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New York Dock Railway and Brooklyn Eastern District Terminal v. United States and Interstate Commerce Commission

decided: November 7, 1979.

NEW YORK DOCK RAILWAY AND BROOKLYN EASTERN DISTRICT TERMINAL, PETITIONERS,
v.
UNITED STATES OF AMERICA AND INTERSTATE COMMERCE COMMISSION, RESPONDENTS.



Petition for review by New York Dock Railway and Brooklyn Eastern District Terminal of a final order of the Interstate Commerce Commission in New York Dock Railway-Control-Brooklyn Eastern District Terminal, Finance Docket No. 28250 dated February 9, 1979. Railway Labor Executives' Association and the Brotherhood of Locomotive Engineers were permitted to file as intervenors-Respondents in support of the decision below, and Association of American Railways appeared as amicus curiae in support of the petition for review. The petition for review is denied.

Before Waterman, Feinberg and Timbers, Circuit Judges.

Author: Waterman

Petitioners seek judicial review of an order of the Interstate Commerce Commission*fn1 ("ICC"), establishing as a matter of general transportation importance the labor protective conditions the challenged order imposed under section 5(2)(f) of the Interstate Commerce Act (the "I.C. Act"), as amended by section 402(a) of the Railroad Revitalization and Regulatory Reform Act of 1976 (the "4R Act"), recently recodified as 49 U.S.C. § 11347, in railroad merger, control, consolidation, coordination and unification transactions as defined in sections 5(2) and (3) of the I.C. Act, 49 U.S.C. §§ 11343-11346. The petition for review is denied.

Before setting forth the factual situation involved in the present case and the substantive positions of the parties to this action, a brief outline of the history of railway labor protective conditions relevant to consolidations, mergers, acquisitions and other similar transactions will be detailed. Such an historical outline is able in placing the present case in context, and in describing more accurately the positions advanced by the parties in response to the ICC's imposition of the labor protective conditions here at issue.

Historical Background

It long ago was recognized that consolidations of railroad operations, although beneficial to the industry as a whole and to the particular carriers involved, could have devastating effects on the employees of those carriers. Accordingly, Congress in 1933 enacted the Emergency Railroad Transportation Act, which sought to protect the employees of railroads engaging in consolidation of operations by mandating a "job freeze" approach so as to guarantee the continued employment for the entire labor force of the railroads involved.

Due to the effects a "job freeze" approach to employee protection could have on operational efficiency, representatives of approximately 85% Of the railroad mileage in the country agreed with 20 of the 21 national labor organizations representing railroad workers in 1936 to a form of job security arrangement that provided bargaining and compensation protection to employees but left employers free to alter the size of their work force. That agreement, the Washington Job Protection Agreement of 1936 ("WJPA"), generally is conceded to be the blueprint for all subsequent job protection arrangements.

The pertinent provisions of the Agreement, applicable to any "coordination," defined as "joint action by two or more carriers whereby they unify, consolidate, merge or pool in whole or in part their separate railroad facilities or any of the operations or services previously performed by them through such separate facilities," (§ 2(a)), were as follows:

Employees of the carriers involved in a particular coordination were entitled to various compensatory protections:

i. any employee displaced into a lower paying position was entitled to an allowance to equalize his new rate of pay with his previous rate of pay for a period of up to five years following the effective date of the coordination (§ 6)

ii. any employee deprived of employment as a result of a coordination was entitled to receive a "coordination allowance" for a period, depending on his length of service, of up to five years following the effective date of the coordination, with the amount of the allowance equivalent to 60% Of his most recent average annual compensation; in the alternative, the employee could resign and accept a "lump sum separation allowance" (§§ 7, 9)

iii. accumulated employee benefits were protected (§ 8)

iv. any employee required to change his residence as a result of the coordination was entitled to reimbursement from his employer for his moving expenses and for any loss incurred on the sale of his previous residence (§§ 10, 11)

And in addition to these compensatory protections, the WJPA also required:

v. advance notice to all employees of the affected carriers, at least 90 days prior to the effective date of the proposed coordination, this 90 day advance notice period to be used to negotiate an implementing agreement to provide for the assignment and selection of a combined work force; and the successful negotiation of such an agreement was an implicit precondition to the consummation of the proposed coordination (§§ 4, 5)*fn2

vi. the submission of disputes concerning the operation of particular provisions of the WJPA, or of particular provisions of agreements reached pursuant to the terms of the WJPA, to a process of resolution employing binding arbitration (§§ 11, 13).

A few years later, in a proceeding concerning the approval of a lease of railroad property, Chicago, R. I. & G. Ry. Trustees Lease, 230 I.C.C. 181 (1938), Modified, 233 I.C.C. 21 (1939), the ICC prescribed employee protective conditions similar to those found in the WJPA, although there was no specific statutory language authorizing this action; and in United States v. Lowden, 308 U.S. 225, 60 S. Ct. 248, 84 L. Ed. 208 (1939), the Supreme Court upheld the imposition of these labor protective conditions, finding such action to be within the ICC's authority pursuant to its mandate to act in the "public interest."

Soon after this decision, in the Transportation Act of 1940, Congress enacted various amendments to the I.C. Act, including the original labor protective provisions contained in section 5(2)(f), 49 U.S.C. § 5(2)(f), which provided as follows:

As a condition of its approval, under this paragraph, of any transaction involving a carrier or carriers by railroad subject to the provisions of this chapter, the Commission shall require a fair and equitable arrangement to protect the interests of the railroad employees affected. In its order of approval the Commission shall include terms and conditions providing that during the period of four years from the effective date of such order such transaction will not result in employees of the carrier or carriers by railroad affected by such order being in a worse position with respect to their employment, except that the protection afforded to any employee pursuant to this sentence shall not be required to continue for a longer period, following the effective date of such order, than the period during which such employee was in the employ of such carrier or carriers prior to the effective date of such order. Notwithstanding any other provisions of this chapter and chapters 8 and 12 of this title, an agreement pertaining to the protection of the interests of said employees may hereafter be entered into by any carrier or carriers by railroad and the duly authorized representative or representatives of its or their employees.

Later, in a subsequent case involving both a carrier abandonment and purchase application, Oklahoma Ry. Trustees-Abandonment of Operations, 257 I.C.C. 177 (1944), the ICC developed, pursuant to the statutory authority granted in section 5(2)(f) of the I.C. Act, the so-called "Oklahoma conditions." These conditions essentially paralleled the provisions of the WJPA, with two principal exceptions: (i) the maximum prescribed protective period was four years following the effective date of the ICC's order, as contrasted to the five years following the effective date of the coordination provided in the WJPA; and (ii) there were no express provisions dealing with required advance notice to affected employees, nor with the prior negotiation of an agreement concerning the reassignment of employees.

As a result of these exceptions, an employees' union challenged the ICC's imposition of the standard "Oklahoma conditions" in New Orleans Union Passenger Terminal Case, 267 I.C.C. 763 (1948). In its review of the ICC's decision in that case, the Supreme Court, after examining the legislative history of section 5(2)(f), concluded that the explicit reference to a four year period in the second sentence of that section was intended to establish the minimum period of protection only, and should not have been construed as also setting the statutory maximum period. Consequently, the Court reversed the ICC's decision and remanded the case to the ICC for further consideration. Railway Labor Executives' Ass'n v. United States, 339 U.S. 142, 70 S. Ct. 530, 94 L. Ed. 721 (1950). Upon its reconsideration of the case, the ICC then devised the so-called "New ...


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