2001 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-2-2001

Union RR Co v. United Steelworkers

Precedential or Non-Precedential:

Docket 97-3680

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"Union RR Co v. United Steelworkers" (2001). 2001 Decisions. Paper 38.

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Filed March 1, 2001 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 97-3680 

UNION RAILROAD COMPANY 

v. 

UNITED STEELWORKERS OF AMERICA; UNITED 

STEELWORKERS OF AMERICA - DISTRICT 10; UNITED 

STEELWORKERS OF AMERICA - LOCAL 3263, 

 Appellants 

Appeal from the United States District Court 

for the Western District of Pennsylvania 

(D.C. Civil Action Nos. 96-cv-02095) 

District Judge: Honorable Donetta W. Ambr ose 

No. 98-6511 

UNITED STEELWORKERS OF AMERICA, 

AFL-CIO-CLC, 

 Petitioner 

v. 

UNITED STATES OF AMERICA; 

and 

SURFACE TRANSPORTATION BOARD, 

 Respondents 
Union Railroad Company ("URR") and 

Bessemer and Lake Erie Railroad 

Company ("B&LE"), 

 Intervenors* 

 *(See Clerk Order of 

 2/16/99) 

On Petition for Review of an Order of the 

Surface Transportation Board enter ed in 

STB Finance Docket No. 31363 (Sub-No. 3) 

Argued January 25, 2000 

Before: GREENBERG,** NYGAARD and 

ROTH, Circuit Judges 

(Opinion filed: March 1, 2001) 

Jeffrey S. Berlin, Esquire (Ar gued) 

Mark E. Martin, Esquire 

Sidley & Austin 

1722 Eye Street, N.W. 

Suite 300 

Washington, DC 20006 

 Attorneys for Appellee/Intervenors 

David R. Jury (Argued) 

Assistant General Counsel 

United Steelworkers of America 

5 Gateway Center 

Pittsburgh, PA 15222 

 Attorney for Appellants/Petitioner 

_________________________________________________________________ 

** After this case was argued, but prior to the issuance of this opinion, 

Judge Greenberg took senior status on June 30, 2000. 

 2 
 Robert J. Wiggers, Esquire 

 John J. Powers, III, Esquire 

 United States Department of Justice 

 Antitrust Division, Room 10535 

 601 D Street, N.W. 

 Patrick Henry Building 

 Washington, DC 20530 

 Attorneys for Respondent 

 Henri F. Rush 

 General Counsel 

 Theodore K. Kalick, Esquire (Argued) 

 Surface Transportation Board 

 Office of General Counsel 

 1925 K Street, N.W. 

 Suite 600 

 Washington, DC 20423 

 Attorneys for Surface 

 Transportation Board Respondent 

OPINION OF THE COURT 

ROTH, Circuit Judge: 

These consolidated cases present the question whether a 

federal district court has subject matter jurisdiction to 

adjudicate challenges to changes to a collective bar gaining 

agreement, made in connection with a rail mer ger 

authorized by the Surface Transportation Board (STB). The 

District Court and the STB concluded that the latter has 

exclusive authority to resolve labor disputes arising out of 

STB-approved rail consolidations. For the r easons set out 

below, we will affirm the decision of the District Court and 

deny the petition for review of the decision of the STB. 

I. Factual and Procedural History 

In 1988, Transtar, Inc., a transportation holding 

company located in Monroeville, Pennsylvania, acquired 

control of the Union Railroad Company and the Bessemer 

and Lake Erie Railroad Company, along withfive other rail 

 3 
carriers and one water carrier. This consolidation was 

achieved pursuant to an Interstate Commerce Commission 

(ICC) authorization (Control Order), which, under 49 U.S.C. 

S 10505, exempted the transaction from the prior approval 

requirements of 49 U.S.C. SS 10746, 11321, and 11343.1 

Blackstone Capital Partners, L.P., and USX Corporation -- 

Exemption from 49 U.S.C. 10746, 11321 and 11343, 

Finance Docket No. 31363, served Dec. 23, 1988. The ICC 

found that exempting the transaction would "minimiz[e] 

administrative expense" and "foster sound economic 

conditions and encourage efficient management." Id. slip 

op. at 2. When the ICC authorized a merger , it was required 

by 49 U.S.C. S 11326 to impose labor pr otections for 

affected employees. Here, the ICC complied with S 11326 by 

applying the New York Dock employee protective conditions. 

The New York Dock conditions ar e those adopted in New 

York Dock Ry. - Control - Br ooklyn Eastern District 

Terminal, 360 I.C.C. 60, 84 (1979), aff 'd. sub. nom. New 

York Dock Ry. v. United States, 609 F .2d 83 (2d Cir. 1979). 

Under New York Dock, changes r elated to authorized

transactions are accomplished through implementing 

agreements negotiated between the rail carrier and 

representatives of the employees. If the parties cannot agree 

to the terms and conditions of the implementing agreement, 

either party may unilaterally invoke an arbitration

proceeding to resolve the dispute.2 

_________________________________________________________________ 

1. The ICC Termination Act of 1995, Pub. L. No. 104-88, 109 Stat. 803, 

abolished the ICC (S 101, 109 Stat. at 804) and transferred its remaining 

functions to the Surface Transportation Board (STB) effective January 1, 

1996. The Act also resulted in the renumbering of various provisions of 

the ICA. Following are the former section numbers that are relevant here 

with the new numbers in brackets: S 10505[S 10502]; S 11341 [S 11321]; 

S 11347 [S 11326]. The new pr ovisions were re-enacted without 

substantive change. In referring to the statute in this opinion, we will 

employ the current section numbering. 

2. More specifically, the New York Dock conditions provide compensatory 

benefits to employees who are adversely af fected by a railroad merger or 

control transaction, including protecting affected employees' wages for 

up to six years. The New York Dock conditions also fix procedures for 

making adjustments in workforces and labor agr eements that will permit 

carriers to implement an authorized transaction. Article I, S 4 requires a 

 4 
Prior to the 1988 consolidation, the Union Railr oad 

Company and the Bessemer and Lake Erie Railr oad 

Company (collectively, the Railroad) had maintained

separate accounting departments. The workers in each of 

these departments worked solely for their respective 

carriers and under separate collective bargaining 

agreements. The clerical workers employed by Union 

Railroad were members of the United Steelworkers of

America (USWA); the clerical workers of Bessemer and Lake 

Erie were members of the Transportation Communications 

International Union. 

As part of the implementation of the 1988 Contr ol Order, 

the Railroad sought to coordinate certain clerical work by 

moving Union Railroad's accounting department to 

Bessemer and Lake Erie Railroad. As requir ed by Article 1, 

S 4, of the New York Dock conditions, the Railroad notified 

the unions of its proposed coordination in a letter dated 

September 3, 1996. The notice stated that nine new 

positions would be established at Bessemer and Lake Erie 

Railroad to perform the consolidated work; nine positions 

at Union Railroad would thereby be eliminated. The notice 

also explained that the nine former Union Railroad 

employees would be incorporated into the existing 

Bessemer and Lake Erie Railroad clerical seniority roster 

according to their Union Railroad seniority rank. 

The USWA, the Union Railroad clerical union, claimed 

that the proposed coordination of work would violate a 

scope rule contained in the United Railroad/USW A's

collective bargaining agreement, which forbade non-Union 

Railroad employees from perfor ming its accounting work.3 

_________________________________________________________________ 

carrier to give affected employees ninety days' advance notice of a 

proposed transaction. The parties must begin negotiation of an 

implementing agreement within ten days of the notice; after thirty days, 

either party may submit the dispute to arbitration before an arbitrator 

acting pursuant to STB authority. If the parties ar e unable to select an 

arbitrator within five days, they may ask the National Mediation Board 

to appoint one. The arbitration hearing must begin within twenty days of 

the arbitrator's designation and the decision is to be rendered within 

thirty days of the hearing. 360 I.C.C. at 84, 85. 

3. The scope rule provided: "[If][a]ny person outside the bargaining unit 

or any person not covered by the bargaining unit performs work in 

 5 
The USWA maintained that changes to the scope rule must 

be made pursuant to the Railway Labor Act (RLA), 45

U.S.C. SS 151 et seq. The USW A also argued that it was not 

a party to any other agreement, such as the W ashington 

Job Protection Agreement of 1936,4 that would authorize 

the contemplated changes. Accordingly, the USW A asserted 

that it considered the Railroad's letter of September 3, 

1996, detailing the planned coordination, as a notice of 

proposed changes in the collective bargaining agreement 

under S 6 of the RLA. 

On October 26, 1996, the Railroad responded by 

providing formal notice that it was invoking arbitration 

under Article I, S 4, of New York Dock. The USWA countered 

in a letter dated November 1, 1996, that it could not be 

compelled to arbitrate because the RLA allows changes to 

existing collective bargaining agreements only if the 

changes are arbitrated with the mutual consent of both 

parties. 45 U.S.C. S 157. It would ther efore consider the 

Railroad's invocation of arbitration under New York Dock as 

a termination of voluntary negotiations underS 6 of the 

RLA. The USWA further asserted that it would not aid in 

the selection of a New York Dock arbitrator. The Railroad 

subsequently requested the National Mediation Board

(NMB) to appoint a neutral referee to arbitrate the dispute. 

The NMB appointed Arbitrator Witt. 

On October 29, 1996, the USWA served the Railroad with 

an RLA S 6 bargaining proposal, asking for numerous

_________________________________________________________________ 

violation of this section and the employee who otherwise would have 

performed this work can reasonably be identified, the Company shall 

pay such employee the applicable standard hourly rate for the time 

involved or for four (4) hours, whichever is gr eater." This rule was 

first 

adopted in 1978 and subsequently revised in 1981. 

4. The Washington Job Protection Agr eement was signed by many of the 

nation's rail carriers and unions in 1936. It r equired carriers to 

compensate employees dismissed or displaced as a r esult of railroad 

mergers and to pay relocating costs. It also provided that carriers give 

notice of consolidation to employees and to negotiate implementing 

agreements for coordinating workfor ces. Disputes concerning the 

interpretation of agreements were submitted to binding arbitration. See 

New York Dock, 609 F. at 87. 

 6 
changes to the collective bargaining agr eement. The 

Railroad responded by filing this action, seeking declaratory 

and injunctive relief under the Declaratory Judgement Act, 

28 U.S.C. S 2001, and the RLA, 45 U.S.C. S 151. The

Railroad sought a declaration that the USW A's October 29, 

1996, S 6 notice was premature because of a moratorium 

clause in the existing collective bargaining agreement and 

that self-help was not available. 

The USWA filed its counterclaim on December 9, 1996, 

seeking declaratory and injunctive relief pr eventing the 

Railroad from carrying out its proposed coordination of 

clerical workers through the New York Dock arbitration 

procedure. Compelled arbitration of the dispute under this 

procedure, the USWA claimed, would violate its rights 

under the RLA. The USWA next filed a motion for summary 

judgment, with respect to both the Railr oad's claim and its 

counterclaim. The Railroad, in tur n, filed a motion to 

dismiss the counterclaim for lack of subject matter

jurisdiction. 

On November 24, 1997, the District Court found, inter 

alia, that it lacked subject matter jurisdiction over the 

USWA's counterclaim: "A review of the relevant case law 

persuades me that the propriety of the Railr oad's invocation 

of the New York Dock process must be resolved by the STB, 

and by the Court of Appeals. I do not have jurisdiction over 

these matters." Union Railroad Company v. United 

Steelworkers of America, No. 96-2095, slip op. at 8 (WDPA, 

Nov. 1997). The USWA timely appealed the District Court's 

November 23, 1997, dismissal.5 

While the action was pending in the District Court, the 

New York Dock arbitration proceeded, with the USWA 

preserving its objections to the arbitrator's jurisdiction. On 

October 21, 1997, Arbitrator Witt issued her award (Witt 

Award), which imposed, with a few modifications, the 

implementing agreement that the Railroad had proposed. 

On November 10, 1997, the USWA petitioned the STB for 

an administrative review of the Witt A ward, pursuant to 49 

_________________________________________________________________ 

5. The District Court has also granted USW A's motion for summary 

judgment on the complaint, making the order appealed from a final 

order. 

 7 
C.F.R. S 1115.8. By a decision dated December 16, 1998, 

the STB declined review of the Witt A ward. Union Railroad 

Company and Bessemer and Lake Erie RailroadArbitration Review - United Steel Workers of America, STB 

Finance Docket No. 31363 (Sub-No. 3), served Dec, 16, 

1998. The USWA filed a timely petition for review of the 

STB decision. 

II. Jurisdiction 

The District Court dismissed the USWA's counterclaim 

for lack of subject matter jurisdiction. We have jurisdiction 

under 28 U.S.C. S 1291 to review thefinal judgment of the 

District Court. 

The STB had jurisdiction over the USWA's petition to 

review the arbitral decision under 49 U.S.C.SS 10502, 

11323, and 11326. Our jurisdiction over the USW A's

petition to review the STB's decision is based on 28 U.S.C. 

SS 2321(a), 2342(5), and 2344. 

III. Standard of Review 

We exercise plenary review over the District Court's 

dismissal of the USWA's counterclaim for lack of subject 

matter jurisdiction. See Erienet, Inc. v. V elocity Net, Inc., 

156 F.3d 513, 514 (3d Cir. 1998). 

We may not upset the decision of the STB unless we find 

that it is arbitrary, capricious, or in excess of its statutory 

authority. See National Small Shipments T raffic Conference, 

Inc., v. United States, 887 F.2d 443, 445 (3d Cir. 1989). 

IV. Discussion 

A. The District Court Decision 

The jurisdictional question at issue here--whether the 

District Court had subject matter jurisdiction to adjudicate 

the USWA's challenge to the Railroad's implementation of 

its 1988 ICC-authorized consolidation--requir es us to 

examine the relationship between the Railr oad Labor Act 

and the Interstate Commerce Act. The USW A argues that 

the RLA and the ICA are "co-equal" and complementary 

 8 
statutory schemes and that, therefore, the District Court 

had general federal subject matter jurisdiction pursuant to 

28 U.S.C. S 1331 to hear its counterclaim seeking 

enforcement of its rights under the RLA. The Railroad 

contends that the ICA is the exclusive statutory scheme for 

dealing with railroad consolidations and that accordingly 

the STB has exclusive jurisdiction to consider disputes 

concerning changes to labor agreements which are 

necessary to implement an STB-authorized consolidation. 

We agree with the Railroad. 

The RLA was passed in 1926 to encourage collective 

bargaining between railroads and their employees, thereby 

preventing strikes and interruptions to interstate 

commerce. See Detroit and Toledo Shore Line Railroad Co. v. 

United Transportation Union, 396 U.S. 142, 148 (1969). To 

this end, the RLA establishes elaborate procedures for the 

negotiation, enforcement, and modification of collective 

bargaining agreements between railr oad carriers and 

railroad labor unions. The RLA also imposes upon parties 

the obligation to engage in good-faith negotiations and to 

maintain status quo without resorting to self-help while the 

RLA's remedies are being exhausted. The exhaustion of the 

RLA's remedies is, however, "an almost interminable

process." Id. at 149. "[T]he procedures of the Act are 

purposely long and drawn out, based on the hope that 

reason and practical considerations will pr ovide in time an 

agreement that resolves the dispute." Brotherhood of Ry. & 

Steamship Clerks, etc. v. Florida East Coast Ry. Co. , 384 

U.S. 238, 246 (1966). 

The ICA, on the other hand, gives substance to what has 

been, since the adoption of the Transportation Act of 1920, 

the nation's policy of pursuing railroad carrier consolidation 

as a means of promoting the health and efficiency of the 

railroad industry: "[C]onsolidation of the railroads of the 

country, in the interest of economy and efficiency, became 

an established national policy . . . so intimately r elated to 

the maintenance of an adequate and efficient rail 

transportation system that the `public inter est' in the one 

cannot be disassociated from that in the other ." United 

States v. Lowden, 308 U.S. 225, 232 (1939); see also, St. 

Joe Paper Co. v. Atlantic Coast Line R. Co., 347 U.S. 298, 

 9 
315-321 (1954). The ICA grants the STB exclusive authority 

to approve mergers and acquisitions of transportation 

carriers within its jurisdiction. 49 U.S.C. S 11323(a). It also 

provides that STB-authorized consolidations ar e exempted 

from "the antitrust laws and from all other law, including 

State and municipal law, as necessary to let that rail 

carrier . . . carry out the transaction." 49 U.S.C. S 11341(a).6 

The authorization may take one of two forms. The STB 

may, under 49 U.S.C. SS 11323-11324, affir matively

approve a merger, acquisition of control, or other rail 

consolidation by determining that it is "consistent with the 

public interest." U.S.C. S 11324(c). Alternatively, 49 U.S.C. 

S 10505 allows the STB to authorize a consolidation by 

granting an exemption for the prior approval r equirements 

of SS 11323-11324.7 In either case, the STB is required to 

impose labor protective measures for af fected employees as 

a condition of consolidation authorizations. 49 U.S.C. 

S 11326. 

Our analysis of the relationship between the RLA and the 

ICA begins with the most recent Supreme Court decision on 

the subject, Norfolk and Wester n Ry. Co. v. American Train 

Dispatchers' Ass'n., 499 U.S. 117, 132 (1991). There, labor 

unions in two separate cases challenged ICC or ders that 

relieved the railroad carriers from collective bargaining 

_________________________________________________________________ 

6. 49 U.S.C. S 11321(a) provides: 

 The authority of the Board under this subchapter is exclusive. A 

 rail carrier or corporation participating in or r esulting from a 

 transaction approved by or exempted by the Boar d under this 

 subchapter may carry out the transaction, own and operate 

 property, and exercise control or franchises acquired through the 

 transaction without the approval of a State authority. A rail 

carrier, 

 corporation, or person participating in that appr oved or exempted 

 transaction is exempt from the antitrust laws and from all other 

 law, including State and municipal law, as necessary to let that 

rail 

 carrier, corporation, or person carry out the transaction, hold, 

 maintain, and operate property, and exer cise control or franchises 

 acquired through the transaction. 

7. Exemption from the full approval pr ocess is appropriate when "the 

transaction or service is of limited scope" or when "the application in 

whole or in part of the provision is not needed to protect shippers from 

the abuse of market power." 49 U.S.C.S 10505. 

 10 
agreement obligations. The unions argued that S 11321(a), 

which confers to transactions necessary for the 

implementation of ICC-authorized consolidations immunity 

from "all other law," does not abr ogate existing collective 

bargaining agreements. Modification of such agreements, 

the unions insisted, must be made pursuant to the RLA. 

The Supreme Court disagreed: "RLA is a law that, under 

[S 11321(a)], is superseded when an ICC-approved 

transaction requires abrogation of collective-bargaining 

obligations." Id. at 132 (citations omitted). This conclusion, 

the Supreme Court explained, is consistent with the ICA's 

overall statutory scheme. The ICA was designed to pr omote 

"economy and efficiency in interstate transportation by the 

removal of the burdens of excessive expenditure." Texas v. 

United States, 292 U.S. 522, 534-35 (1934). Recognizing 

that consolidations of carriers would result in employee 

dismissals, transfers and other changes detrimental to 

employees, the ICA mandated that the ICC impose 

safeguards, like the New York Dock employee protective 

conditions, to ensure that employee inter ests of the affected 

parties are protected. Section 11321(a), in turn, guaranteed 

that, once these interests are accounted for, the ICC would 

be free from requirements, such as provisions of the RLA, 

that might impede the consolidation. If the RLA wer e not 

superseded by the ICA, the Court observed, "rail carrier 

consolidations would be difficult, if not impossible, to 

achieve," because "[t]he resolution process for major 

disputes under the RLA would so delay the pr oposed

transfer of operations that any efficiencies the carriers 

sought would be defeated." Dispatchers, 499 U.S. at 133 

(citations omitted).8 

_________________________________________________________________ 

8. The Union argues, based in part on our decision in Railway Labor 

Executives' Ass'n. v. Pennsylvania & Lake Erie Railr oad Co., 845 F.2d 

420 (3d. Cir. 1988), that the RLA and the ICA are co-equal and 

complementary sources of legal rights. In that case, we focused on the 

differing policy goals animating the RLA and the ICA. The former, we 

stated, advances the policy of avoiding "disruptions in the railroad 

industry by promoting collective bargaining and preventing strikes." Id. 

at 436. The latter promoted the policy goal of"encourag[ing] the flow of 

capital into the [rail] industry" and "expedit[ing] the approval process 

so 

that efficient transactions are not derailed by red tape." Id. In light of 

 11 
Although Dispatchers did not directly address the 

jurisdictional question at issue here, the Ninth and Fourth 

Circuit Courts of Appeals have interpreted Dispatchers, and 

the relationship between the RLA and the ICA that it 

envisions, as compelling the conclusion that the ICC (now 

the STB), not the district court, has the exclusive authority 

to resolve labor disputes that arise fr om implementing an 

ICC (or STB)-authorized transaction. Railway Labor 

Executives' Ass'n. v. Southern Pacific T ransportation Co., 7 

F.3d 902 (9th Cir. 1993); Nor folk & Western Ry. v.

Brotherhood of Railroad Signalmen, 164 F.3d 847 (4th Cir. 

1998). 

In Southern Pacific, the ICC appr oved a merger of certain 

railroads pursuant to 49 U.S.C. S 11321(a) and, in 

compliance with 49 U.S.C. S 11326, imposed the New York 

Dock conditions to protect existing and future employees 

from the adverse effects of the mer ger. When time came for 

the merged railroad to coordinate work, it claimed, believing 

that the coordination was incident to the mer ger, that the 

changes should be implemented through the New York 

Dock procedures. The union ther e, like the USWA in the 

present case, countered that changes to the existing 

collective bargaining agreement could be made only 

through RLA procedures. The union br ought suit, claiming 

that a New York Dock arbitration of its dispute without its 

consent would violate its RLA rights. 

The Ninth Circuit affirmed the district court's ruling that 

it lacked subject matter jurisdiction over the suit. The court 

stated that the Supreme Court's Dispatchers decision, while 

not directly on point, was determinative: 

 First of all, Dispatchers reiterates the proposition that 

 under the ICA, "the Interstate Commerce Commission 

_________________________________________________________________ 

these differences, we explained, the judiciary "must reconcile the two 

statutes as much as possible and attempt to r each a result that will 

produce the minimum possible conflict with Congressional intent." Id. at 

423. But in invoking our decision in P&LE, the Union neglects to 

acknowledge that we were without the benefit of the Supreme Court's 

decision in Dispatchers. To the extent our observations on the 

relationship between the RLA and the ICA conflict with those of the 

Supreme Court in Dispatchers, ours must give way. 

 12 
 [has] exclusive authority to examine, condition, and 

 approve proposed mergers and consolidations of 

 transportation carriers within its jurisdiction." Second, 

 Dispatchers makes clear that under Section [11321(a)], 

 the ICC has the effective power of exempting parties to 

 a railroad merger from any pr ovision of the RLA, by 

 approving the merger. It follows from these 

 propositions that where a railroad which has been a 

 party to an ICC approved merger claims that certain 

 proposed actions are incident to that mer ger and 

 exempt from RLA procedures under section [11321(a)], 

 the ICC has exclusive authority to resolve a challenge 

 to these claims. 

Southern Pacific, 7 F.3d at 906 (internal citations omitted). 

The court went on to state that the conclusion that

jurisdiction belongs to the ICC and not the district court 

also comports with the policy objective underlying the ICA-- 

the promotion of economy and efficiency of interstate 

transportation. See Dispatchers, 499 U.S. at 132; Texas v. 

United States, 292 U.S. at 134. Integral to meeting this 

objective is the authority vested in the ICC to substitute 

RLA procedures with the expedited dispute resolution 

prescribed by the New York Dock conditions. But, if parties 

were allowed to litigate in federal district court the propriety 

of invoking the New York Dock pr ocess, the ICC's ability to 

meet this stated objective of facilitating rail consolidations 

would be hindered: "We would invite a barrage of collateral 

challenges to the ICC's authority which would be likely to 

frustrate and delay the administration of mer gers in a way 

that section [11321(a)] was clearly meant to avoid." Id. at 

907. 

The Fourth Circuit in Norfolk & W estern Ry. v. 

Brotherhood of Railroad Signalmen, 164 F.3d 847 (4th Cir. 

1998) reached the same conclusion. As in Southern Pacific 

and the present case, the unions in Signalmen sought a 

declaratory judgement in district court that changes to 

collective bargaining agreements in connection with the 

implementation of a STB-authorized rail consolidation must 

be made pursuant to RLA procedures. The district court 

dismissed the case for lack of subject matter jurisdiction. 

The court of appeals found that the dismissal was pr oper. 

 13 
Drawing on Dispatchers, the court held that within the 

context of an STB-authorized merger,"any effort to 

challenge changes in the collective bargaining agreements 

proposed . . . must be presented in thefirst instance to the 

STB under its exclusive jurisdiction and may not be

negotiated under the RLA."9Id. at 855. 

The USWA argues that Dispatchers , Southern Pacific, and 

Signalmen are inapposite because the consolidations in 

those cases were authorized through the full approval 

process of S 11323 while the merger here was achieved 

through the abbreviated process ofS 10502. This 

distinction is critical, according to the USW A, because the 

_________________________________________________________________ 

9. The Eleventh Circuit came to the same conclusion--although by way 

of a different rationale--in Brotherhood Ry. Carmen, Div. Of Transp. 

Comm. Int'l Union (TCU) v. CSX Transp., Inc. , 855 F.2d 745 (11th Cir. 

1988), a pre-Dispatchers case. Ther e, the ICC approved a merger of 

certain rail carriers and incident to that appr oval imposed the New York 

Dock conditions. The consolidated carrier then proposed to close down a 

repair shop and transfer the work and employees to another facility. 

Attempts between the carrier and the union r epresenting the affected 

employees to negotiate an implementing agreement on the transfer failed 

and the carrier sought arbitration of the dispute under New York Dock. 

The union in turn filed an action in district court arguing, inter alia, 

that 

the implementing agreement was not gover ned by the New York Dock 

procedures and that compulsory arbitration would violate the RLA. While 

the action in district court was pending, a New York Dock arbitrator 

considered the dispute and rendered a decision. Both parties appealed 

the arbitrator's decision to the ICC. Before the appeal was heard by the 

ICC, the district court granted summary judgment to the carrier. 

A panel of the Eleventh Circuit vacated the district court's order, 

finding that the district court lacked subject matter jurisdiction to 

adjudicate the dispute. The court based its decision on Congress's grant 

of exclusive jurisdiction to the courts of appeals to review ICC orders. 

28 

U.S.C. SS 2231(a), 2342(5). The court explained: "The arbitration opinion 

and award . . . is authoritative only as an extension of the authority of 

the ICC. . . . [T]he present lawsuit is, in effect, a collateral attack on 

the 

arbitration award; it is an attempt by [the union] to have the district 

court set aside the arbitration award, rather than going through the 

normal channels of appeal to the ICC and then to the Court of Appeals." 

Id. at 745. By assuming jurisdiction over the dispute, the court ruled, 

the district court improperly interfer ed with the normal appeals 

procedure and encroached on the court of appeals' exclusive authority to 

review ICC decisions. Id. 

 14 
S 11321(a) exemption "from all other laws" applies only to 

S 11323 transactions. This argument is based on the

language of S 11321(a), which provides that "[t]he authority 

of the Board under this subchapter is exclusive." (emphasis 

added). Section 10502 is not in the same subchapter as 

S 11321. See Railway Labor Executive Ass'n v. United 

States, 987 F.2d 806, 813 (D.C. Cir . 1993) ("That decision 

[Dispatchers] is not applicable her e, however, because 

S [11321(a)] applies to transactions exempted under

subchapter III, of which it is a part. The Commission 

exempted the transaction at issue here underS [10502], 

which is in subchapter I"). The USWA ar gues, therefore, 

that when the STB is not given the power of making 

exemptions--that is, when its actions are not taken

pursuant to S 11321(a)--there is no basis for granting 

exclusive jurisdiction to the STB. 

The USWA's argument misses the mark, confusing the 

STB's scope of exemption under S 11321(a) with its 

jurisdictional authority over disputes arising out of the 

implementation of railroad consolidations. Although

S 11321(a) expressly can preempt the RLA, the STB's

jurisdictional exclusivity does not depend alone on

S 11321(a). Rather, the STB also finds jurisdictional 

authority in the overall statutory design of the ICA. 

Congress, in seeking to promote the economy and efficiency 

of the rail industry, has given the STB considerable 

authority over railroads, granting to it exclusive jurisdiction 

to authorize railroad mergers and consolidations. 49 U.S.C. 

S 11321(a). See Dispatchers, 499 U.S. at 119-20. 

Among the matters which the ICA puts within the 

exclusive jurisdiction of the STB is the relationship between 

the railroad and its employees. Section 11324 mandates 

that the STB consider when approving a mer ger "the

interest of the rail carrier employees af fected by the 

transaction." 49 U.S.C. S 11324(b)(4). Mor e importantly, 

S 11326 grants to the STB both the statutory authority and 

the mandate to impose on the rail carrier, as a condition of 

consolidation authorization, a "fair arrangement" that will 

protect the employees affected by the consolidation. All this 

demonstrates, as the Fourth Circuit noted in Signalmen, 

that "to the extent that a transaction subject to the STB's 

 15 
approval impacts collective bargaining agreements or the 

relationship between railroads and their employees, the 

STB has exclusive jurisdiction in the first instance to 

consider the issues." 164 F.3d at 855. Thus, the exclusive 

jurisdiction to resolve labor problems in a merger exists 

independently of the S 11321(a) exemption of such a merger 

from other laws.10 

The USWA contends, however, that interpreting the ICA 

as vesting the STB with exclusive jurisdiction to adjudicate 

all issues concerning railroad-employee r elationships which 

arise as a result of approved mergers is too sweeping. For 

this argument, it relies on the Seventh Circuit's decision in 

Harris v. Union Pacific Railroad, 141 F.3d 740 (7th Cir. 

1998). There the court considered whether the ICA takes 

away from the district court jurisdiction to consider civil 

rights claims brought by two union members against a 

railroad carrier. The ICC had appr oved Union Pacific's 

_________________________________________________________________ 

10. To the extent that S 10502 mer gers may receive exclusive STB 

resolution of employee relations issues but not S 11321(a) exemption 

from "other laws," the justification for this result may be found in the 

fact that S 10502 mergers by definition are of "limited scope." 

That said, we note that the USWA's ef fort to draw a distinction 

between an approved transaction under S 11321(a) and an exempted 

transaction under S 10502 has been rejected by the ICC, which found 

that S 11321(a) does apply to S 10502 transactions. In Rio Grande 

Industries, Inc., et al. -- Trackage Rights-- Burlington Northern R.R. 

Lines Between Kansas City, MO and Chicago, IL, ICC Finance Docket No. 

31730, 1991 ICC LEXIS 57, served March 12, 1991, at *9-11, the ICC 

held that immunity under S 11321(a) extends to transactions exempted 

under S 10502. Accord Brother hood of Locomotive Engineers v. Boston & 

Maine Corp., 788 F.2d 794, 799-801 (1st Cir. 1986).

The conclusion that S 11321(a) applies to both"approved" and 

"exempted" transactions is consistent with polices behind the Staggers 

Rail Act of 1980, Pub. L. No. 96-448, 94 Stat. 1895 (1980), which 

broadened and liberalized S 10502 in furtherance of the ICA's goal of 

revitalizing the railroad industry. See Coal Exporters Ass'n v. United 

States, 745 F.2d 76, 80-82 (D.C. Cir . 1984). By increasing the ICC's 

ability to exercise its power under S 10502, Congress indicated that the 

S 10502 procedure was an equal and even preferred way of regulating 

the railroad industry. See H.R. Rep. No. 96-1430, 96th Cong., 2d Sess. 

105 (1980), reprinted in 1980 U.S.C.C.A.N. 4110, 4137. 

 16 
acquisition of another carrier pursuant to S 11321(a). 

Although the ICC imposed the New York Dock conditions, it 

also permitted labor and management to negotiate different 

conditions "in a labor agreement enter ed into prior to 

consolidation, in which case protection shall be at the 

negotiated level, subject to our review to assure fair and 

equitable treatment of affected employees." Id. at 741 

(quoting ICC order). The parties then r eached an alternative 

agreement for separation benefits. To qualify for the 

separation allowance, however, an employee on leave had to 

return to work within twenty days. Neither the union nor 

the management sought the ICC's review of the alternative 

agreement. 

The two plaintiffs in Harris wer e on maternity leave at the 

time the labor agreement was posted; neither r eturned 

within twenty days. Their applications for separation 

benefits were denied. They then filed suit for sex 

discrimination in district court. The court dismissed the 

action for lack of subject matter jurisdiction. The Seventh 

Circuit reversed, holding that the civil rights laws did not 

put any obstacle in the way of the railroad mer ger at issue. 

None of the relief sought by the plaintif fs would be 

incompatible with the ICC's approval of the mer ger. It 

would be pointless, therefore, to deny jurisdiction to the 

district court in order to refer the civil rights issue to the 

STB. 

The USWA urges us to follow Harris by requiring that the 

STB articulate in its approval of a mer ger the laws that are 

necessary to displace. We do not read this result into 

Harris. We conclude that a case involving civil rights issues, 

arising from the application of a non-STB appr oved

agreement to two members of a class, is distinguishable 

from the situation here where New York Dock arbitration 

has authorized changes in the labor agreement, which 

changes are necessary to implement the transaction. For 

that reason, even if we were bound to follow the Seventh 

Circuit, we would find Harris to be distinguishable.11 

_________________________________________________________________ 

11. In a related argument, the USW A contends that it cannot be made 

subject to the New York Dock pr ocedures because it was not a signatory 

to the Washington Job Protection Agr eement of 1936. On the USWA's 

 17 
We conclude that the ICA--in its language and overall 

statutory design--reflects Congress's commitment to a 

national transportation policy that favors the consolidation 

of railroads. And Congress has decided that such a policy 

is best pursued by freeing rail consolidations from the 

burdensome delays and expenditures associated with RLA 

procedures. Thus, the ICA and the RLA ar e not 

complementary and co-equal statutory schemes, as the 

USWA proposes. The RLA must yield to the ICA when it 

impedes the implementation of a STB-approved 

consolidation. Moreover, the STB has the exclusive 

jurisdiction to adjudicate challenges to such an 

implementation. Accordingly, we will affir m the District 

Court's dismissal of the USWA's counter claim for lack of 

subject matter jurisdiction. 

B. The STB Decision 

We now turn to the USWA's petition for review of the STB 

decision of December 17, 1998. The standard the STB must 

apply in reviewing arbitration decisions is pr ovided in 

_________________________________________________________________ 

theory, only signatories to the Agreement have bargained away their RLA 

right to refuse to arbitration under New York Dock procedures. Wefind 

that this argument is without merit and agr ee with the District Court's 

conclusion that the ICC's authority S under 11326(a) to impose labor 

protections is "statutory in nature, and owe nothing to the WJPA." 

Although the WJPA provisions are, in many respects, duplicated in the 

New York Dock conditions, the two sets of labor protections derive their 

authority from different sour ces and are not equivalent in scope. The 

WJPA is a contract, the provisions of which bind only those carriers and 

unions that consented to the Agreement. The New York Dock conditions, 

on the other hand, arose as a result of Congressional mandate. As part 

of the Transportation Act of 1940, Congr ess granted to the ICC express 

statutory authority to impose employee protection upon approval of 

railroad mergers. Pub. L. No. 76-785, 54 Stat. 898 (1941) (codified as 

amended at 49 U.S.C. SS 10101-11901 (1998)). It is pursuant to this 

statutory authority that the ICC developed the standard set of labor 

protections contained in New York Dock. The ICC's authority to impose 

the New York Dock conditions--and to make changes to labor 

agreements pursuant to those conditions--derives, therefore, from the 

ICA and reaches those carriers and unions who were not signatories to 

the WJPA. 

 18 
Chicago & North Western Transportation Company, 3 I.C.C. 

2d 729 (1987) ("Lace Curtain"), af f 'd. sub. nom. 

International Brotherhood of Electrical Workers v. ICC, 862 

F.2d 330 (D.C. Cir. 1988). 49 CFR 1115.8. Under Lace 

Curtain, the arbitrator's decision is given deference and the 

STB will review "issues of causation, calculation of benefits, 

or the resolution of factual questions" only if there is 

egregious error. Review is thus limited to "recurring or 

otherwise significant issues of general importance regarding 

the interpretation of our labor conditions." 3 I.C.C. at 735- 

36. Based on this, the STB declined to review and vacate 

the Witt Award: "We find no reason to disturb the 

arbitrator's award under the Lace Curtain standards. There 

is no issue of first impression; and any issues that are 

likely to recur have already been thor oughly resolved by us 

and the courts. [The USWA] has not shown egregious error 

or any other grounds requiring review of the arbitration 

award here." Union Railroad Company and Bessemer and 

Lake Erie Railroad -- Arbitration Review-- United Steel 

Workers of America, STB Finance Docket No. 31363 (SubNo. 3), served Dec, 16, 1998, slip op. at 7-8. 

The USWA presents in this appeal no challenges to the 

factual determinations made by the arbitrator , relying solely 

on the argument it made before the District Court that the 

STB does not have exclusive jurisdiction to adjudicate the 

USWA's RLA-based challenges to the implementation of the 

1988 ICC-authorized consolidation. In light of our analysis 

in the previous section, we cannot say that the Board's 

conclusion that it has exclusive jurisdiction to consider 

whether the ICA preempts the RLA was arbitrary, 

capricious, or otherwise not in accordance with law. See 

National Small Shipments Traffic Confer ence, Inc. v. United 

States, 887 F.2d 443, 445 (1989). W e will, therefore, deny 

the petition for review of the STB's decision not to review 

the Witt Award. 

V. Conclusion 

For the foregoing reasons, we will affir m the judgment of 

the District Court and we will deny the petition for review 

of the decision of the Surface Transportation Board. 

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A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

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