Court Opinion

ID: 9411379
Source: CourtListenerOpinion
Date Created: 2023-07-26 18:00:55.905887+00
Date Added: 2024-06-11T17:21:06.449236
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________

No. 22-1445
UNION PACIFIC RAILROAD COMPANY,
                                                   Plaintiff-Appellee,

                                 v.

REGIONAL TRANSPORTATION AUTHORITY,
                                               Defendant-Appellant.
                     ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
             No. 19 C 7957 — Jorge L. Alonso, Judge.
                     ____________________

     ARGUED OCTOBER 31, 2022 — DECIDED JULY 26, 2023
                ____________________

   Before EASTERBROOK, JACKSON-AKIWUMI, and LEE, Circuit
Judges.
      EASTERBROOK, Circuit Judge. The Regional Transporta-
tion Authority (RTA), an agency established by the State of Il-
linois, oversees or operates the Chicago Transit Authority, the
Pace bus system, and Metra, a railroad that oﬀers passenger
service over 11 lines radiating from Chicago. (Technically
Metra is the RTA’s Commuter Rail Division; we use the short
2                                                     No. 22-1445

name by which the service does business.) This case concerns
Metra’s service on three lines of track owned by Union Paciﬁc
Railroad.
    Metra owns the rolling stock, while Union Paciﬁc supplies
the track, the work force, and the ticket sales. Money from
tickets goes to Metra, which pays Union Paciﬁc a fee for its
services. Perhaps believing that this fee is too small, Union Pa-
ciﬁc notiﬁed Metra that it would discontinue its services.
Then Metra could close these lines, operate the trains through
its own staﬀ, or ﬁnd someone else willing to handle these
tasks. Metra replied that Union Paciﬁc cannot drop the service
unless relieved of its obligations by the Surface Transporta-
tion Board. And as legislation in 1995 (the ICC Termination
Act, which the parties call ICCTA) repealed 49 U.S.C. §§ 10908
and 10909, the only statutes giving the Board any authority
over the discontinuation of passenger service, Metra contends
that the Railroad is locked into its relation with Metra.
    The Railroad, by contrast, contends that the repeal of
§§ 10908 and 10909 deregulated the provision of passenger
rail service, so that today railroads and air carriers alike can
end passenger service when business considerations dictate.
Federal law requires the Board’s permission to abandon all
service over a line of track, 49 U.S.C. §10903(a)(1), but the Rail-
road states (and Metra does not deny) that it will continue
freight service, so the three lines will not be abandoned. The
Railroad adds that, if there is any common carrier in northern
Illinois’ suburban-rail business, that status belongs to Metra.
Riders believe that they are dealing with Metra: its name is on
the cars, locomotives, tickets, and ads for the service; the en-
gineers and conductors wear Metra’s livery; and it owns the
rolling stock.
No. 22-1445                                                     3

    Union Paciﬁc asked a district court for a declaratory judg-
ment that it is entitled to cease providing services to Metra.
The district court obliged and denied Metra’s belated request
to add a counterclaim. 2020 U.S. Dist. LEXIS 222094 (N.D. Ill.
Aug. 27, 2020); 2021 U.S. Dist. LEXIS 182492 (N.D. Ill. Sept. 23,
2021); 2022 U.S. Dist. LEXIS 52614 (N.D. Ill. Feb. 17, 2022).
    The court’s ﬁrst opinion addressed what is also an issue
on appeal: whether it should defer to the Board’s primary ju-
risdiction. The court answered no, because the dispute does
not require any ﬁndings of fact by an agency. See United States
v. Western Paciﬁc R.R., 352 U.S. 59 (1956) (discussing the re-
quirements for referral to an agency under the doctrine of pri-
mary jurisdiction).
    The Board concurs with the district judge. Metra asked the
Board to issue a declaratory order requiring the Railroad to
continue providing its passenger services. The Board held the
request in abeyance pending the judicial decision (the suit had
been ﬁled before the administrative proceeding). It remarked
that “the federal district court has concurrent jurisdiction to
resolve the common carrier question”. Commuter Rail Division
of the Regional Transportation Authority, No. FD 36420 (STB
Aug. 5, 2020), at 2. (The district court’s subject-mader jurisdic-
tion comes from 28 U.S.C. §1331 and 49 U.S.C. §11704(b),
(c)(1), which allows the judiciary to enforce carriers’ obliga-
tions.) Because the Board does not see itself as having primary
authority over this dispute, and judicial resolution does not
depend on any factual disputes that the Board must resolve,
the court need not wait for the Board to act.
   In this court Metra advances a diﬀerent argument. It con-
tends that Union Paciﬁc lacks a case or controversy within the
scope of Article III. Metra asserts that this litigation is just
4                                                    No. 22-1445

about establishing a framework that will aﬀect the price of
service that the Railroad plans to continue providing. But
that’s not what Union Paciﬁc says. It contends that it is enti-
tled to cease running trains for Metra and that it wants to stop,
but that it is concerned about the potential penalties for doing
so if Metra is right. The parties are at odds about a legal issue
with concrete consequences for them. Resolving such dis-
putes is a main function of the declaratory-judgment statute,
28 U.S.C. §2201, which does not exceed constitutional bounds.
See, e.g., 303 Creative LLC v. Elenis, No. 21–476 (U.S. June 30,
2023); Aetna Life Insurance Co. v. Haworth, 300 U.S. 227 (1937).
     Metra may be right that the parties will return to the bar-
gaining table after their legal rights have been ﬁxed, but that
is true of all litigation: a winning tort plaintiﬀ may accept less
in order to avoid an appeal; a winning ex-worker in a Title VII
case may decide not to return to work at the discriminatory
employer; a mine operator told by a court that the surface
owner also holds the mineral rights may choose to buy them;
and so on. That people bargain in the shadow of the law does
not prevent their disagreements about legal entitlements from
posing justiciable controversies.
   The merits are straightforward, as the district court recog-
nized. Between 1887, when the Interstate Commerce Commis-
sion was created, and 1995, when it was abolished, the Com-
mission’s approval (or that of a state) was required for aban-
donment of rail service over a given line. Details varied as
time passed, but few of those diﬀerences mader. In 1958 Con-
gress for the ﬁrst time allowed the Commission to approve
the discontinuation of some services while the line itself re-
mained in use. See National Railroad Passenger Corp. v. Atchison,
Topeka & Santa Fe Ry., 470 U.S. 451 (1985); New Jersey v. New
No. 22-1445                                                  5

York, Susquehanna & Western R.R., 372 U.S. 1 (1963). By 1980
the prevailing statutes (later recodiﬁed at 49 U.S.C. §§ 10908
and 10909) allowed the Commission discretion over pro-
posals to discontinue particular interstate services (§10908)
and intrastate services (§10909). Had Union Paciﬁc wanted to
end its commuter rail operations before 1995, those would
have been the governing statutes, and the Commission’s ap-
proval would have been essential.
    But in 1995 Congress abolished the Commission and re-
pealed many of the statutes it had administered. It created the
Board to superintend a smaller portfolio of statutes and
rules—for one goal of the 1995 amendments was to deregulate
rail transportation, so that it could beder compete with air,
water, and truck transportation, industries that had been de-
regulated years earlier. As of 1995 “it is the policy of the
United States Government … to reduce regulatory barriers to
entry into and exit from the [rail] industry”. 49 U.S.C.
§10101(7). Sections 10908 and 10909 vanished and were not
replaced. The only remaining regulatory control over aban-
donment of service is 49 U.S.C. §10903, which deals with the
sort of abandonment that leaves a line of track without ser-
vice. (Section 10903(a)(1)(B) deals with discontinuation of all
service, and §10903(a)(1)(A) with tearing up the track and
turning rails into trails or roads.) The Board now holds sole
authority over abandonments of these kinds; state authority
has been preempted by 49 U.S.C. §10501.
   These changes leave Metra without a legal hook. To the
extent that Union Paciﬁc is a common carrier—rather than an
independent contractor of Metra, which is the carrier from
passengers’ perspective—it has unfedered authority to dis-
continue any particular service without the Board’s approval,
6                                                            No. 22-1445

as long as it does not take a step covered by §10903. Because
Union Paciﬁc proposes to keep the rails in place and continue
running freight trains over them, §10903 does not subject its
passenger operations to the Board’s abandonment authority.
So far as federal law is concerned, then, Union Paciﬁc is enti-
tled to proceed as it proposes.
    The Supreme Court held in American Airlines, Inc. v.
Wolens, 513 U.S. 219 (1995), that the deregulation of airline ser-
vice, which came with a preemption clause similar to §10501,
does not prevent air carriers from making contracts that will
be governed by state law and does not prevent the beneﬁciar-
ies of those contracts from enforcing them against the carriers.
After the close of discovery in this suit, Metra proposed to ﬁle
a counterclaim that would rest on one or more contracts be-
tween it and Union Paciﬁc. The district court declined to allow
this belated complication, ﬁrst because Metra had known for
years about the contracts (and had mentioned them through-
out the suit) and second because they do not do it any good.
2021 U.S. Dist. LEXIS 182492 at *30–33. That decision was not
an abuse of discretion, and we can rely on the second reason
alone (if only to prevent the end of the federal suit from be-
coming the start of a state-court suit).
   One problem for Metra is that the controlling contract,
signed in 2010, has long ago expired. The parties extended it
occasionally, and Metra points to a clause in the 2017 exten-
sion providing:
    The Grantee agrees to use its best eﬀorts to continue to provide,
    either directly or by contract or service agreement, as the case may
    be, the service(s) for which these Project Facilities are being ac-
    quired or constructed … . No reduction or termination of such
    service shall be made without compliance with all applicable stat-
    utory and regulatory provisions.
No. 22-1445                                                              7

Metra reads this as a promise by Union Paciﬁc to continue ser-
vice until the Board signs oﬀ. But this is not what it says. It
refers to “compliance with all applicable statutory and regu-
latory provisions.” We have already explained that Union Pa-
ciﬁc has complied with every legally required step (of which
there are none). That federal law does not erect any barrier on
the way to discontinuation of a given service does not mean
that discontinuation is impossible. Just as important, the
word “Grantee” in this passage, and the document as a whole,
refers to Metra, not Union Paciﬁc. It is a promise by Metra to
the Railroad, not the other way around.
   Some older contracts contain diﬀerent language, but they
have long expired or been superseded (or both). Metra in-
vokes a contract signed in 1978, when the Commission’s per-
mission was needed for abandonment. The 1978 contract is
between Metra and the Chicago & North Western Railroad,
which then operated the commuter service. This was the year
that Metra took over the operation and the Railroad became
Metra’s contractor. (Union Paciﬁc merged with the Chicago &
North Western in 1995, which is why Union Paciﬁc is the
party today.) One clause in this agreement provides:
   In the event no Service Agreement is in eﬀect, [Union Paciﬁc] shall
   provide Commuter Rail Service over or upon the Project Facilities
   in accordance with its common carrier obligations. Reduction or
   termination of such service may be made only upon compliance
   with all applicable statutory and regulatory provisions.

Because Union Paciﬁc has declined to renew its periodic con-
tracts with Metra, the condition of this paragraph—that “no
Service Agreement is in eﬀect”—has been satisﬁed. Any re-
duction in service on Union Paciﬁc’s part thus depends on
“compliance with all applicable statutory and regulatory
8                                                 No. 22-1445

provisions.” But, as we have explained, Union Paciﬁc has
complied with all “applicable” statutes and regulations.
    It would make lidle sense to read this contractual lan-
guage to mean “all statutes and regulations applicable in
1978” as opposed to “all statutes and regulations applicable
at the time of the reduction or termination.” All it can ever
mean to “comply” with the law is to do what the law com-
mands on the date of the action. Using the forms of repealed
statutes is not “compliance” with any set of legal require-
ments.
   Union Paciﬁc is not bound by any contractual promise to
keep providing rail services to Metra for the indeﬁnite future.
The parties’ contracts have start and end dates, which both
sides can enforce.
                                                    AFFIRMED