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BROTHERHOOD OF LOCOMOTIVE ENGRS. v. NEW JERSEY TRA

May 14, 1985

BROTHERHOOD OF LOCOMOTIVE ENGINEERS, Plaintiff, against NEW JERSEY TRANSIT RAIL OPERATIONS, INC. and CONSOLIDATED RAIL CORPORATION, Defendants


The opinion of the court was delivered by: BRIEANT

MEMORANDUM AND ORDER

BRIEANT, J.

 On October 2, 1984, plaintiff Brotherhood of Locomotive Engineers ("BLE") filed a complaint against New Jersey Transit Rail Operations, Inc. ("NJTRO") and Consolidated Rail corporation ("Conrail") under the Railway Labor Act ("RLA"), 45 U.S.C. § 152, First. The complaint seeks declaratory judgment and prospective injunctive relief, to effectuate a collective bargaining agreement said to have been formed orally on March 23, 1983 between plaintiff and the defendants. Plaintiff seeks the unusual remedy under the RLA by which a designated representative can enforce "the duty upon defendants to bargain in good faith, including the duty to sign and acknowledge collective bargaining agreements" formed orally but not reduced to writing (Complaint, [P] 14).

 By notice of motion filed January 17, 1985, defendant NJTRO moves to dismiss the Complaint on the ground that the Eleventh Amendment to the United States Constitution bars this suit in the federal district court. This motion presents one very interesting legal issue: whether a state-owned rail carrier, engaged in interstate transportation of passengers, is amenable to suit in federal court by private parties seeking to enforce rights created by Congress in the exercise of its commerce clause power. For the reasons that follow, the Court answers this question in the affirmative.

 The complaint alleges, and the documents cited or submitted demonstrate, that NJTRO is a public corporation of the State of New Jersey and a rail carrier of passengers whose lines extend into this District. NJTRO is a wholly owned subsidiary of New Jersey Transit Corporation, which is also a public corporation of the State of New Jersey, created by the New Jersey Public Transportation Act of 1979, as successor to the Commuter Operating Agency of the New Jersey Department of Transportation. Its purpose is to preserve and operate the essential commuter service into New York City which Conrail and its predecessor railroads had conducted for so long with such disastrous financial results. The State Legislature of New Jersey has made a legislative finding that New Jersey Transit Corporation and its subsidiaries are constituted as instrumentalities of the State exercising essential public and governmental functions of the State. This is said to be so notwithstanding that it sets its own tariffs for transportation services and it receives, deposits and expends its own funds in furtherance of its corporate objective. N.J.S.A. § 27:25-4(n), (o), (p). Also NJTRO in independent of any supervision or control by any other department of the Executive Branch of the State of New Jersey. Id. at 25-4(a).

 It its effort to maintain federal court jurisdiction, plaintiff argues that NJTRO is not an arm of the State, or the State's "alter ego", for Eleventh Amendment purposes. We disagree. Under similar facts, the United States District Court for the District of New Jersey already has determined that New Jersey Transit Corporation is the alter ego of the State for diversity purposes. Gibson-Homans Co. v. New Jersey Transit Corp., 560 F. Supp. 110, 113 (D.N.J. 1982). In that decision the Court pointed out that although the State has purportedly disclaimed liability for any debts or liabilities of the corporation, N.J.S.A. § 27:25-17, the same statute prohibits the corporation from incurring a deficit or from raising money through the sale of its own bonds. Similarly, all property of New Jersey Transit is deemed by statute to be state property. Id. at § 27:25-16. The Gibson-Homans Court found that these facts necessarily require that state funds flow freely into the coffers of New Jersey Transit's budget is a sufficiently direct effect on the state Treasury to support a finding that New Jersey Transit is the alter of New Jersey. Fitzpatrick v. Bitzer, 519 F.2d 559, 564-65 (2d Cir. 1975), rev'd on other grounds, 427 U.S. 445, 49 L. Ed. 2d 614, 96 S. Ct. 2666 (1976)." Gibson-Homans, 560 F. Supp. at 114. The District Court in New Jersey considered the alter ego issue solely for purposes of determining diversity jurisdiction. However, it relied in part on Fitzpatrick which presented an Eleventh Amendment question and was decided by our Court of Appeals. Under the Fitzpatrick standard, this Court finds that NJTRO is also the alter ego of the State for purposes of determining immunity under the Eleventh Amendment. However, since, we find that in any event, NJTRO is not immune from suit in this Court, the "alter ego" issue is not dispositive of the within motion.

 The real question presented by this motion involves the constitutional power of Congress to regulate this sphere of industry. It appears that NJTRO does not dispute the contention that the Federal Railway Labor Act applies to the commuter services operated by NJTRO. Nor has NJTRO raised a defense based upon the Tenth Amendment. (Brief in Support of Defendant's Motion, p.7). This concession is entirely proper in view of the United States Supreme Court's decisions that the RLA confers rights on employees of state-owned railroads, California v. Taylor, 353 U.S. 553, 1 L. Ed. 2d 1034, 77 S. Ct. 1037 (1957), and that a state-owned commuter railroad is not immune from the requirements of the RLA, United Transportation Union v. Long Island R. Co., 455 U.S. 678, 71 L. Ed. 2d 547, 102 S. Ct. 1349 (1982). Furthermore, this concession is necessary under the mandate of the New Jersey Legislature, e.g. N.J.S.A. § 27:25-14(e) ("[Labor relationships] may be changed only in accordance with the principles established under the 'Labor Management Relations Act, 1947' and the 'Railway Labor Act'").

 Having established that the federal statute applies to NJTRO's operations and controls its relationships with its locomotive engineers, we turn tot he specific question of whether plaintiff can enforce its rights granted by Congress in the RLA in federal court, or whether it should be required to litigate in the state courts of New Jersey.

 The Supreme Court authority most relevant to our discussion is Parden v. Terminal Railway, 377 U.S. 184, 12 L. Ed. 2d 233, 84 S. Ct. 1207 (1964). In that case, plaintiff sought damages under the Federal Employers' Liability Act ("FELA"), 45 U.S.C. §§ 51-60, for injuries sustained while employed by a state-owned railway. The Supreme Court reversed an order dismissing on the ground that the railway was an agency of the State and the State had not waived its immunity from suit, holding that the immunity doctrine as embodied in the Eleventh Amendment is no bar to federal court jurisdiction in a FELA action, because Congress enacted the FELA in the valid exercise of its power to regulate interstate commerce.

 
"By empowering Congress to regulate commerce, then, the States necessarily surrendered any portion of their sovereignty that would stand in the way of such regulation. Since imposition of the FELA right of action upon interstate railroads is within the congressional regulatory power, it must follow that application of the Act to such a railroad cannot be precluded by sovereign immunity."

 Id. at 192 (footnote omitted). Quoting from its previous decision in United States v. California, 297 U.S. 175, 184-85, 80 L. Ed. 567, 56 S. Ct. 421 (1936), the Parden Court remanded us that:

 
"a State's operation of a railroad in interstate commerce must be in subordination to the power to regulate interstate commerce, which has been granted specifically to the national government. The sovereign power of the states is necessarily diminished to the extent of the grants of power to the federal government in the constitution. . . . [T]here is no such limitation upon the plenary power to regulate commerce [as there is upon the federal power to tax state instrumentalities]. The state can no more deny the power if its exercise has been authorized by Congress than can an individual." 377 U.S. at 191-92.

 As in FELA actions, the federal courts have original jurisdiction over RLA suits. Unlike the FELA, Section 152, First of the RLA does not contain an express statutory grant of jurisdiction. However, it is well settled that the federal district courts are authorized to grant injunctive and declaratory relief when railway employees challenge the legality of labor practices under the RLA. Chicago and N.W.R. Co. v. United Transportation Union, 402 U.S. 570, 29 L. Ed. 2d 187, 91 S. Ct. 1731 (S.D.N.Y. 1971); O'Connell v. Erie Lackawanna R. Co., 268 F. Supp. 397, 399 (S.D.N.Y. 1967). Subject matter jurisdiction is founded upon 28 U.S.C. § 1337 and the federal act, which has the stated purpose of avoiding "any interruption to [interstate] commerce or to the operation of any carrier engaged therein." 45 U.S.C. § 151a. As in the FELA, the RLA contains no statutory language in limitation of its jurisdictional coverage. See Parden, 377 U.S. at 189 ("The language of the FELA is at least as broad and all-embracing as that of the Safety Appliance Act or the Railway Labor Act, and its purpose is not less applicable to state railroads and their employees"). Furthermore, despite defendant NJTRO's contention that BLE can bring its suit in New Jersey state court, concurrent jurisdiction merely provides an alternative forum and should not be read as a limit on the authority of the federal district courts. Parden, 377 U.S. at 190 n.8. If Parden were the only relevant precedent, this Court would be persuaded that the similarities between the RLA and the FELA compel the same result here as in Parden. However, in Employees v. Missouri Public Health and Welfare Dept., 411 U.S. 279, 36 L. Ed. 2d 251, 93 S. Ct. 1614 (1973), the Supreme Court distinguished Parden.

 In Employees, employees of state hospitals and training schools sued for overtime compensation under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 216(b). The Court held that the Eleventh Amendment did bar plaintiffs' suit in federal court, and that Congress did not intend to authorize federal court jurisdiction over FLSA suits by state hospital employees. Id. at 285. Significantly, the Court reasoned that Parden had involved employees of a railroad transportation business which the State had operated for profit, as a traditionally private or "proprietary" function, rather than a governmental function. In ...


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