Opinion ID: 564889
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 2 When the Atlantic Richfield Company (ARCO) acquired the copper mine operations of the Anaconda Company of Delaware (Anaconda), Anaconda owned two railroads, the Butte, Anaconda & Pacific Railway Company (BA & P) in Montana and the Tooele Valley Railroad Company (TOV) in Utah. Because two railroads were involved, ARCO was required to obtain ICC approval of the merger pursuant to 49 U.S.C. Sec. 11343 (1988), even though the two railroads were separate entities and no consolidation, coordination, or interchange was physically possible due to location. The ICC approved the acquisition, conditioned on ARCO's acceptance of labor protective conditions (ultimately, the so-called New York Dock conditions). The ICC is required to impose labor protective conditions in authorizing rail mergers and consolidations. 49 U.S.C. Sec. 11347 (1988). The New York Dock conditions require arbitration of disputes regarding the application, interpretation and enforcement of the benefits conferred by the conditions. 3 In late 1979, the copper market collapsed. As a result, ARCO closed the copper smelter facilities located in Anaconda, Montana, which were the principal source of materials shipped on the BA & P. An additional reduction in mining and processing operations in Butte and Anaconda in 1981 further diminished the shipping volume on the BA & P and decreased employment on the railroad. As a result of these reductions, the United Transportation Union (UTU), and later, BA & P employees represented by other labor organizations, asserted that BA & P employees who were adversely affected by the job changes were entitled to New York Dock benefits. 4 In 1982, the UTU on behalf of its members requested the National Mediation Board to appoint a neutral member of an arbitration board as provided by the New York Dock conditions. The Board appointed Jack Cassle as the neutral of a three-member arbitration panel (the Cassle panel). After a failed attempt by BA & P to enjoin the arbitration, the matter was arbitrated. 5 The Cassle panel divided the arbitration into liability and damage phases. After hearings, Arbitrator Cassle issued an order dated September 26, 1984, in which he found BA & P liable for New York Dock benefits to employees adversely affected by reductions-in-force and job changes that occurred between February 15, 1978 and February 14, 1982. In the liability order, Cassle noted that the only effects to the employees of the BA & P after the acquisition would be those that might result from economic considerations. 6 BA & P's liability was based on Cassle's finding that ARCO, Anaconda, and BA & P entered into a pre-transaction agreement with BA & P employees to accord protection for post-transaction job changes. Cassle imputed a contract from statements made by ARCO and Anaconda in the control application to the ICC and announcements to BA & P employees that employees would not be adversely affected by the transaction. He further determined that an express contract was formed between the applicants and the ICC when the ICC approved the application and the statements contained therein. On the strength of his determination that ARCO and the BA & P voluntarily provided for employee protection, Cassle rejected as irrelevant BA & P's arguments that employees were adversely affected by economic conditions that arose subsequent to the acquisition. Instead, Cassle determined that applicants knew the industry and could have foreseen the possible decline in the copper market when they represented that the transaction would have no adverse effect on employees. 7 On December 11, 1984, BA & P petitioned the ICC to reopen and clarify the conditions it imposed on the transaction. 1 In response to BA & P's actions, Arbitrator Cassle issued a Nunc Pro Tunc order signed on February 6, 1985, to clarify his liability determination. Cassle explained that ARCO's application to the ICC to acquire control of the railroads and representations by ARCO and Anaconda to BA & P employees regarding employee protection benefits constituted an offer to accord the labor protective conditions to any employee who became adversely affected during the term of the conditions regardless of cause. According to Cassle, the ICC accepted the offer when it approved the transaction and imposed the employee protective conditions. Cassle concluded that the ICC's order was a transaction within the definition of 49 U.S.C. Sec. 5(2) and that a direct causal connection existed between the transaction and the job changes. 8 The Cassle panel resolved phase II of the arbitration on March 15 and May 15, 1986. The award became effective on May 22, 1986. The UTU then filed suit before the district court in Montana to enforce the award. The district court consolidated UTU's petition with BA & P's earlier petition to review the Cassle panel's phase I determination. Proceedings continued in the district court until the ICC rendered the decisions now on appeal before this court. 9 In the summer of 1985, a second arbitration panel was formed to hear the claims for protective benefits filed by BA & P employees represented by the Brotherhood of Maintenance of Way Employees, the Brotherhood of Railway, Airline & Steamship Clerks and the Brotherhood of Railway Carmen. Joseph Sickles served as a panel of one (the Sickles arbitration). 10 At the arbitration, the Unions asserted that Arbitrator Sickles was bound by the Cassle panel's earlier determination that BA & P was liable for New York Dock benefits. Sickles rejected this suggestion, and on February 2, 1988, concluded that the adverse effects to BA & P employees were not caused by ARCO's acquisition of control of the railroad, but resulted from Anaconda's changes in operation. Sickles therefore denied the Unions' claims for benefits. 11 The Unions petitioned the ICC for review of the Sickles' decision and brought an action in United States district court to enjoin, annul, set aside, suspend or judicially review an order of the ICC. In addition, they petitioned this court for review of the Sickles' decision. 12 Two weeks after the Sickles' decision was served, the ICC granted BA & P's three-year-old request to reopen and clarify the labor protective conditions imposed by the ICC when ARCO acquired Anaconda. Because BA & P's petition emanated from the Cassle award, the ICC decided to review the award itself. The ICC determined that it had authority to review the award under 49 U.S.C. Sec. 11351 (1988), which empowers the ICC to issue supplemental orders in proceedings in which it has previously exercised its authority. The ICC also noted that its earlier decision in Chicago & North Western Transp. Co., 3 I.C.C.2d 729 (1987) (Lace Curtain ), authorized review of arbitration decisions applying ICC-imposed conditions. The ICC confirmed that it would review the award under the standards set forth in Lace Curtain. Lace Curtain adopted the deferential criteria set forth in the so-called Steelworkers Trilogy. 2 Under these standards, awards are not vacated because of a substantive mistake unless there is egregious error; the award fails to draw its essence from the collective bargaining agreement; or the arbitrator exceeds the specific contract limits on his authority. 13 The ICC concluded that review of Arbitrator Cassle's decision was warranted because Cassle had misinterpreted the scope of labor protection imposed in the control proceeding. According to the ICC, Cassle incorrectly found that the ICC had approved an agreement requiring ARCO to pay benefits to adversely affected employees regardless of cause. The ICC concluded that Cassle's finding failed to draw its essence from the conditions imposed by this agency as well as having exceeded the limits of his authority as defined by the New York Dock conditions. 14 The Commission also found that Cassle had erred in his handling of the issue of causal nexus. Although noting that it normally would not review issues of causation, the ICC decided to reevaluate the issue because Cassle's determination of causation issues was based on the flawed premise that the Commission intended New York Dock benefits imposed in the control transaction to cover any and all future adverse effects on BA & P employees. Thereafter, the ICC found that Anaconda's post-1979 changes were made as a result of changing market conditions in the copper industry and that the market conditions caused the adverse effects on the BA & P railroad and its employees. Consequently, the ICC vacated the Cassle award in a supplemental order issued March 2, 1988. 15 The UTU petitioned the ICC to reopen, reconsider and clarify its supplemental order. The ICC consolidated UTU's petition to reconsider with the Unions' petition to review the Sickles' award and denied both petitions in a decision served September 21, 1989. In regard to the Cassle arbitration, the ICC rejected UTU's argument that the ICC exceeded its proper scope of review in reversing the Cassle decision. The ICC reasoned that it was permitted to vacate arbitration awards for egregious error. In regard to the Sickles' decision, the ICC ruled that Sickles had correctly stated and applied the burden of proof embodied in its New York Dock conditions. Because it found no error in Sickles' findings on causation, the ICC denied the petition. 16 The Unions then petitioned this court for review of the September 21, 1989 order. The Unions' petition was consolidated with UTU's earlier petition for review of the ICC order dated March 2, 1988 and the Organizations' petition for review of the Sickles' arbitration decision. We hereinafter refer to all of the appellants as the Unions.