Employees of the Butte, Anaconda & Pacific Railway Company, Represented by Brotherhood of Maintenance of Way Employees, Brotherhood of Airline Clerks and Brotherhood of Railway Carmen v. United States of America Interstate Commerce Commission Butte, Anaconda & Pacific Railway Company (Ba & P) Respondent-Intervenor. Employees of the Butte, Anaconda & Pacific Railway Company, Represented by United Transportation Union v. United States of America Interstate Commerce Commission, Employees of the Butte, Anaconda & Pacific Railway Company, Represented by Brotherhood of Maintenance of Way Employees, Brotherhood of Airline Clerks, Brotherhood of Railway Carmen and United Transportation Union v. United States of America, Interstate Commerce Commission

Citations: 938 F.2d 1009; 91 Cal. Daily Op. Serv. 5392; 91 Daily Journal DAR 8271; 138 L.R.R.M. (BNA) 2041; 1991 U.S. App. LEXIS 14214Docket: 89-70504

Court: Court of Appeals for the Ninth Circuit; July 10, 1991; Federal Appellate Court

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In this legal proceeding, various labor organizations representing employees of the Butte, Anaconda, Pacific Railway Company (B.A.P) petitioned the United States Court of Appeals for the Ninth Circuit to review three orders from the Interstate Commerce Commission (ICC). The ICC had denied labor protective benefits to these employees, and the unions argued that the ICC acted arbitrarily, capriciously, or exceeded its authority by vacating an arbitration decision that had awarded benefits. They also contended that the ICC should have reversed another arbitration decision that denied benefits. The court affirmed the ICC's orders.

The background involves the Atlantic Richfield Company (ARCO) acquiring the Anaconda Company's copper mine operations, which included two railroads: B.A.P in Montana and the Tooele Valley Railroad in Utah. Despite these being separate entities, ICC approval was required due to merger regulations. The ICC approved the acquisition with labor protective conditions, specifically the New York Dock conditions, which mandate arbitration for disputes related to these benefits.

Following a collapse in the copper market in late 1979, ARCO closed its smelter facilities in Anaconda, leading to a decrease in shipping and employment on the B.A.P. Labor organizations, particularly the United Transportation Union (UTU), claimed that B.A.P employees affected by these changes were entitled to New York Dock benefits. In 1982, the UTU requested the National Mediation Board to appoint a neutral arbitrator, resulting in the establishment of an arbitration panel to address the claims.

The arbitration was divided into liability and damage phases, during which Arbitrator Cassle found B.A.P liable for New York Dock benefits for employees affected by job changes from February 15, 1978, to February 14, 1982. Cassle determined that B.A.P's liability stemmed from a pre-transaction agreement involving ARCO, Anaconda, and B.A.P, which promised employee protection against job changes. He interpreted statements made to the ICC and B.A.P employees as imputed contractual obligations for employee protection, rejecting B.A.P's claims that subsequent economic conditions were the cause of adverse effects on employees. 

On December 11, 1984, B.A.P sought clarification from the ICC regarding the imposed conditions, leading to Cassle's Nunc Pro Tunc order on February 6, 1985, which clarified that the ICC accepted an offer for labor protection benefits for adversely affected employees, irrespective of the cause. The arbitration's second phase concluded with an award effective May 22, 1986, prompting the UTU to file a lawsuit in Montana to enforce it. This lawsuit was consolidated with B.A.P's petition to review Cassle's phase I determination, leading to further proceedings until the ICC issued decisions currently under appeal.

In summer 1985, a second arbitration panel, led by Joseph Sickles, addressed claims for protective benefits from B.A.P employees represented by various unions. Sickles found that adverse effects on employees were due to operational changes by Anaconda rather than ARCO's acquisition, thus denying the unions' claims for benefits. The unions subsequently petitioned the ICC for review of Sickles' decision and sought judicial intervention in U.S. district court.

Two weeks after the Sickles' decision, the ICC granted B.A.P's request to reopen the labor protective conditions set during ARCO's acquisition of Anaconda. The ICC decided to review the Cassle award, asserting its authority under 49 U.S.C. Sec. 11351, which allows for supplemental orders in previously adjudicated proceedings. It referenced its prior ruling in Chicago, North Western Transp. Co. that permitted reviews of arbitration decisions involving ICC conditions. The review would follow the standards from the Lace Curtain decision, which employed deferential criteria from the Steelworkers Trilogy, allowing vacating of awards only for egregious errors, failure to align with the collective bargaining agreement, or exceeding contractual limits.

The ICC found that Arbitrator Cassle misinterpreted labor protection scope, erroneously concluding that ARCO was obligated to pay benefits to affected employees regardless of causation. This conclusion was deemed to not draw from the ICC's conditions and to exceed Cassle's authority under New York Dock conditions. The ICC also identified flaws in Cassle's approach to causation, deciding to reexamine this issue due to Cassle's mistaken belief that New York Dock benefits would cover all future adverse effects on B.A.P. employees. The ICC attributed adverse effects to post-1979 changes driven by copper market conditions, leading to the vacating of the Cassle award on March 2, 1988.

Subsequently, the UTU petitioned the ICC to reconsider its supplemental order, which was consolidated with a review of the Sickles' award. The ICC denied both petitions on September 21, 1989, stating it acted within its review scope by vacating the Cassle decision for egregious error and confirming that Sickles properly applied the burden of proof under New York Dock conditions, finding no errors in Sickles' causation findings. The Unions then sought judicial review of the ICC's September 21, 1989 order, which was consolidated with earlier petitions related to the March 2, 1988 order and the Sickles' arbitration decision. All appellants are referred to as the Unions.

The Unions challenge three specific orders: the Sickles arbitration award from February 2, 1988; the ICC's March 2, 1988 supplemental order reversing the Cassle arbitration award; and the ICC's September 21, 1989 decision denying petitions to reopen and review the Sickles award. They argue that the ICC acted beyond its authority and in an arbitrary manner when reviewing the Cassle award and that the Sickles award, along with the ICC's refusal to review it, improperly grants Arbitrator Sickles excessive review powers. 

The standard for overturning an ICC decision requires proof that the findings were arbitrary, capricious, an abuse of discretion, or not in accordance with law, as outlined in 5 U.S.C. Sec. 706(2). The Unions contend the ICC exceeded permissible review limits established in Lace Curtain but do not dispute the ICC's authority to review arbitration decisions. It is determined that the ICC can review arbitration decisions related to labor protective conditions imposed by it, a shift that began in 1987. The ICC had previously refrained from arbitration reviews, but now limits its review to significant issues of general importance, avoiding factual questions such as causation or benefits calculation. The ICC's review of arbitration awards is consistent with its statutory powers, as these awards are regarded as orders of the ICC, which can amend its orders with a reasoned explanation.

The District of Columbia Circuit affirmed the Commission's authority to review arbitration awards, referencing the case International Brotherhood of Electrical Workers v. ICC, which established that the ICC's interpretation of its statutory authority under the Interstate Commerce Act (ICA) was valid. The ICA's silence on arbitration review allows the ICC to act within the framework of the statute, relevant case law, and its prior decisions. In reviewing the Cassle award, the ICC found that Arbitrator Cassle misinterpreted labor protective conditions and exceeded his authority. The ICC’s decision to review was deemed justified, even though it was initiated without a specific request from B.A.P, as the Commission has the right to reopen proceedings for material errors at any time.

The Unions contested the ICC's basis for review, arguing that Cassle did not exceed his jurisdiction and that the arbitration panel was directed to assess the impact of a control transaction on B.A.P employees, which they claimed was affirmed in the award's comprehensive documents. They asserted that the ICC focused too heavily on a specific statement from Cassle’s Nunc Pro Tunc order and overlooked his alternative rationale. The Unions pointed to earlier orders indicating a concern for establishing a causal relationship. However, the review revealed that the thirty claims rejected by Cassle were not dismissed due to a lack of demonstrated causal connections; other reasons included claimant retirement and jurisdictional limitations. The Unions' arguments were ultimately unpersuasive to the reviewing body.

The ICC determined that Arbitrator Cassle exceeded his jurisdiction by creating an agreement that did not exist, rejecting Cassle's assertion that the Commission had approved such an agreement. This finding aligns with the New York Dock conditions, which are intended to protect employees from negative impacts of approved transactions. Consequently, the ICC's decision to vacate the Cassle award was justified and not arbitrary or capricious.

The Unions contended that the ICC overstepped its jurisdiction by modifying Cassle's factual conclusions regarding causation, citing the ICC's previous statement that it would not review factual issues of causation. However, the ICC clarified that Cassle's findings were based on flawed premises, particularly regarding post-transaction job changes, and thus warranted reevaluation. The ICC's conclusions about the adverse effects on B.A.P. employees were consistent with Cassle's findings, indicating that the ICC did not substitute its own findings for those of Cassle.

Additionally, the Unions challenged the decision of Arbitrator Sickles and the ICC's order related to that case, arguing that Sickles should have been bound by the Cassle award under res judicata. However, since the Cassle award was properly vacated, this argument is moot, and the ICC's orders are affirmed. The document also notes that B.A.P filed a lawsuit in district court concerning Cassle's liability determination, which was stayed pending a final award from the Cassle panel. No precedent was found to support the Unions' claim that an arbitrator is bound by a prior unreviewed arbitration decision.