSF main line from Seattle to Van-
couver. Longview is approximately ½ mile from Longview
Junction and serves various industry customers. Historically,
three companies performed switching operations at Longview
Junction: LSC, BNSF, and UP. This arrangement created sub-
stantial operational inefficiencies because BNSF and UP were
forced to take turns doing switching in the Longview Junction
yard. One company switched its own cars for approximately
twelve hours before giving way to the other for the next
twelve hours. LSC also took turns doing its own switching.
While one railroad switched its cars, the others remained idle.
Ultimately, rail traffic was slowed throughout the region
because of the delays which resulted, and the freight traffic of
BNSF and UP, as well as Amtrak’s passenger service, were
affected.
On May 30, 2006, BNSF, LSC, and UP entered into an
Overhead Trackage Rights Agreement (“Trackage Rights
Agreement”) which allowed LSC to perform all switching in
the yard, eliminated the system of “taking turns,” and reduced
or eliminated “work events” on the main line.1 On June 6,
2006, LSC filed a Verified Notice of Exemption with the Sur-
face Transportation Board (“STB”) pursuant to 49 C.F.R.
§ 1180.2(d)(7). The parties attached a copy of the Agreement
and stated that BNSF and LSC were agreeable to the imposi-
1
The result was increased fluidity of rail traffic for all users of the track.
In implementing the Agreement, BNSF did away with one position that
had previously handled some of the switching for the railroad, but no
employees were furloughed as a result of the change. All affected individ-
uals were assigned to other work. LSC added one switching job.
6556 UNITED TRANSPORTATION UNION v. BNSF
tion of the STB’s standard labor protective conditions for
trackage rights agreements. The STB issued an order
acknowledging the Exemption on June 26, 2006, and provid-
ing that, “[a]s a condition to this exemption, any employees
affected by the trackage rights will be protected by the condi-
tions imposed in Norfolk & Western Ry. Co. — Trackage
Rights — BN, 354 L.C.C. 605 (1978), [modified,] 360 I.C.C.
653 (1980).”
On June 29, 2006, the Union filed a petition to stay the
exemption with the STB. BNSF filed an objection. The STB
denied the petition for stay on June 30, 2006. While the STB
noted the Union’s argument that STB authorization was not
necessary or appropriate because LSC was merely going to
perform switching operations, the STB disagreed and held
that “[b]ased on the evidence presented, it appears that the
transaction at issue does require Board authorization.” The
STB noted that the Union could seek further relief by virtue
of a petition to reject or revoke the notice of exemption. There
is no record that the Union filed a petition to reject or revoke
the exemption. Neither is there a record that the Union filed
an action in the Court of Appeals to enjoin or suspend the
STB’s order denying the stay. Finally, there is no record that
the Union invoked the arbitration procedures available under
the labor conditions imposed by the STB. Instead, the Union
filed the present suit in the Western District of Washington
seeking declaratory and injunctive relief.
II. STANDARD OF REVIEW
“The district court’s factual findings relevant to its determi-
nation of subject matter jurisdiction are reviewed for clear
error.” Ass’n of Flight Attendants v. Horizon Air Indus., Inc.,
280 F.3d 901, 904 (9th Cir. 2002), citing La Reunion Fran-
çaise SA v. Barnes, 247 F.3d 1022, 1024 (9th Cir. 2001). The
district court’s conclusions of law relevant to dismissal for
lack of subject matter jurisdiction are reviewed de novo. Id.UNITED TRANSPORTATION UNION v. BNSF 6557
III. DISCUSSION
A. Statutory Framework
The jurisdictional question in this case hinges on the rela-
tionship between the Interstate Commerce Act (“ICA”), 49
U.S.C. § 11301 et seq.,2 and the Railway Labor Act (“RLA”),
45 U.S.C. § 151 et seq. The former promotes railroad consoli-
dation to create a more efficient system of interstate rail trans-
portation. See Norfolk & W. Ry. Co. v. Am. Train
Dispatchers’ Ass’n, 499 U.S. 117, 119-20 (1991)
(“Dispatchers”). The ICA grants the STB exclusive authority
to approve or exempt from the standard approval process a
variety of transactions involving rail carriers. 49 U.S.C.
§ 11323. An approved or exempted transaction may be carried
out “without the approval of a State authority” and is “exempt
from the antitrust laws and from all other law, including State
and municipal law, as necessary” to let the involved carriers
execute the transaction. 49 U.S.C. § 11321(a). However, the
STB must still “impose labor protective conditions on the
transaction to safeguard the interests of adversely affected
railroad employees.” Dispatchers, 499 U.S. at 120; see also
49 U.S.C. §§ 11326(a) & 10502(g).
The RLA, by contrast, aims “to encourage collective bar-
gaining by railroads and their employees in order to prevent,
if possible, wasteful strikes and interruptions of interstate
2
The ICC Termination Act of 1995, Pub. L. No. 104-88, 109 Stat. 803,
abolished the Interstate Commerce Commission (“ICC”) (§ 101, 109 Stat.
at 804) and transferred its remaining functions to the Surface Transporta-
tion Board (“STB”) as of January 1, 1996. The Act also resulted in the
renumbering of various provisions of the Interstate Commerce Act. 49
U.S.C. § 10505 became § 10502. Section 11341 became § 11321. Sections
11344 and 11345 became §§ 11323 and 11324, respectively. Section
11347 became § 11326. The new sections were enacted without substan-
tive change. We refer to the current section numbering in this opinion and
substitute the new numbers where the case law or administrative material
refers to the former numbering system.
6558 UNITED TRANSPORTATION UNION v. BNSF
commerce.” Detroit & Toledo Shore Line R.R. Co. v. United
Transp. Union, 396 U.S. 142, 148 (1969). “To this end, the
RLA establishes elaborate procedures for the negotiation,
enforcement, and modification of collective bargaining agree-
ments between railroad carriers and labor unions.” Union R.R.
Co. v. United Steelworkers of Am., 242 F.3d 458, 463 (3d Cir.
2001). “[T]he procedures of the Act are purposely long and
drawn out, based on the hope that reason and practical consid-
erations will provide in time an agreement that resolves the
dispute.” Bhd. of Ry. & Steamship Clerks, etc. v. Fla. E. Coast
Ry. Co., 384 U.S. 238, 246 (1966).
The question of whether a labor dispute is governed by
STB procedures or by the RLA has important implications.
Rail carriers generally prefer the streamlined STB procedures
under the ICA because they reduce delay and facilitate the
implementation of transactions. See Norfolk & W. Ry. Co. v.
Bhd. of R.R. Signalmen, 164 F.3d 847, 852 (4th Cir. 1998).
Unions tend to prefer the RLA because its negotiation proce-
dures generate substantial delay and thereby increase
employee leverage at the bargaining table. Id. The interplay
between these statutory schemes also affects federal jurisdic-
tion. Under the ICA, federal courts of appeals have “exclusive
jurisdiction to enjoin, set aside, suspend (in whole or in part),
or to determine the validity of . . . all rules, regulations, or
final orders of the [STB].” 28 U.S.C. § 2342(5); see also 28
U.S.C. § 2321(a). By contrast, at least where the RLA alone
applies, a plaintiff may file suit in federal district court under
28 U.S.C. § 1331. See, e.g., Ass’n of Flight Attendants, AFL-
CIO v. USAir, Inc., 960 F.2d 345, 347 (3d Cir. 1992).
With this background in mind, we proceed to the question
at hand: whether the ICA required the district court to dismiss
the union’s action under the RLA for lack of subject matter
jurisdiction. For the reasons set forth below, we hold that the
ICA deprived the district court of jurisdiction, and therefore
affirm.
UNITED TRANSPORTATION UNION v. BNSF 6559
1. LSC’s acquisition of trackage rights is an exempt
transaction under 49 U.S.C. § 10502(a).
The first step in the analysis is to characterize the trackage
rights agreement under the ICA. The parties do not dispute
that the agreement is an exempt transaction. Reading 49
U.S.C. § 10502(a) and 49 C.F.R. § 1180.2(d)(7) together con-
firms that their understanding is correct.
[1] Section 10502(a) provides that the STB “shall exempt
a transaction whenever the Board finds that the application (1)
is not necessary to carry out the transportation policy of sec-
tion 10101, and (2) either the transaction is of limited scope
or the application is not needed to protect shippers from the
abuse of market power.” 49 C.F.R. § 1180.2(d)(7) in turn pro-
vides that “[a]cquisition of trackage rights and renewal of
trackage rights by a rail carrier over lines owned or operated
by any other rail carrier or carriers” are exempt transactions
under § 10502 if they are “(1) based on written agreements,
and (2) not filed or sought in responsive applications in rail
consolidation proceedings.” The statutory exemption provided
by § 10502(a) applies because the regulatory requirements of
§ 1180.2(d)(7) have been satisfied. The parties do not dispute
that LSC is an “other rail carrier.” The trackage rights agree-
ment, moreover, was “based on written agreement” and “not
filed or sought in responsive applications in rail consolidation
proceedings.” 49 C.F.R. § 1180.2(d)(7).
2. 49 U.S.C. § 11321(a) applies to a transaction made
exempt by 49 U.S.C. § 10502(a).
[2] One result of the exemption under 49 U.S.C. § 10502(a)
and 49 C.F.R. § 1180.2(d)(7) is that the carriers can imple-
ment their transaction without obtaining prior approval and
authorization from the STB under 49 U.S.C. § 11323(a)(6).
See 49 C.F.R. § 1180.2. More importantly to this case, how-
ever, the exemption under § 10502(a) triggers the application
of 49 U.S.C. § 11321(a).
6560 UNITED TRANSPORTATION UNION v. BNSF
[3] Section 11321(a) permits carriers whose transaction has
been “approved or exempted by the Board under this sub-
chapter” to carry out the transaction “without the approval of
a State authority.” 49 U.S.C. § 11321(a) (referring to Title 49,
Chapter 113, Subchapter II). For the designated exempt trans-
action, the statute also grants an exemption “from the antitrust
laws and from all other law, including State and municipal
law, as necessary to let [the parties] carry out the transaction.”
Id. “The authority of the Board under this subchapter is exclu-
sive.” Id. The purpose of § 11321 immunity is to ensure that,
once the interests of affected employees are accommodated to
the greatest extent possible, obligations imposed by laws such
as the Railway Labor Act will not prevent carriers from creat-
ing a more efficient market in rail transportation. See Dis-
patchers, 499 U.S. at 133.
Citing Railroad Consolidation Procedures—Trackage
Rights Exemption, Ex Parte No. 282, 1 I.C.C. 270 (1985), the
Union argues that § 11321(a) does not apply because the
trackage rights agreement was not “exempted by the Board
under this subchapter.” 49 U.S.C. § 11321(a). Railroad Con-
solidation Procedures interpreted the quoted text as referring
to exemptions that originate in what is now Title 49, Chapter
113, Subchapter II. See 1 I.C.C. at 279. Because LSC’s
exemption had its source in § 10502 and § 10502 is instead
located in Chapter 105, the Union reasons, § 11321(a) does
not apply on its terms.
[4] We reject the Union’s interpretation because none of
the statutes contained in Subchapter II of Chapter 113 autho-
rizes the STB to exempt a transaction. Section 11321(a) is the
only statute in Subchapter II that even mentions exemptions,
and the exemptions that may issue under that statute are nei-
ther issued “by the Board” nor applicable to “transactions.”
Instead, § 11321(a) exemptions issue automatically upon sat-
isfaction of the statutory requirements and apply to carriers
rather than the transactions in which they may be involved.
Compare 49 U.S.C. § 11321(a) (“A rail carrier . . . participat-
UNITED TRANSPORTATION UNION v. BNSF 6561
ing in . . . a transaction . . . exempted by the Board under this
subchapter may carry out the transaction . . . without the
approval of a State authority.”) (emphasis added) with id. (“A
rail carrier . . . is exempt from the antitrust laws and from all
other law . . . .”) (emphasis added); see also Bhd. of Locomo-
tive Engr’s v. Boston & Maine Corp., 788 F.2d 794, 801 (1st
Cir. 1986) (“[T]he [antitrust and other law] exemption provi-
sion [in § 11321(a)] . . . is self-executing.”). The Union’s
interpretation is thus at odds with the text of Subchapter II.
See 49 U.S.C. §§ 11321-11328.
[5] The more reasonable construction of “exempted by the
Board under this subchapter” is that § 11321(a) immunity
applies if the result of a Board exemption that originates any-
where in the statutory scheme is that a carrier need not com-
ply with a requirement imposed in Subchapter II. This is the
construction most recently adopted by the ICC in Rio Grande
Industries, Inc.—Trackage Rights—Burlington Northern Rail-
road Co., I.C.C. Finance Docket No. 31730, 1991 WL 62169,
at *3-4 (Mar. 8, 1991), which clarified Rail Consolidation
Procedures and explained that the exemption authority in
§ 10502 does not “remove transactions exempted from
[§ 11323] from the reach of [§ 11321(a)].” Id. at *4; see also
Union R.R. Co., 242 F.3d at 466-67 & n.10 (holding that
§ 11321(a) applies to transactions exempted under § 10502
and noting the ICC’s decision in Rio Grande Industries).
Even if § 11321(a) did not unambiguously compel this inter-
pretation, we would be required to follow it as the ICC’s rea-
sonable interpretation of the statute. See Chevron U.S.A., Inc.
v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843 (1984).
[6] We therefore hold that the trackage rights agreement
between BNSF, LSC, and UP was “exempted by the Board
under [Chapter 113, Subchapter II]” because, even though the
statutory source of the transaction’s exemption was § 10502,
the effect of the exemption was that the carriers did not have
to comply with the approval requirements of § 11323, and
§ 11323 is located in Subchapter II of Chapter 113. The carri-
6562 UNITED TRANSPORTATION UNION v. BNSF
ers’ trackage rights agreement could therefore be carried out
“without the approval of a State authority.” 49 U.S.C.
§ 11321(a). The transaction was also “exempt from the anti-
trust laws and from all other law, including State and munici-
pal law, as necessary to let [the] rail carrier[s] . . . carry out
the transaction.” Id.
3. The STB’s exclusive authority under § 11321(a)
deprives the district court of jurisdiction.
[7] Finally, we conclude that the application of § 11321(a)
deprived the district court of subject matter jurisdiction over
the Union’s RLA claims. Section 11321(a) makes the “au-
thority of the Board under [Chapter 113, Subchapter II] . . .
exclusive.” 49 U.S.C. § 11321(a). In Railway Labor Execu-
tives Association v. Southern Pacific Transportation Com-
pany, 7 F.3d 902, 906 (9th Cir. 1993), we interpreted this
language to mean that the “ICC has exclusive authority to
resolve” a challenge to a transaction immunized under the
statute. We also held that § 11321(a) immunity applies against
claims brought under the RLA. Id. Because the union in that
case had filed an RLA claim challenging a merger to which
§ 11321(a) applied, it followed that the district court lacked
subject matter jurisdiction. Id. Railway Labor Executives
compels the same outcome here. See also Norfolk & W. Ry.
Co. v. Bhd. of R.R. Signalmen, 164 F.3d 847, 854-55 (4th Cir.
1998) (taking a similar approach); Bhd. Ry. Carmen, Div. of
Transp. Commc’ns Int’l Union v. CSX Transp., Inc., 855 F.2d
745, 748-49 (11th Cir. 1988) (same); Boston & Maine Corp.,
788 F.2d at 800-01 (same).
[8] The Trackage Rights Agreement in this matter is a regu-
lated Subchapter II transaction under 49 U.S.C. § 11323(a)
and 49 C.F.R. § 1180.2. The parties to that transaction filed
a Notice of Exemption, expressly referencing § 1180.2(d)(7).
The STB granted the exemption from the procedures other-
wise required under 49 U.S.C. §§ 11323 and 11324, filing its
notice under 49 C.F.R. § 1180.2(d)(7) and imposing Norfolk
UNITED TRANSPORTATION UNION v. BNSF 6563
& Western conditions. As a regulated Subchapter II transac-
tion, the transaction is, thus, subject to 49 U.S.C. § 11321(a)
and immune from “all other law,” including the abrogation of
collective bargaining agreements and the strictures of the
RLA as necessary to implement the transaction. Dispatchers,
499 U.S. at 131; Union R.R., 242 F.3d at 463-64. Any dis-
putes, including labor disputes, necessary to the Trackage
Rights Agreement and its implementation and any disputes
about whether modifications to the collective bargaining
agreements are “necessary” to the transaction are within the
exclusive jurisdiction of the STB, not the federal courts, and
should be raised there. 49 U.S.C. § 11323(a); Southern
Pacific, 7 F.3d at 906-07.
[9] We conclude that the district court properly dismissed
this matter, having determined that it did not have subject
matter jurisdiction.
AFFIRMED.