Opinion ID: 515490
Heading Depth: 1
Heading Rank: 5

Heading: the interstate commerce act

Text: 54 Burlington and Winona Bridge urge this Court to hold that the RLA is superseded pro tanto by the ICA. Essentially, both argue that regardless of our disposition of the major-minor dispute issue, the bargaining procedures mandated by the RLA are inapplicable because the ICC, which has exclusive jurisdiction to approve and regulate trackage rights agreements, approved the transaction between the two carriers and imposed statutorily required labor protective conditions under a post-RLA provision of the ICA. Consequently, according to appellees the transaction is cloaked with a statutory grant of immunity from any laws that interfere with the transaction. We did not need to resolve a similar superseding question in Chicago and North Western Transp. Co. v. Railway Labor Exec. Ass'n, 855 F.2d 1277 (7th Cir.1988), decision stayed, 57 U.S.L.W. 3185 (Stevens, J.), nor do we resolve it here. 55 The purported conflict between the pertinent later provisions of the Interstate Commerce Act and the Railway Labor Act is admittedly not easily resolved. Only a few Circuits have taken the opportunity to address it, and the results have been less than consistent. 8 Our burden is eased by the facts of this case which permit a result compatible with both statutes. 56 The railroad industry has for some time been in serious decline. Congress has recognized this situation and taken steps to revitalize the industry, primarily by removing many of the regulatory impediments interfering with rail transactions and allowing competitive pricing. The first major amendment to the ICA since 1940 was the Railroad Revitalization and Regulatory Reform Act of 1976 (4-R Act), Pub.L. No. 94-210, 90 Stat. 31. The 4-R Act was designed to remove unnecessary barriers which prohibited railroads from competing with other modes of transportation, while at the same time maintaining necessary protection for rail customers. S.Rep. No. 499, 94th Cong. 2d Sess. 1, U.S.Code Cong. & Admin.News 1976, p. 14. Particular attention was accorded to streamlining the ICC regulatory processes, with an emphasis on mergers, consolidations and certain other forms of rail transactions. Id. at 15-21, U.S.Code Cong. & Admin.News 1976, pp. 28-35. 57 The 4-R Act proved to be too little to halt the decline. By 1980, the railroad industry remained beset with financial difficulties which threatened vast segments of the industry. Congress responded in 1980 by creating the Staggers Rail Act, Pub.L. No. 96-448, 94 Stat. 1895. 9 The Staggers Act recognized that many of the regulations imposed upon the railroad industry were outdated. Originally, the ICA was essential to prevent an abuse of monopoly power by railroads and to maintain a national railroad network as an essential part of the national transportation system. Staggers Conf.Rep. No. 1430, 96 Cong. 2d Sess. 79, U.S.Code Cong. & Admin.News 1980, pp. 3978, 4110-4111. By 1980, however, two thirds of intercity transportation was conducted by means other than rail; rail earnings were the lowest of any carrier industry; capital shortfalls between $16 billion and $20 billion were expected. Id. The overall purpose of the Staggers Act was to provide, through financial assistance and freedom from unnecessary regulation, the opportunity for railroads to obtain adequate earnings to restore, maintain and improve their physical facilities while achieving the financial stability of the national rail system. Id. at 80, U.S.Code Cong. & Admin.News 1980, at p. 4111. 58 Significant portions of the Staggers Act streamlined the regulatory process by either relieving the ICC from conducting investigations and hearings altogether, or shortening the time frame for mergers, consolidations and certain other rail transactions. The Staggers Act required the ICC to reduce its regulatory procedure for those transactions which are routinely and consistently approved. Id. at 120, U.S.Code Cong. & Admin.News 1980, at p. 4152. One of the most significant features, and certainly a clear example of Congress' intent for immediate deregulation, was the exemption procedure, in which the ICC was instructed to grant exemptions from regulation and then conduct post-hoc reviews. The class exemptions are to be granted whenever regulation is not needed to protect abuses of market power. Id. at 105, U.S.Code Cong. & Admin.News 1980, at p. 4137. Congress entrusted the ICC with identifying the specific regulatory provisions and practices    to determine where they can be deregulated consistent with the policies of Congress; the stated policy explicitly lists deregulation over the national rail system in general and reducing regulatory barriers to entry and exit from the industry as factors. Id. 10 The aim was to reduce ICC regulatory exercise to those instances where necessary to protect against abuse of market power where other federal remedies are inadequate. Id. It was decided that this determination should be made, if at all, in a post-hoc hearing. 59 Congress clearly envisioned swift and efficient approval of rail consolidations, mergers and grants such as the type at issue. This Court is reluctant to take any action which would disturb the process encouraged by Congress through its 1980 amendments of the ICA. At the same time, it should be noted that Congress has not made any substantial revisions in the RLA since 1934. Ours is not the first Circuit impressed by this inaction. See Railway Labor Exec. Ass'n v. Pittsburgh & Lake Erie R.R., 845 F.2d 420 (3rd Cir.1988). Fortunately, this case does not require a determination which would offend the policies and goals of either Act. Rather, the primary relief requested concerns a labor dispute, not the trackage rights agreement itself. 60 Section 10505 of the ICA authorizes the ICC to exempt rail transportation but not to relieve a carrier of its obligation to protect the interests of employees. Section 11343(a) requires Commission approval of trackage rights agreements such as involved here, and Section 11344 covers the procedure therefor. In turn, Section 11347 requires labor protective conditions in Section 11344 cases. The carriers thus postulate that since Section 11341(a) provides that a carrier in an exempt transaction such as the Burlington-Winona Bridge trackage rights agreement is exempt from the antitrust laws and from all other laws    , the carrier is only bound by the labor protective provisions which the Commission's exemption condition made applicable here to any employees affected by the trackage rights (Carriers' App. Tab 2). The trouble is that the carriers have ignored the statutory language following from all other laws. The entire phrase reads is exempt from the antitrust laws and all other laws, including State and municipal law, as necessary to let that person carry out the transaction, hold, maintain, and operate property, and exercise control over franchises acquired through the transaction (emphasis supplied). The RLA will not preclude consummation of the transaction and thus does not meet the necessary qualification, so that the trackage rights agreement is not freed entirely from the RLA by the language in Section 11341(a) as the carriers contend. 61 The RLA is not rendered nugatory by ICC-approved transactions. To the contrary, the RLA still governs this labor dispute; the district court merely erred in the breadth of relief granted, not the substance. As we stated previously, the trackage rights agreement per se does not make this a major dispute; rather the use of a trackage rights agreement, via a shell subsidiary, to abrogate a collective bargaining agreement constitutes a major dispute. 62 Regardless of whether the ICA superseded the RLA, the injunction enjoining the trackage rights agreement was erroneous because the injunction was needlessly overbroad. An injunction should be narrowly tailored to serve equity's interest. 11 In this instance, given the singularity of interests of Burlington and Winona Bridge, a proper injunction should only have enjoined unilateral changes in working conditions by either Burlington or Winona Bridge pending RLA procedures, regardless of the status of the trackage transaction. Because we hold that Winona Bridge, as the alter ego of the Burlington, is bound by the existing collective bargaining agreements, it is unnecessary to decide whether the RLA is superseded in part by the ICA. The preliminary injunction granted by the district court should not have interfered with the trackage rights agreement. In that way, the RLA and ICA provisions would not have conflicted. 63 The ICA, by virtue of the Staggers Act exemption, arguably divests the courts of jurisdiction to enjoin the proposed trackage rights agreement itself. Nevertheless since Winona Bridge is the alter ego of its parent Burlington, like the situation in Butte, the RLA compels a status quo injunction as to the planned unilateral changes in working conditions pending RLA procedures. Even though the Staggers Act may prevent enjoining the trackage rights agreement, an injunction should be granted under the RLA to maintain the status quo with respect to working conditions. 64 This determination is not inconsistent with 49 U.S.C. Sec. 11347, which provides for mandatory labor protective conditions in exemption cases of this nature. 12 See Norfolk and Western R. Co.--Trackage Rights--Burlington Northern, Inc., 354 I.C.C. 605 (1978), modified, Mendocino Coast Ry.--Lease and Operate--California Western R.R., 360 I.C.C. 653 (1980), affirmed sub nom. Railway Labor Exec. Ass'n v. United States, 675 F.2d 1248 (D.C.Cir.1982). Moreover, Section 11347, in conjunction with the Mendocino labor protective conditions, also stipulates retention of '[t]he rates of pay, rules, working conditions and all collective bargaining and other rights, privileges and benefits    unless changed by future collective bargaining agreements or applicable statutes.'  Interstate Commerce Comm'n v. Brotherhood of Locomotive Engineers, 482 U.S. 270, 107 S.Ct. 2360, 2363-2364, 96 L.Ed.2d 222 (1987), citing Norfolk and Western, 354 I.C.C. at 610. 65 Section 11347, as interpreted by the ICC with Supreme Court approval, requires that the existing collective bargaining agreement be preserved, and since we have determined that in the setting of this case Winona Bridge does not represent an employer distinct from Burlington, an injunction requiring Winona Bridge to bargain with the Unions is consistent with the ICC-prescribed labor protective conditions. Our decision merely binds Winona Bridge to respect contractual obligations preserved not only under the RLA, but under the ICA as well. 66 As noted previously, Burlington and Winona Bridge are for purposes of this case one and the same under the rationale of Butte. Therefore an injunction may issue prohibiting Winona Bridge from implementing any unilateral changes in working conditions, including changes in crew consists, pending the major labor dispute resolution as prescribed by the RLA. Our exercise of jurisdiction and consequent approval of injunctive relief consistent with the RLA in no way challenges Burlington's and Winona Bridge's trackage rights agreement under the ICA. The agreement may proceed apace, but unilateral changes in working conditions may not be implemented regardless of the status of the proposed trackage rights transaction.