Court Opinion

ID: 8961610
Source: CourtListenerOpinion
Date Created: 2022-11-27 09:43:54.533081+00
Date Added: 2024-06-11T17:10:12.734386
License: Public Domain

HEANEY, Circuit Judge,
dissenting, with whom LAY, Chief Judge, and McMILLIAN and ARNOLD, Circuit Judges, join.
I respectfully dissent. By negotiating the individual severance agreements at issue in this case, Soo Line is attempting to diminish its obligations under the existing collective bargaining agreement (which includes the Labor Protective Agreement) at the expense and to the direct detriment of those who would have qualified for benefits under the Labor Protective Agreement. Such a course of action is clearly prohibited under the RLA.
I
A comparison of the majority and panel opinions reveals that there is no dispute as to the relevant facts. Soo Line determined that as a result of a combination of economic factors and the merger of Soo Line and Milwaukee Railroad, Soo Line had more employees than it needed. Majority opinion at 372. Several hundred of these employees became “unnecessary” as a result of the acquisition. Pursuant to the Labor Protective Agreement, if Soo Line laid off employees and if the layoff resulted from the merger, it was required to pay those employees the equivalent of the wage earned at the time of the adverse action for six years, unless they chose to accept a lump sum payment (valued at about $38,-000). Faced with this obligation, Soo Line unilaterally decided to offer voluntary separation pay plans to certain employees represented by unions other than the IAM. Under the plans, employees who entered into separation agreements would receive $15,000 in severance pay and if they were older than sixty, would have their health and welfare benefits continued for a period of five years. To take advantage of the plans, employees were required to:
Release all rights under labor protective conditions, including but not limited to, statutory, contract, or agreement labor protection and those conditions commonly referred to as Appendix B. * * * [Rjesign and relinquish all rights of or claims to employment with the Soo Line Railroad * * * and release and discharge said railroad company, * * * parent or subsidiaries, from any and all claims of whatsoever kind and nature growing out of or in connection with said employment.
No negotiations were held with the unions representing these employees. Many employees accepted the separation plan and terminated their services with Soo Line. The IAM learned of the program and questioned Soo Line concerning the availability of the program to machinists. Soo Line said it was not available. Thereafter, eight machinists, all over sixty years of age, asked to participate in the severance plan. Soo Line honored their requests and, after signing the necessary releases, their services with the railroad were terminated. Each received a separation allowance of $15,000 and continued eligibility for certain benefits until age sixty-five.
When the IAM learned that the severance plan was being offered to some of its members, it objected. In response to the objection, Soo Line and the Union negotiated, in March and April of 1986, in an effort to reach an acceptable separation agreement. The negotiations were unsuccessful. At no time prior to or during the series of meetings between Soo Line and the IAM did Soo Line issue a notice pursuant to section 6 of the RLA, 45 U.S.C. § 156, triggering the dispute resolution procedures of the RLA. Soo Line thereafter announced its intention to solicit machinists pursuant to its own separation agreement containing essentially the same terms as the agreements signed by other machinists. The IAM then filed this action seeking to restrain Soo Line from entering into separation agreements with individual machinists.
The matter was submitted to the district court on affidavits, exhibits, and abbreviated oral testimony. The parties stipulated that the hearing on the preliminary injunction could also serve as the hearing for a permanent injunction. The district court held that the dispute between the parties was a major one and enjoined Soo Line from entering into individual separation *385agreements with employees represented by the IAM until Soo Line complied with the notice and bargaining procedures of section 6 of the RLA, 45 U.S.C. § 156.
The above stated facts are clear that, by negotiating the individual severance agreements, Soo Line reduced its obligations under the Labor Protective Agreement and concurrently benefited select IAM members to the direct detriment of those members who would have otherwise qualified for benefits under the Labor Protective Agreement. It did so despite the fact that the IAM negotiated the Labor Protective Agreement in keeping with the interests of all of its members. Moreover, Soo Line knew precisely what it was doing and why. It concedes as much in its petition for rehearing en banc when it states that by taking this action it “avoids the prospect of paying people to sit at home.” Petition for Rehearing at 2.
Moreover, those who would have been furloughed under the Labor Protective Agreement but for the individual severance agreements are not the only IAM members affected. As a result of the individual agreements, both work and employees will, in all probability, be transferred from one facility to another and seniority and bidding rights of many IAM members affected. In this light, it is disingenuous to conclude that the individual agreements involved a matter of voluntary choice, personal to each employee. Majority Opinion at n. 9. Rather, it is clear that as a result of the individual agreements, the “rates of pay, rules, and working conditions” of the IAM members as a whole will be significantly affected.
II
The Supreme Court cases, which are binding upon this Court, are clear that contracts between employers and individual employees covered by collective agreements are suspect. In J. I. Case Co. v. NLRB, 321 U.S. 332, 64 S.Ct. 576, 88 L.Ed. 762 (1944), the Court stated:
[I]t is urged that some employees may lose by the collective agreement, that an individual workman may sometimes have, or be capable of getting, better terms than those obtainable by the group and that his freedom of contract must be respected on that account * * * but we find that the mere possibility that such agreements might be made no ground for holding generally that individual contracts may survive or surmount collective ones. The practice and philosophy of collective bargaining looks with suspicion on such individual advantages. Of course, where there is great variation in circumstances of employment or capacity of employees, it is possible for the collective bargain to prescribe only minimum rates or maximum hours or expressly to leave certain areas open to individual bargaining. But except as so provided, advantages to individuals may prove as disruptive of industrial peace as disadvantages. They are a fruitful way of interfering with organization and choice of representatives; increased compensation, if individually deserved, is often earned at the cost of breaking down some other standard thought to be for the welfare of the group, and always creates the suspicion of being paid at the long-range expense of the group as a whole. * * * We cannot except individual contracts generally from the operation of collective ones because some may be more individually advantageous. Individual contracts cannot subtract from collective ones.
321 U.S. at 338-39, 64 S.Ct. at 580-81.
It is in light of the above quoted admonition that the Supreme Court set forth the rigorous standard applicable to an employer when it seeks to enter into an individual agreement with an employee who is covered under a collective bargaining agreement. It stated:
We know of nothing to prevent the employee’s, because he is an employee, making any contract provided it is not inconsistent with a collective agreement or does not amount to or result from or is not part of an unfair labor practice. But in so doing the employer may not incidentally exact or obtain any diminution of his own obligation or any increase *386of those of employees in the matters covered by the collective agreement.
Id.; see also Order of Railroad Telegraphers v. Railway Express Agency, 321 U.S. 342, 345, 64 S.Ct. 582, 585, 88 L.Ed. 788 (1944).
Thus, in view of the fact that Soo Line has, for all practical purposes, admitted it entered into the individual separation agreements in order to diminish its obligations under the Labor Protective Agreement, the practice here at issue is plainly prohibited by J. I. Case.
Ill
The majority erroneously asserts that: [T]he presence of the Individual Plan will not deprive any employees of the opportunity to be separated under the terms of the Protective Agreement, for the simple reason that an employee who opts for the Individual Plan is not being deprived, but is making a free choice. An employee who decides against the Individual Plan remains as eligible as ever for the benefits of the Protective Agreement.
Majority Opinion at n. 9.
The vice in the individual agreements, however, is the significant effect they will have upon the collective agreement, and in particular the Labor Protective Agreement. Thus, the question whether the eight IAM members who entered into the individual agreements did so voluntarily or would have been affected by the acquisition is not relevant. The appropriate considerations are the effects of the acquisition and of the individual agreements on the IAM membership as a whole and on their collective rights under the Labor Protective Agreement.1
In this regard, Soo Line did not argue below and does not argue here that it sought to reduce its complement of machinists due solely to economic conditions. It rather argues that, whatever the reason for the reduction, it has the right to seek voluntary retirements from the IAM members. The reason for this argument is clear. If Soo Line had not used the individual separation agreements as a means of avoiding the Labor Protective Agreement and had furloughed employees, it could have argued that some or all of the furloughs were unrelated to the merger, and if the Union disagreed, the dispute would have been subject to arbitration pursuant to the terms of the Labor Protective Agreement. But, Soo Line’s obligations under the Labor Protective Agreement are not in dispute. Instead, the dispute centers on the question whether Soo Line may entirely ignore the Labor Protective Agreement and reduce its work force by individually negotiating less costly individual retirement agreements, or whether it must follow the seniority principles set forth in the collectively negotiated Protective Agreement and compensate laid-off employees pursuant to it.
*387IV
In light of the foregoing, it is not surprising that the case law relied upon by the majority offers no real support for its position. In Caterpillar, Inc. v. Williams, — U.S. -, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1977), the Supreme Court simply reiterated the view expressed in J. I. Case that individual contracts are valid “provided they are not inconsistent with an existing collective bargaining agreement.” Yet, in this case the inconsistency is apparent and egregious.
In Antonioli v. Lehigh Coal and Navigation Co., 451 F.2d 1171 (3d Cir.1971), also relied upon by the majority, former railroad employees appealed the district court’s denial of their claims. The claims were based on alleged non-compliance with an ICC protective order and requested allowances for furloughs and dismissals resulting from a merger. The employees’ complaint set out three counts. What the majority overlooks is that the Third Circuit found counts I and II were barred by the applicable statute of limitations and count III was barred by the doctrine of res judi-cata. Thus, the language cited by the majority represents, at most, an alternative rationale to one of the statute of limitation holdings.
Moreover, the cases relied upon in Anto-nioli to support the alternative rationale simply hold that a union may enter into an agreement with a carrier that limits the rights of individual employees under a previously executed labor protective agreement. See Roberts v. Lehigh & New England Railway Co., 211 F.Supp. 379 (E.D.Pa.1962), aff'd, 323 F.2d 219 (3d Cir.1963); Clemens v. Central Railroad Co., 399 F.2d 825 (3d Cir.1968), cert. denied, 393 U.S. 1023, 89 S.Ct. 633, 21 L.Ed.2d 567 (1969); Nemitz v. Norfolk and Western Railway Co., 436 F.2d 841 (6th Cir.), aff'd, 404 U.S. 37, 92 S.Ct. 185, 30 L.Ed.2d 198 (1971). Yet, the fact that a union may enter into such an agreement, does not mean that its individual members may do so as well. Rather, the individual agreements here at issue fall within the plain prohibition of J. I. Case. Thus, none of the decisions cited by the majority supports its decision that a union does not have the right to object to an employer offering retirement benefits to select members when acceptance of that offer will deprive other members of the union from furlough benefits previously agreed to by the employer and the union.
Finally, the majority asserts that, at best, this case presents a minor dispute to be resolved by the National Railroad Adjustment Board. The question whether the Soo Line is free to negotiate individual separation agreements, however, does not involve interpretation of either the collective bargaining agreement or the Labor Protective Agreement. Instead, it involves an effort to recast these agreements by negotiating individually with parties bound by them. Therefore, Soo Line cannot meet its “relatively light burden” of showing that the dispute concerns the meaning or interpretation of the collective bargaining agreement or the Labor Protective Agreement. See Brotherhood of Maintenance of Way Employees v. Burlington Northern R. R. Co., 802 F.2d 1016, 1022 (8th Cir.1986).
The position taken by the district court— that this case does not present a minor dispute — is supported by the only two district court cases directly on point. See Brotherhood of Railway, Airline & Steamship Clerks v. Chesapeake and Ohio Railway Co., 115 L.R.R.M. (BNA) 3635 (N.D.Ohio 1983); Southern Pacific Transportation Co. v. Brotherhood of Railway, Airline & Steamship Clerks, 636 F.Supp. 57 (D.Utah 1986). In contrast, the cases cited by the majority are simply not on point. In Chambers v. Burlington Northern, Inc., 692 F.2d 109, 112 (10th Cir.1982), the dispute involved a “claim by one employee that the railroad had not recognized seniority or paid the allowance to which he was entitled on transfer.” Id. at 113. Clausen v. Burlington Northern, Inc., 106 L.R.R.M. (BNA) 2496 (D.Mont.1980), involved an individual transfer agreement under which the employee gave up his seniority, for a lump sum payment of $15,000. (His move did not adversely affect any other employees.) Thereafter, *388the Union and the employer negotiated an agreement providing transferred employees with a $22,000 payment over three years and retention of seniority. The employee then sought to recover benefits under the newly negotiated agreement. The court held that the case presented a minor dispute for the Railway Adjustment Board. Thus, neither case presented the issue under consideration in this case.
The two cases cited by the majority which do consider disputes similar to this one simply do not help the majority’s position. In those cases, the district courts found the employers’ contentions — that past practice permitted individual agreements — were not frivolous. See Transportation-Communication Employees Union v. Grand Trunk Western Railroad Co., 679 F.Supp. 696 (E.D.Mich.1988); International Association of Machinists and Aerospace Workers v. Illinois Central Gulf Railroad Co., 102 Lab.Cas. (CCH) ¶ 11,345 (S.D.Ill.1984). Here, the majority correctly recognizes that Soo Line did not claim that the Individual Agreements were authorized by past practice. Majority Opinion at n. 11. Thus, the cases are simply inapposite. Moreover, in light of the applicable statutory authority and case law, it is simply erroneous to interpret the dicta in Grand Trunk and Illinois Gulf Central as indicating they would reach a similar result if no past practice had existed.
Stripped of its case law support, the majority is left to argue that the plain language of the Labor Protective Agreement requires arbitration. Yet, the plain language only states that any dispute over the “interpretation” or “application” must be resolved by binding arbitration. This case, however, does not present a dispute over interpretation or application of the Labor Protective Agreement. Soo Line simply seeks to ignore the agreement and to reduce its work force through an alternative technique which will diminish its clear obligations under the Labor Protective Agreement. It seeks to do so at the expense of those in the bargaining unit who would have otherwise been entitled to benefits previously bargained for by the IAM with the interests of all its members in mind. The Supreme Court recognized long ago in J. I. Case the impropriety of such conduct. This Court should do likewise.

. Thus, the majority's statement that the eight IAM members who took advantage of the Individual Plan would not have been affected by the acquisition and therefore would have been ineligible for benefits under the Protective Agreement simply misses the point. The crux of this dispute is:
As a result of the Acquisition, the Protective Agreement required that those machinists with less seniority were furloughed first and were being paid a day’s wages for not working; however, when the senior eight machinists quit and took the $15,000, [less than half the amount available to those who would have been furloughed under the Protective Agreement] the seniority of the junior machinists was increased by eight and some or till of them may have gone off furlough and back in service.
Majority Opinion at n. 10.
The majority would apparently exempt Soo Line from the bargain it struck with the IAM in the Protective Agreement because it results in "the prospect of paying people to sit at home." Id. The majority would do so on the basis of the preamble to the Protective Agreement which lists among the general purposes of the agreement to “provide for expedited changes" so that Soo Line may operate "in the most efficient manner.” Id.
Yet, even if the Protective Agreement could somehow be artfully construed to allow Soo Line to avoid specific provisions in it because they are “inefficient,” such a highly interpretative process would not be appropriate unless and until Soo Line’s obligations under the Protective Agreement are actually in dispute. Here, Soo Line simply seeks to avoid altogether its obligations under the Protective Agreement by offering selected employees the Individual Plan.