United Transp. v. Burlington N. Santa Fe R. Co.

528 F.3d 674

UNITED TRANSPORTATION UNION, General Committee of Adjustment GO-386, J.D. Fitzgerald, General Chairman, Plaintiff-Appellant, v. BURLINGTON NORTHERN SANTA FE RAILROAD COMPANY and Longview Switching Company, Defendants-Appellees.

No. 07-35066.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 11, 2008.

Filed June 9, 2008.

David S. Straton, Eugene, OR; David J. Hollander, Hollander, Lebenbaum & Gannicott, Portland, OR, for the plaintiff-appellant.

Donald J. Munro, Goodwin Procter LLP, Washington, DC, for the defendants-appellees.

Appeal from the United States District Court for the Western District of Washington; Ronald B. Leighton, District Judge, Presiding. D.C. No. CV-06-5441-RBL.

Before: CARLOS T. BEA and MILAN D. SMITH, JR., Circuit Judges, and JOSEPH M. HOOD^*, Senior District Judge.

HOOD, Senior District Judge:

In its Complaint, Plaintiff-Appellant United Transportation Union, General Committee of Adjustment GO-386 ("Union") alleged that Defendants-Appellees Burlington Northern Santa Fe Railroad Company ("BNSF") and Longview Switching Company ("LSC") violated the Railway Labor Act ("RLA"), 45 U.S.C. § 151, et seq., by implementing a trackage rights agreement approved through the process prescribed by the Interstate Commerce Act (hereinafter, "ICA"), 49 U.S.C. § 10101, et seq., without bargaining with the Union. The Union objected to the unilateral transfer of certain work to employees of LSC and the cancellation of BNSF jobs, which effected a change in the "terms and conditions of employment" of individuals represented by the Union. In the present appeal, the Union challenges the district court's grant of BNSF and LSC's motion to dismiss on grounds that the court lacked subject matter jurisdiction. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

I. BACKGROUND

LSC is a Class III rail carrier, jointly owned by BNSF and another, non-party railroad, Union Pacific ("UP"). BNSF and UP are Class I rail carriers. LSC has a separate corporate structure, its own employees, and distinct labor agreements from BNSF. The Union represents conductors and other operating employees (except engineers) of all three railroads.

Longview and Longview Junction are railyards that are part of a joint facility owned by BNSF and UP. Longview Junction is adjacent to the BNSF main line from Seattle to Vancouver. Longview is approximately ½ mile from Longview Junction and serves various industry customers. Historically, three companies performed switching operations at Longview Junction: LSC, BNSF, and UP. This arrangement created substantial operational inefficiencies because BNSF and UP were forced to take turns doing switching in the Longview Junction yard. One company switched its own cars for approximately twelve hours before giving way to the other for the next twelve hours. LSC also took turns doing its own switching. While one railroad switched its cars, the others remained idle. Ultimately, rail traffic was slowed throughout the region because of the delays which resulted, and the freight traffic of BNSF and UP, as well as Amtrak's passenger service, were affected.

On May 30, 2006, BNSF, LSC, and UP entered into an Overhead Trackage Rights Agreement ("Trackage Rights Agreement") which allowed LSC to perform all switching in the yard, eliminated the system of "taking turns," and reduced or eliminated "work events" on the main line.¹ On June 6, 2006, LSC filed a Verified Notice of Exemption with the Surface Transportation Board ("STB") pursuant to 49 C.F.R. § 1180.2(d)(7). The parties attached a copy of the Agreement and stated that BNSF and LSC were agreeable to the imposition of the STB's standard labor protective conditions for trackage rights agreements. The STB issued an order acknowledging the Exemption on June 26, 2006, and providing that, "[a]s a condition to this exemption, any employees affected by the trackage rights will be protected by the conditions imposed in Norfolk & Western Ry. Co. — Trackage Rights — BN, 354 L.C.C. 605 (1978), [modified,] 360 I.C.C. 653 (1980)."

On June 29, 2006, the Union filed a petition to stay the exemption with the STB. BNSF filed an objection. The STB denied the petition for stay on June 30, 2006. While the STB noted the Union's argument that STB authorization was not necessary or appropriate because LSC was merely going to perform switching operations, the STB disagreed and held that "[b]ased on the evidence presented, it appears that the transaction at issue does require Board authorization." The STB noted that the Union could seek further relief by virtue of a petition to reject or revoke the notice of exemption. There is no record that the Union filed a petition to reject or revoke the exemption. Neither is there a record that the Union filed an action in the Court of Appeals to enjoin or suspend the STB's order denying the stay. Finally, there is no record that the Union invoked the arbitration procedures available under the labor conditions imposed by the STB. Instead, the Union filed the present suit in the Western District of Washington seeking declaratory and injunctive relief.

II. STANDARD OF REVIEW

"The district court's factual findings relevant to its determination of subject matter jurisdiction are reviewed for clear error." Ass'n of Flight Attendants v. Horizon Air Indus., Inc., 280 F.3d 901, 904 (9th Cir.2002), citing La Reunion Francaise SA v. Barnes, 247 F.3d 1022, 1024 (9th Cir.2001). The district court's conclusions of law relevant to dismissal for lack of subject matter jurisdiction are reviewed de novo. Id.

III. DISCUSSION

A. Statutory Framework

The jurisdictional question in this case hinges on the relationship between the Interstate Commerce Act ("ICA"), 49 U.S.C. § 11301 et seq.,² and the Railway Labor Act ("RLA"), 45 U.S.C. § 151 et seq. The former promotes railroad consolidation to create a more efficient system of interstate rail transportation. See Norfolk & W. Ry. Co. v. Am. Train Dispatchers' Ass'n, 499 U.S. 117, 119-20, 111 S.Ct. 1156, 113 L.Ed.2d 95 (1991) ("Dispatchers"). The ICA grants the STB exclusive authority to approve or exempt from the standard approval process a variety of transactions involving rail carriers. 49 U.S.C. § 11323. An approved or exempted transaction may be carried out "without the approval of a State authority" and is "exempt from the antitrust laws and from all other law, including State and municipal law, as necessary" to let the involved carriers execute the transaction. 49 U.S.C. § 11321(a). However, the STB must still "impose labor protective conditions on the transaction to safeguard the interests of adversely affected railroad employees." Dispatchers, 499 U.S. at 120, 111 S.Ct. 1156; see also 49 U.S.C. §§ 11326(a) & 10502(g).

The RLA, by contrast, aims "to encourage collective bargaining by rail-roads and their employees in order to prevent, if possible, wasteful strikes and interruptions of interstate commerce." Detroit & Toledo Shore Line R.R. Co. v. United Transp. Union, 396 U.S. 142, 148, 90 S.Ct. 294, 24 L.Ed.2d 325 (1969). "To this end, the RLA establishes elaborate procedures for the negotiation, enforcement, and modification of collective bargaining agreements between railroad carriers and labor unions." Union R.R. Co. v. United Steelworkers of Am., 242 F.3d 458, 463 (3d Cir.2001). "[T]he procedures of the Act are purposely long and drawn out, based on the hope that reason and practical considerations will provide in time an agreement that resolves the dispute." Bhd. of Ry. & Steamship Clerks, etc. v. Fla. E. Coast Ry. Co., 384 U.S. 238, 246, 86 S.Ct. 1420, 16 L.Ed.2d 501 (1966).

The question of whether a labor dispute is governed by STB procedures or by the RLA has important implications. Rail carriers generally prefer the streamlined STB procedures under the ICA because they reduce delay and facilitate the implementation of transactions. See Norfolk & W. Ry. Co. v. Bhd. of R.R. Signalmen, 164 F.3d 847, 852 (4th Cir.1998). Unions tend to prefer the RLA because its negotiation procedures generate substantial delay and thereby increase employee leverage at the bargaining table. Id. The interplay between these statutory schemes also affects federal jurisdiction. Under the ICA, federal courts of appeals have "exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or to determine the validity of . . . all rules, regulations, or final orders of the [STB]." 28 U.S.C. § 2342(5); see also 28 U.S.C. § 2321(a). By contrast, at least where the RLA alone applies, a plaintiff may file suit in federal district court under 28 U.S.C. § 1331. See, e.g., Ass'n of Flight Attendants, AFL-CIO v. USAir, Inc., 960 F.2d 345, 347 (3d Cir.1992).

With this background in mind, we proceed to the question at hand: whether the ICA required the district court to dismiss the union's action under the RLA for lack of subject matter jurisdiction. For the reasons set forth below, we hold that the ICA deprived the district court of jurisdiction, and therefore affirm.

1. LSC's acquisition of trackage rights is an exempt transaction under 49 U.S.C. § 10502(a).

The first step in the analysis is to characterize the trackage rights agreement under the ICA. The parties do not dispute that the agreement is an exempt transaction. Reading 49 U.S.C. § 10502(a) and 49 C.F.R. § 1180.2(d)(7) together confirms that their understanding is correct.

Section 10502(a) provides that the STB "shall exempt a transaction whenever the Board finds that the application (1) is not necessary to carry out the transportation policy of section 10101, and (2) either the transaction is of limited scope or the application is not needed to protect shippers from the abuse of market power." 49 C.F.R. § 1180.2(d)(7) in turn provides that "[a]cquisition of trackage rights and renewal of trackage rights by a rail carrier over lines owned or operated by any other rail carrier or carriers"...