United Transportation Union v. Surface Transportation Board
Docket: Nos. 96-1201, 96-1202
Court: Court of Appeals for the D.C. Circuit; June 13, 1997; Federal Appellate Court
The United Transportation Union (UTU) and the Railway Labor Executives’ Association (RLEA) challenged an order from the Surface Transportation Board (STB) regarding a coordination of railway service proposed by CSX Transportation, Inc. (CSXT). The STB ruled that the coordination should follow the labor protective conditions under the New York Dock rules rather than the Railway Labor Act (RLA). The Unions argued that the STB lacked jurisdiction and that its decision was arbitrary and capricious. However, the court denied their petition for review.
The background includes a 1980 merger authorized by the Interstate Commerce Commission (ICC) that allowed CSX Corporation to control several railroads, with conditions set to protect employees under the New York Dock rules. Following this, CSXT emerged as a controlling entity in 1987, while work continued to be allocated based on the original companies' identities. In 1981, an agreement established coordinated operations over a specific territory, but in 1993, CSXT sought to expand these operations.
UTU refused to negotiate under New York Dock procedures, citing that modifications should follow RLA procedures according to the 1981 Agreement. After failing to resolve the procedural disagreement, the matter went to arbitration, where the panel determined that RLA procedures were applicable. CSXT subsequently appealed to the ICC, which was later succeeded by the STB, resulting in the STB vacating the arbitration decision and mandating negotiations under New York Dock procedures. The Unions then sought judicial review of the STB's order.
The Unions argue that the Surface Transportation Board (STB) lacked jurisdiction to vacate the arbitration panel's decision but have waived this argument by not raising it earlier. Specifically, the United Transportation Union (UTU) indicated it was appropriate for the Interstate Commerce Commission (ICC) to review the award, and the Unions admitted they did not assert a jurisdictional challenge until this appeal. As established in precedent, claims not presented to the agency cannot be raised in court for the first time. The Unions attempt to circumvent this by claiming the STB exceeded its authority by interpreting Article XVIII of the 1981 Agreement, which they argue should be decided by adjustment boards under the Railway Labor Act (RLA). However, the issue of Article XVIII was presented to the STB during CSXT's petition for review, which included both jurisdictional questions and the interpretation of the 1981 Agreement. The Unions' assertion that their claim pertains to "subject matter jurisdiction" does not apply, as agency jurisdiction challenges cannot be raised for the first time on appeal, barring specific exceptions not applicable in this case.
On the merits, the Unions contend that the STB's decision to vacate the arbitration ruling was arbitrary and capricious. The STB's scope of review, outlined in the Lace Curtain decision, allows for the review of arbitration involving significant labor protective provisions and permits vacatur only in cases of egregious error, failure to adhere to the essence of the collective bargaining agreement, or if the arbitrator exceeds their authority.
The Unions assert that Article XVIII of the 1981 Agreement mandates the application of Railway Labor Act (RLA) procedures to the 1993 Proposed Coordination, arguing that the arbitrators erred in their ruling. However, the interpretation of Article XVIII is ambiguous. It can be understood to require RLA procedures for any modifications affecting the 1981 Agreement's territory or employees, as the Unions argue. Conversely, the Surface Transportation Board (STB) interprets it as limiting Article XVIII's scope to the specific subject matter of the 1981 Agreement, thus excluding the 1993 Proposed Coordination.
The STB's interpretation suggests that changes involving different geographic areas do not fall under Article XVIII’s requirements. For instance, pay rate changes within the Coordinated Territory would require RLA procedures, while a new coordination approved by the Board would adhere to New York Dock rules despite potential impacts on pay rates. Given this ambiguity, the STB's view that Article XVIII does not apply to the 1993 Proposed Coordination is deemed reasonable.
Furthermore, the Interstate Commerce Act (ICA) balances employee interests with public interests by facilitating efficient consolidations. Former 49 U.S.C. 11341(a) provided exemptions from antitrust laws to expedite transactions once approved by the ICC. The Supreme Court, in Norfolk, Western Railway Co. v. American Train Dispatchers Ass’n, clarified that these exemptions encompass collective bargaining obligations, indicating that RLA procedures could delay necessary consolidations and diminish their intended efficiencies. The Court concluded that, post-approval, the public interest may necessitate the supersession of collective bargaining terms and RLA procedures to achieve consolidation.
While compliance of the 1993 Proposed Coordination with labor protective conditions of the ICA remains unresolved until negotiations occur under New York Dock, the Dispatchers ruling underscores the importance of expedited consolidation. Therefore, the STB was justified in determining that parties wishing to replace New York Dock procedures with RLA procedures must clearly express their intent, which Article XVIII fails to do.
Determining whether an arbitration decision is an "egregious error" involves assessing its adverse impact in relation to other arbitration decisions rather than solely the reasoning quality. The Surface Transportation Board (STB) evaluates whether inconsistencies in arbitration outcomes affect its implementation of the law. An example is given where a different arbitration panel interpreted similar contract language to not override existing procedures, which the STB affirmed, indicating that reconciling conflicting decisions is not arbitrary. The petition for review was denied. The Interstate Commerce Commission Termination Act of 1995 (ICCTA) replaced the Interstate Commerce Commission (ICC) with the STB, with applicable laws depending on events before and after the enactment. The legal framework under scrutiny is former 49 U.S.C. 11347, mirroring current regulations. The case involves CSXT’s control over various railroads and highlights differences in dispute resolution under the Railway Labor Act (RLA) compared to New York Dock procedures, with the RLA being more prolonged. The RLEA, an intervenor, did not contest the Board’s jurisdiction. The case's context included service coordination necessary for consolidation, which does not present an issue regarding Dispatchers. The STB concluded that Article XVIII does not mandate RLA procedures, leaving unresolved whether public interest might override existing procedures. The STB has not yet substantively interpreted New York Dock conditions as the arbitration decision deemed them inapplicable to the proposed coordination.
