Opinion ID: 526734
Heading Depth: 2
Heading Rank: 1

Heading: The Carmen's Case

Text: 4 In 1980, the ICC approved a proposal under which CSX Corporation, a newly-formed holding company, would acquire control of two other holding companies: (1) the Chessie System, Inc., the principal railroad subsidiaries of which were the Chesapeake and Ohio Railway Company (C & O) and the Baltimore and Ohio Railroad Company; and (2) Seaboard Coast Line Industries, Inc., the parent of the Seaboard Coast Line Railroad (Seaboard) (later to become CSX Transportation, Inc., or CSX). CSX Corporation--Control--Chessie System, Inc., and Seaboard Coast Line Industries, Inc., 363 I.C.C. 521 (1980) (CSX Control ). 5 In its order approving the transaction, the ICC imposed upon the parties a standard set of labor-protective conditions, as required by Sec. 11347 of the Act, 49 U.S.C. Sec. 11347. CSX Control, 363 I.C.C. at 588-92, 604. As usual in merger cases, the applicable conditions were transplanted from the ICC's decision in New York Dock, 360 I.C.C. 60, 84-90 (1979), aff'd, New York Dock Ry. v. United States, 609 F.2d 83 (2d Cir.1979). Section 4 of the New York Dock conditions establishes procedures for the resolution--by means of negotiation and, failing that, binding arbitration--of any labor dispute arising from an ICC-approved railroad consolidation. Accordingly, Sec. 4 requires a railroad contemplating a transaction which ... may cause the dismissal or displacement of any employees, or rearrangement of forces [to] give at least ninety ... days written notice.... Section 2 is a status quo provision: 6 The rates of pay, rules, working conditions and all collective bargaining and other rights, privileges and benefits ... under applicable laws and/or existing collective bargaining agreements or otherwise shall be preserved unless changed by future collective bargaining agreements. 7 In 1986, CSX, invoking Sec. 4 of the New York Dock conditions, notified the labor organizations representing its employees that it intended to close its freight car repair shop at Waycross, Georgia, and to transfer the work performed there to the C & O repair shop at Raceland, Kentucky, and that the transfer would result in a net decrease in available jobs at the two shops. The Brotherhood then attempted, on behalf of certain CSX employees who would be affected by the transfer, to negotiate an agreement governing the labor-related changes that the Waycross-Raceland consolidation would require. 8 Relations between the Brotherhood (and other unions) and CSX were governed by a CBA--known as the Orange Book--that they had negotiated in connection with the 1967 merger that created Seaboard; CSX and the Brotherhood continued to observe these terms after the 1980 CSX Control transaction. The Orange Book provides, with exceptions not here relevant, that the carrier will employ each covered employee for the remainder of his working life, and that no covered employee shall be deprived of employment or placed in a worse position with respect to compensation, rules, working conditions, fringe benefits or rights and privileges pertaining thereto at any time during such employment. In consideration for this job protection, the Orange Book gives the carrier the right to transfer the work of the employees protected [t]hereunder throughout the merged or consolidated [i.e., Seaboard] system.... 9 The negotiations between CSX and the Brotherhood failed due to disagreements as to (1) whether displaced Waycross employees would retain their Orange Book right to lifetime income; and (2) whether (a) the Waycross-Raceland consolidation would result in a change in working conditions, and, if so, (b) CSX would be required to comply with the terms of Sec. 6 of the RLA, 45 U.S.C. Sec. 156, and thus to bargain before effecting the change. The Brotherhood then invoked the mandatory arbitration provision of the New York Dock conditions, but shortly thereafter, reversed its position and claimed that because the shop consolidation was not contemplated by the CSX Control transaction, the New York Dock conditions were not applicable at all. By then, however, CSX had invoked arbitration under the New York Dock conditions, and the matter came before a three-member arbitration panel (the Carmen Committee), with the Brotherhood participating under protest. 10 In the proceedings before the Committee, it became clear that CSX sought not only to transfer work from Waycross to Raceland and to reduce the total number of positions, but also (1) to transfer certain Waycross employees to employment by the C & O in Raceland and (2) to remove them from the protection of the Orange Book to coverage under the CBA between the C & O and the Union, which apparently does not contain a lifetime income clause. The Committee held that the Orange Book prohibited CSX from transferring either work or employees outside the Seaboard system created by the 1967 merger. The ICC did not pass upon that determination, but CSX, which has intervened in this appeal, does not dispute it. 11 The Committee then held, however, that (1) it had the power, [a]s a quasi-judicial extension of the ICC to abrogate provisions of a CBA, and to relieve CSX from any requirement of the RLA, that stood in the way of an operational change, such as the shop transfer, that was authorized or required by--though not specifically referenced in--the CSX Control decision approving the 1980 merger; and (2) it would (a) abrogate the Orange Book prohibition on the transfer of work, but not on the transfer of employees, outside the old Seaboard system, and (b) exempt CSX from the RLA insofar as it might require the carrier to bargain before unilaterally changing the Orange Book with respect to the work transfer. 12 The ICC upheld the Committee in other respects, but reversed the Committee's decision not to abrogate the Orange Book prohibition on the transfer of employees as well as work. The ICC further held that, to the extent that switching CSX employees from the Orange Book to the CBA at Raceland would deprive them of their right to income for life, that right would be abrogated. It did not pass upon the question whether the Orange Book did in fact prohibit the transfer of either work or employees but assumed as much. 13 In its petition for review, the Brotherhood challenges the ICC's authority under the Act to override provisions of the Orange Book and of the RLA. It also claims that the ICC's decision, insofar as it overrides the Orange Book, violates the Compensation Clause of the Fifth Amendment to the Constitution. Finally, it challenges the standard of review that the ICC applied in reversing the Committee's ruling against employee transfers.