Association of American Railroads v. Surface Transportation Board

WALD, Circuit Judge,

dissenting from Part II:

I disagree with the panel that the statutory provision for severance pay for rail workers who lose their jobs as a result of short-line acquisitions under section 10902(d) is unambiguously limited to workers who after the acquisition will no longer work for the selling railroad. In my view, the text of the •relevant provision is decidedly ambiguous, the legislative history sheds no appreciable additional light on its meaning, and I would therefore proceed to a Chevron step two analysis, which defers to the Surface Transportation Board’s (“the Board”) reasonable determination that all employees who lose their jobs as a result of a short-line acquisition — including those who go on to other less well-paying employment with the selling carrier — are entitled to some amount of severance pay.

The ICC Termination Act first authorizes the Board to require a covered rail carrier to “provide a fair and equitable arrangement for the protection of the interests of employees who may be affected” when one Class II railroad buys a short line from any other railroad. 49 U.S.C. § 10902(d). The next sentence goes on to define the meaning of that “arrangement”: “The arrangement shall consist exclusively of one year of severance pay....” Id. Thus, the second sentence tells the Board what the arrangement is but does not delimit who is entitled to receive it. The Board is left to decipher which “employees [ ] may be affected thereby.”

Under the ruling of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), the panel finds that Congress has unequivocally made its intention clear that only employees of a short line who leave the employment of the seller of that line altogether are eligible for severance pay. It reasons that since “severance pay” is the only available remedy for “employees who may be affected” by an acquisition, it must follow that only “severed employees” are eligible for “severance pay.” This of course is essentially a tautology. The panel then elaborates a bit by quoting a dictionary definition that defines “severance” as “termination of a contractual association (as employment),” see Majority Opinion (“Maj. Op.”) at 104. Building on this somewhat scrawny framework, the panel extrapolates that a “severed employee” can only be one terminated from his employment relationship with the • particular employer who used to own the short line and cannot mean someone who has been severed from his former job but still works for the former owner of the short line. Yet nothing in the statute’s text, its history, or even the dictionary definition of severance pay suggests that limitation.

Rather, “severance pay” — certainly in the context of this statute — is an ambiguous term not confined to employees “whose employment with the selling carrier was terminated as a result of a transaction.” Maj. Op. at 104. The ICC Termination Act, as originally introduced in the House, eliminated all labor protective conditions, known as New York Dock conditions, traditionally imposed by the ICC in mergers and line acquisitions. A compromise struck on the floor of the House of Representatives between those who favored some labor protection and those who opposed it resulted in adoption of the Whitfield Amendment, which we now construe. There was no indication in the floor debate preceding the amendment’s passage that lawmakers had achieved any meeting of the minds as to what exactly “severance pay” encompassed. Instead, the entire discussion addressed the compromise in terms of the shortening of the post-acquisition period during which salary protection was available, from six years under New York Dock, to one year under the amendment. See 141 Cong. Rec. H12,297-306 (daily ed. Nov. 14, 1995). The issue of just who qualified as an “employee affected” so as to merit “severance pay” was never directly confronted.

The panel’s restrictive definition of the term “severance pay” had never been employed as a term of art by the ICC, nor was it a definition unequivocally embraced by members of Congress who debated the amendment. Under the New York Dock regime, an acquiring railroad was required to make two types of allowances — “displacement allowances” and “dismissal allowances.” The former allowance was for employees who were placed in worse positions with respect to their compensation as a result of a rail transaction, regardless of whom they worked for after the transaction; the latter was for employees who lost their jobs entirely because of a transaction. See New York Dock Ry.-Control-Brooklyn Eastern Dist. Terminal, 360 I.C.C. 60 app. III (Feb. 9, 1979). The term “severance pay” was often used by the ICC and reviewing courts to describe the combination of these two allowances. See, e.g., Santa Fe Pacific Corp.-Control-Southern Pacific Transp. Co., Finance Docket No. 30400 (Sub-No. 21) (I.C.C. June 12, 1992), available in 1992 ICC Lexis 114; Indiana R.R. Co.-Merger, 6 I.C.C. 969 (1990); see also Railway Labor Executives’ Ass’n v. ICC, 999 F.2d 574, 575 n. 2 (D.C.Cir.1993); Brotherhood of R.R. Signalmen v. ICC, 63 F.3d 638, 639 (7th Cir.1995). Indeed some members of Congress also used the term “severance pay” as shorthand for the old New York Dock salary protections in debating the Whitfield Amendment. See 41 Cong. ReC. H12,302 col. 1 (statement of Rep. Na-dler); id. at H12,304 col. 3 (statement of Rep. Traficant); id. at H12,305 col. 2 (statement of Rep. Oberstar); id. at H12,306 col. 1-2 (statement of Rep. Spratt) (under old regime “Congress gave the ICC discretion to require 6-year severance payments to rail workers displaced by mergers or acquisitions”).¹ Both allowances were calculated on a monthly “time paid for” basis, which is the payment calculation scheme the Board has proposed for implementing the term “earnings” in section 10902(d) and which as part of the majority in Part III of the opinion I accept.²

The panel argues that the Board has to rewrite the statute to provide for offsets to severance pay for employees who take lower paid positions in their old company in order to avoid giving them a windfall. Inevitably, as Judge Sentelle complains in his dissent, we do a bit of rewriting with respect to the term “earnings” in section 10902(d), Maj. Op. at 105, in order to arrive at a “fair and equitable arrangement.” What is one judge’s rewriting is another’s gap-filling. In this case I believe that Congress probably focused on an offset for employment with the acquiring railroad in order to create an economic incentive for the acquiring railroad to hire workers displaced from the acquired line. Under the ICC regime, when Class II carriers were granted exemptions from labor protections, the average percentage of employees with the selling carrier who went to work for the new operator was 85 percent. See 41 Cong. Rec. H12,303 col. 1 (statement of Rep. Shuster). Congress may well have wanted to keep that figure high by alleviating the new company’s financial burden when that happened. When the Board later defined those included in the severance pay eligible group, it made the offset accommodation to make sure that affected employees played on a level field whether they took new jobs with their old company or went to work for the new one.

Finally, and most important, the panel’s rejection of the Board’s interpretation creates a distinct and I believe inequitable anomaly in the treatment of affected railroad workers. Under the panel’s interpretation, when an acquiring railroad (A) buys a line (line B) from the selling railroad (B), the following employees are entitled to severance pay: any worker dismissed from line B who takes a lower-paying job with A; any worker dismissed from line B who takes a lowerpay-ing job with any railroad other than B (in this ease, A will have to pay the former B worker his full wages for a year with no offset); and any worker who keeps his same job but at a lower rate of pay on line B but who is now an employee of A. The only “employee[] who may be affected” by the acquisition who will not get any severance pay is one who loses his job on line B and takes a different lower-paying job with B. But presumably if that employee by dint of seniority bumps another worker in railroad B from his job, the bumped employee will be considered “severed” and will be entitled to severance pay. Such a disparity doesn’t make sense and there is no signal from Congress that this is what it intended.

For these reasons, I would defer to the Board’s reasonable interpretation of section 10902(d) as to who is eligible for “severance pay,” as well as the other challenged parts of its ruling.

1 . Notably, the seminal ICC case discussing the evolution ol the New York Dock conditions describes the employees who were eligible for displacement and dismissal allowances as "severed and dismissed employees.” Oregon Short Line R.R. and Union Pacific R.R. Co.-Abandonment Portion Goshen Branch, 354 I.C.C. 76 (July 22, 1977), available in 1977 ICC Lexis 75, *15.

2 . Of course, I do not accept the argument in Part III that the term "severance pay” is patently unambiguous on the one hand, but that we should defer to the Board's experience in administering "earnings" — an ambiguous term — on the other. Rather, we should interpret both terms guided by "an awareness of the practical expertise which an agency normally develops, and of a willingness to accord some measure of flexibility to such an agency as it encounters new and unforeseen problems over time.” International Brotherhood of Teamsters v. Daniel, 439 U.S. 551, 566 n. 20, 99 S.Ct. 790, 58 L.Ed.2d 808 (1979), cited in Maj. Op. at 107.