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Parties Involved:
Interstate Commerce Commission
Respondent
Norfolk and Western Railway Company
Intervenor
United States of America
Respondent
United Transportation Union
Petitioner

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 21, 1994 Decided January 10, 1995

No. 93-1639

UNITED TRANSPORTATION UNION,

PETITIONER

v.

INTERSTATE COMMERCE COMMISSION

AND UNITED STATES OF AMERICA,

RESPONDENTS

NORFOLK AND WESTERN RAILWAY COMPANY,

INTERVENOR

Petition for Review of an Order of the

Interstate Commerce Commission

Norton N. Newborn, Attorney, argued the cause and filed the briefs for petitioner.

Louis Mackall, Attorney, Interstate Commerce Commission, argued the cause for respondents. On

the brief for respondents were Henri F. Rush, General Counsel, and Judith A. Albert, Attorney,

Interstate Commerce Commission, Anne K. Bingaman, Assistant AttorneyGeneral, John J. Powers,

III and Robert J. Wiggers, Attorneys, Department of Justice.

Jeffrey S. Berlin and William P. Stallsmith, Jr., were on the brief for intervenor.

Before: SILBERMAN, HENDERSON, and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge SILBERMAN.

SILBERMAN, Circuit Judge: Petitioner challenges an ICC decision vacating an arbitration

board's awards of protective pay allowances to railway employees who refused to exercise their

seniority to take jobs at other locations after their prior jobs were abolished. We deny the petition.

I.

The ICC is required under the Interstate Commerce Act (ICA), 49 U.S.C. § 11347 (1988),

to condition its approval of railroad merger agreements on the inclusion of "fair and equitable"

arrangementsto protect employee interests. This case involves interpretation of the labor protective

provisions in a Merger Agreement (the Agreement) and related Memoranda of Understanding

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(MOUs) negotiated by the Norfolk and Western Railway Company (N&W) and its labor unions at

the time of the 1962 "Nickel Plate" merger between N&W and the former New York, Chicago and

St. Louis Railway Company.

The Agreement incorporated the provisions of a previous labor protective agreement, the

Washington Job Protection Agreement of 1936 (WJPA). Section 6(a) of the WJPA provides that

employees will be deemed to be placed in a "worse position" and entitled to benefitsfrom the carrier

if, as a result of the merger, or "coordination," they are unable "in the normal exercise of ... seniority

rights" to retain a position in the merged system with compensation at least equivalent to that earned

at the time of the Agreement. This protection was extended in § 1(b) of the Agreement to cover the

employee's working lifetime with the carrier, beyond the WJPA's ordinary five-year limit. Section

1(b) also gave N&Wthe right to "transfer the work ofthe employees protected hereunder throughout

the merged or consolidated system." This right was qualified by a MOU dated January 10, 1962,

paragraph 5 of which specified that § 1(b) did not permit N&W to "transfer any employee (as

distinguished from work) to another job within his craft or class beyond the same general locality as

his point of employment ... without the consent of his representative...."

Petitioner brought this action on behalf of two groups of N&W employees whose jobs were

abolished by the railroad. The "NKP group" includes two trainmen, one yardman, and one fireman

in Indiana who lost their jobsin August 1989 due to a leasing and a crossing automation. The "WLE

group" is composed of 40 firemen and trainmen who lost their positions after N&W sold a 166-mile

section of Nickel Plate's Wheeling and Lake Erie District in Ohio in May 1990. The claimants were

all Nickel Plate employees at the time of the Agreement, and all had seniority entitling them to take

other N&W positions after their jobs were abolished. Rather than exercise their seniority, however,

which might have required a geographic relocation, the employees submitted displacement claims

under the Agreement, asserting that they did not have to accept other work beyond the general

locality of their last place of employment. N&W denied the claims because it viewed the employees'

failure to exercise seniority as a refusal to take available work that disqualified them from any

allowances under the Agreement. In accordance with the Agreement, the dispute was presented to

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an arbitration board.

The arbitration board sustained the claims of all of the WLE group employees and two of the

four NKP group employees. It held that requiring the WLE employees to travel up to 160 miles to

relocate to jobs within their seniority district, but outside their "historic seniority division," would

place the employees in a "worse position" within the meaning of § 1(b) of the Agreement unless the

employer could demonstrate otherwise. And in ruling for two of the NKP employees, the arbitration

board said that an individual is placed in a "worse position" as a result of a forced relocation "by

having to travel an unreasonably long distance" to take a new job. N&W petitioned for ICC review

of the arbitration board's awards under 49 C.F.R. § 1115.8 (1993).

The ICC vacated both decisions. Norfolk & W. Ry. Co. and New York, Chicago & St. Louis

Ry. Co.Merger, Etc. (Arbitration Review), 9 I.C.C.2d 1021 (1993) (N&W Merger). The

Commission reaffirmed its authority "to review arbitral awards arising from the labor protective

conditions that the agency imposes upon its approval of mergers and other transactions embraced

within 49 U.S.C. § 11343(a)." 9 I.C.C.2d at 1025. In Chicago & North W. Transp.

Co.Abandonment, 3 I.C.C.2d 729 (1987) (Lace Curtain), aff'd sub nom. International Bhd. of

Elec. Workers v. ICC, 862 F.2d 330 (D.C. Cir. 1988), the Commission had articulated its standard

ofreview of arbitral awardsinterpreting Commission-imposed agreements. The ICC indicated it was

concerned about "recurring or otherwise significant issues of general importance regarding

interpretation of our labor protective provisions." Lace Curtain, 3 I.C.C.2d at 736. Accordingly,

the ICC said it will vacate arbitral awards where "there is egregious error, the award fails to draw its

essence from [the labor conditions], or the arbitrator exceeds the specific contract limits on his

authority." Id. at 735 (citing Loveless v. Eastern Air Lines, Inc., 681 F.2d 1272, 1275-76 (11th Cir.

1982)).

Applying thisstandard, the ICC held that the arbitration board ignored the "essential bargain"

of the Agreement, which requires employees to exercise their seniority to take available work

anywhere should theyultimatelybe displaced. N&W Merger, 9 I.C.C.2d at 1027. Neither the "worse

position" language of § 1(b) of the Agreement, nor paragraph 5 of the January 10 MOU, modified

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this obligation. The ICC concluded that the MOU's provision that employees need only follow

transferred work within the "general locality" of their employment does not affect the employees'

obligations, as in this case, when their jobs are abolished.

II.

Petitioner argues that the Commission exercised too aggressive a scope of review of the

arbitration board's awards. The ICC should instead have limited itself to that review which a district

court would apply to an award under the Railway Labor Act (RLA): a district court "may not ... set

aside [an award] except for failure of the [Board] to comply with the requirements of [the Act], for

failure ofthe order to conform... to matters within the scope ofthe [Board's] jurisdiction, or for fraud

or corruption by a member of the [Board] making the order." 45 U.S.C. § 153 First (q) (1982). We

have previously described this standard as "amongst the narrowest known to the law." Northwest

Airlines, Inc. v. Air Line Pilots Ass'n Int'l, 808 F.2d 76, 80 & n.19 (D.C. Cir. 1987), cert. denied,

486 U.S. 1014 (1988) (citing Diamond v. Terminal Ry. Ala. State Docks, 421 F.2d 228, 233 (5thCir.

1970)). The union was apparently confident that under that latter standard the awards would remain

unscathed.

We are thus presented with one of those administrative law cases in which the decisive issue

is the appropriate scope of review. But here the key question is the appropriateness of the scope of

review the agency afforded the arbitration board. Petitioner argues that the ICC acted unreasonably

(arbitrary and capricious) when it applied the Lace Curtain scope of review to the arbitration board's

interpretations of labor protective provisions that had been negotiated by the carriers and the

unionas opposed to those formulated by the Commission itselfand then merely adopted by the

Commission.

The ICC's assertion in Lace Curtain of its jurisdiction to review arbitral awards, and the

standards ofreview it applied, have been repeatedly upheld by this court. International Bhd. of Elec.

Workers v. ICC, 862 F.2d 330, 335-38 (D.C. Cir. 1988) (IBEW ); Brotherhood of Maintenance of

Way Employees v. ICC, 920 F.2d 40, 44-45 (D.C. Cir. 1990); Railway Labor Executives' Ass'n v.

United States, 987 F.2d 806, 811-12 (D.C. Cir. 1993) (RLEA). Petitioner does not challenge the

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validity of Lace Curtain review per se (nor could it under existing caselaw); it argues rather that

application of Lace Curtain standards is inappropriate if the Commission is called upon to interpret

language that the parties themselves fashioned. An arbitrator is thought under those circumstances

to have a comparative institutionaladvantage and therefore theCommission should give the arbitrator

the broadest possible deference.

The Supreme Court has insisted, however, that the Commission must oversee the

appropriateness of labor protective provisions required by the statute even when negotiated by the

parties. The Commission must incorporate those provisions into an order approving a merger or a

like transaction and thereafter the Commission has the responsibility to ensure that those provisions

are implemented. See Norfolk & W. Ry. Co. v. Nemitz, 404 U.S. 37, 42 (1971). In other words,

labor protective provisions, once incorporated into an ICC order, are more a matter of public than

private law, unlike the ordinary collective bargaining agreement.

Still petitioner argues that, notwithstanding Nemitz, the most deferential scope of review of

an arbitrator'sinterpretation oflabor protective provisions must be employed here. The Commission

itself, it is asserted, implicitly acknowledged as much in the Lace Curtain opinion byemphasizing that

it had formulated the protective provisions at issue and therefore brought "special competence and

expertise" to determine "whether our intent has been carried out," and that the Commission would

"know best what we intended [the conditions] to mean." See Lace Curtain, 3 I.C.C.2d at 733. If the

parties negotiate the protective provisions, no such Commission expertise can be brought to bear.

Petitioner has a point as to the language in Lace Curtain. Yet it was certainly open to the

Commission to determineasit did in this casethat itsresponsibilityto ensure that labor protective

provisions are applied in accordance with statutory policy overrode any perceived lack of

Commission expertise as to the meaning of the language in the provisions. That, after all, is the

fundamental logic ofNemitz. Moreover, if the Commission were to adopt a different scope of review

as to labor protective provisions that are bargained-for, as opposed to those fashioned by the

Commission, considerable confusion would be created if, as is certainly likely, the provisions were

a product of both processes. (In that regard, the Commission permits the parties to modify the

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1United Steelworkers v. American Mfg. Co., 363 U.S. 564 (1960); United Steelworkers v.

Warrior & Gulf Navigation Co., 363 U.S. 574 (1960); United Steelworkers v. Enterprise Wheel

& Car Corp., 363 U.S. 593 (1960). 

2We note, en passant, as did the Commission, that petitioner did not explain why RLA review

in particular is appropriate here. See N&W Merger, 9 I.C.C.2d at 1026 & n.8. The Agreement

does not incorporate RLA standards or provide for creation of an RLA Public Law Board to

resolve labor disputes. In United Transp. Union v. Norfolk & W. Ry. Co., 822 F.2d 1114, 1122

(D.C. Cir. 1987), cert. denied, 484 U.S. 1006 (1988), we held that where an arbitral award is

"directly traceable to labor protective conditions imposed by the Commission in carrying out its

responsibilities" under the ICA, "[i]t does not derive its vitality in any part from the RLA and

there is no particular reason to suggest that it should be reviewed" under RLA standards. 

Compare Brotherhood of Locomotive Eng'rs v. ICC, 885 F.2d 446, 449 (8th Cir. 1989) (ICC

lacks jurisdiction to review arbitrator's award where parties' agreement specifically invoked RLA

standards and court review procedures). 

provisions of a merger or like agreement through collective bargainingbut always subject to the

Commission's approval.)

In sum, we think the Commission quite reasonably adopted the Lace Curtain scope ofreview

of the arbitration board's awards. That standard is also deferential but somewhat less so than the

RLA standard. The critical difference is that the Lace Curtain standard, like the standards applied

by courts under the Steelworkers Trilogy1of cases, permits inquiry as to whether the arbitral award

"draws its essence from the collective bargaining agreement." United Steelworkers of America v.

Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960); see Lace Curtain, 3 I.C.C.2d at 735. In

applying Lace Curtain in this case, the Commission vacated the awards "because they fundamentally

misinterpret and fail to draw their essence from" the labor protective conditions. N&W Merger, 9

I.C.C.2d at 1027.2

Petitioner alternatively argues that the Commission is clearly wrong: the arbitration board's

awards do, in fact, draw their essence from the Agreement. Indeed, according to petitioner, the

arbitration board's interpretation is the more plausible construction of ambiguous language. We do

not reach this issue, however, because it was not raised by petitioner before the Commission, see

N&W Merger, 9 I.C.C.2d at 1025 ("UTU's sole argument here is that Lace Curtain review is

precluded because the disputed labor protective conditions were bargained-for rather than

Commission-derived conditions ..."), and "claims not presented to the agency may not be made for

the first time to a reviewing court." Washington Ass'n for Television and Children v. FCC, 712 F.2d

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677, 680 (D.C. Cir. 1983); United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 36-37

(1952).

The petition for review is therefore denied.

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