CARRIER MEMBERS' DISSENT

TO

INTERPRETATION NOS. I AND 2

(SERIAL NOS. 401, 403 AND 404)

TO

THIRD DIVISION AWARD 36983 (DOCKET MW-36035)

AND

THIRD DIVISION AWARD 36984 (DOCKET MW-36053)

(Referee Edwin H. Benn)

This is further dissent to Awards 36983 and 36984, as well as to the two Interpretations issued by the Board for each of those Awards. Our previous dissent to the original Awards is incorporated herein by reference.

Awards 36983 and 36984 constituted a discovery order; the Board acknowledged that it was not ruling on the merits of the claims. Interpretation No. I (Serial No. 401) amounts to a decision-avoidance tactic on the part of the Board, inasmuch as the Carrier was basically offering what records it had available, provided that the Organization signed an effective confidentiality agreement. But contrary to the Board's assertion in that decision, there was nothing "hypothetical" about the Carrier's offer of documents, because-as the Carrier pointed out in its Submission for Interpretation--the Carrier was offering all that could have been required under standards of law. Interpretation Nos. 2 (Serial Nos, 403 and 404) are the first true rulings on the merits of these cases.

Unfortunately, Serial Nos. 403 and 404 are more accurately termed a "catch 22," as opposed to rulings on the merits. We say that because, while in both the original Awards and in Serial No. 401 the Board recognized the Carrier's right to a means of protecting the confidentiality of those records from disclosure to third parties, the Board nevertheless in its Interpretation Nos. 2 effectively defeated that right. It is incomprehensible how the Board can on one hand recognize the legitimacy of the Carrier's requiring a confidentiality agreement from the organization, and yet issue Awards that allow the Organization to argue that the Carrier will hereafter have to pay by default thousands of future Article XV claims, because the Organization refuses to sign a bona fide confidentiality agreement.

In the Board's own words, the premise for Serial No. 401 ryas to direct the parties ". . . to set up procedures for- the production of that information and to agree upon further procedures to protect the confidentiality of the Carrier's records," and the Board also said that both parties had an "obligation" to satisfy that directive.] Yet although the Board was willing to claim authority to issue an unprecedented r Serial No. 401, page 5, third paragraph.

discovery order, it is strangely unwilling to demonstrate comparable authority to fairly enforce that order so as to protect the Carrier's right to confidentiality of those proprietary records.

Serial Nos. 403 and 404 reflect that the Board has no reason to doubt the good faith of the Carrier as to the form of its confidentiality agreement, nor in its negotiations efforts with the Organization in attempting to procure the Organization's signature. And during the Referee Hearing on the request for Interpretation Nos. 2, the Carrier Member heard no persuasive reason why the Organization refused to sign the Carrier's confidentiality agreement. As tile Board will recall, the Organization admitted both in its Submission for Interpretation No. I (Serial No. 401) and in its oral argument before the Board that it indeed intended to avoid financial liability for disclosures of the protected information.

During the Referee Hearing on Interpretation Nos. 2, the Organization spent most of its time on this subject arguing that it did not want its officers and agents personally liable for violations of the confidentiality agreement. But obviously damages liability is precisely v0hat makes a confidentiality agreement effective; and individual liability is all tile more necessary for effectiveness as to an association like the Organization. And certainly the Organization has shown a tendency to ignore confidentiality in the past---for example, referring, in Submissions to the Board, to claims settlements that the Organization had previously agreed would be nonreferable.

The confidentiality agreement that the Carrier proposed to the Organization contained rather standard language for such instruments. But the Organization's draft form was both non-standard and legally insufficient to protect the Carrier's confidentiality rights for several reasons, which the Carrier outlined in its Submission for Interpretation Nos. 2. For example, the Organization's version proposed to deprive the Carrier of money damages in the event the Organization or its agents breached the agreement. If one compares the Organization's unreasonable proposal with confidentiality forms commonly used in the transportation industry (e.g., the standard ALPA form for the airline industry, which is also governed by the Railway Labor Act) one does not see the labor organization exempted from money damages liability.

Such an illusory form as that counter-proposed by the Organization is particularly dangerous to fife industry with respect to securities regulation issues, as

the Carrier argued in its Interpretation Submissions. (The standard ALPA confidentiality agreement form [a copy of Nwhich is attached] expressly acknowledges that danger.) If, in order to comply with the Awards, the Carrier were to accept an ineffective confidentiality agreement such as the Organization proposed, then the Carrier risks exposing itself to the consequences of a possible disclosure to third parties, contrary to the intent of securities regulations. In producing that legal dilemma, the Board stepped beyond its authority.

At the Referee Hearing, the Organization failed to prove that there is anything unreasonable about the language of the Carrier's proposed confidentiality agreernent.2 Indeed, there is no justification for the Organization's not signing it as a prerequisite to its access to this proprietary data. Appallingly, the Board rewarded the Organization for its bad faith intransigence by sustaining these claims, despite the fact that it was the Organization-not the Carrier-that thwarted the discovery process ordered in Awards 36983 and 36984. Clearly, the Board's decision to sustain these claims is arbitrary, capricious, and legally insupportable.

In its Submission and during its presentation at the Referee Hearing, the Carrier remit~ded the T1nird that ;h-c:e cvmm«aly are advC1se cunsequenceS Joe a party's willful failure to cooperate in discovery proceedings. The Carrier cited, in its Submission for Interpretation Nos. 2, some Awards that provide precedent for the Board to dismiss the claim where the Organization fails to cooperate or refuses to sign an appropriate Carrier-provided agreement (e.g. Public Law Board No. 4768, Award 6 involving the parties to this dispute; and Third Division Award 36420).

Moreover, the Carrier noted that in court cases, a plaintiff's claims may be dismissed if the plaintiff fails to cooperate with the defendant in the discovery process. By way of illustration, we cite various court decisions in the Fifth Circuit, which is where the Carrier's headquarters are located, that require dismissal of claims by a nou-cooperative plaintiff: See, e.g. Butler v. Cloud, 104 Fed. Appx. 373, 374 (5th Cir. 2004) (affirming dismissal of plaintiffs claims with prejudice for failure to comply with discovery obligations, quoting Griffin v. Aluminum Co. of America, 564 F.2d 1171, 1172 (5th Cir. 1977); Wright v. Robinson, 113 Fed. Appx.

'' The only unusual provision in the proposed agreement was that specifically barring use of these confidential records before a Presidential Emergency Board, rvhich provision was necessitated by the Organization's early admission that it intended to use it for that purpose.

12, 16 (5th Cir. 2004); In re Liquid Carbonic Truck Drivers Chemical Poisoning Litigation, etc., 580 F.2d 819, 823 (5th Cir. 1978); Smith v. Hertz Equip. Rental, 2002 U.S. Dist. LLXIS 131, *1 (N.D. Tex. Jan. 4, 2002); Gist v. Lugo, 165 F.R.D. 474, 478 (E.D. Tex. 1996); Wright v. Robinson, 113 Fed. Appx. 12, 16 (5th Cir. 2004) (affirming the dismissal of plaintiffs case with prejudice where plaintiff "failed to cooperate in the discovery process").

A few representative samples from other Circuits include: Technology Recycling Corp. v. City of Taylor, 186 Fed. Appx. 624, 644 (6th Cir. 2006); Everyday Learning Corp. v. Larson, 242 F.3d 815, 817 (8th Cir. 2001); Bobal v. Rensselaer Polytechnic Institute, 916 F.2d 759, 765 (2d Cir. 1990) (sustaining dismissal as sanction for plaintiffs unwillingness to cooperate with discovery as ordered by the court); Floyd v. Mount Sinai Medical Center Personnel Director, 2006 U.S. Dist. LEXIS 81715, *19 (S.D.N.Y. Nov. 8, 2006).

During arguments, the Carrier asked the Board to be even-handed, and hold the Organization accountable for its non-cooperation. In the absence of any good reason to question the form of the confidentiality agreement, it would have been fair that any sanctions should have fallen upon the Organization, not upon the Carrier. The Carrier made good faith efforts to comply with the Board's discovery order-yet it was the Carrier whom the Board unjustly punished. In that injustice, the Board is sending a signal that employers have no effective means of protecting confidential information; their only alternative is to pay the claims as blackmail.

Nobody asked the Board to "micromanage" the discovery process that it ordered. But v%,ith the order comes the responsibility to enforce its intent and integrity. By rewarding the Organization for its predictable refusal to sign any effective confidentiality agreement, the Board abdicated its responsibility, and consequently imperils the legitimate proprietary interests of every employer in this industry. As a practical matter, the effect of these Awards is to deprive the Carrier of its legal right to protect its confidential information. This is a substantive issue that resonates throughout the industry. Indeed, the Organization's evident objective is not only to open the books of every railroad company, but to establish a precedent for coercing every railroad into divulging its confidential financial information without the adequate protection of a fullyy effective non-disclosure agreement.

The fact that the Board's previous Awards ordered discovery with an acknowledgement of the need to protect the Carrier's confidential information, and then essentially condoned tile Organization's violation of the intent of the previous Awards, unmasks these Awards as arbitrary and capricious. Furthermore, by interfering with the Carrier's lawful right to protect its confidential information, tile Board clearly exceeded its authority.

Leading to tile travesty of these Ayvards was the Board's fundamental error in refusing to recognize that the Organization's motive in demanding these records was to use the confidential documents in proceedings before a third party, a Presidential Emergency Board, in Section b proceedings, which are outside of the Board's jurisdiction. The Carrier emphasized that fact in its Submissions and in argument during the Referee Ilea rings-wiflrout any real dispute from the Organization. The Organization's real motive was underscored in its refusal to sign a confidentiality agreement that would have limited use of the information to resolution of these RLA Section 3 labor claims. The Board had authority only to consider the Section 3 claims, and should have rejected the Organization's excuse for not signing the confidentiality agreement for the reason that it also wanted to use the data for Section 6 purposes. By playing to the Organization's ulterior agenda, the Board consequently intruded into an RLA Section 6 area, which is outside of its authority.

Another serious error was for the Board to presume that it should write into Article XV language that the parties did not negotiate, such as what suffices for documentation of tire calculation of the contracting ratio. If, as the Board already indicated in its initial Awards, Article XY is so poorly drafted that certain definitions and basic provisions are lacking, then tile Board could offer no remedy beyond suggesting that the parties use the statutorily mandated Section 6 proceedings to produce a more enforceable Article XV. But it is not for the Board to re-write Article XY under the rubric of "interpreting" that agreement. Public Law Board No. 5191, Award 2 cogently explained tile jurisdiction of boards of adjustment as follows:

"These are certainly refreshing and cerebral approaches to this issue and could be considered if ~vc were a board of equity and/or we had tile poNver to remake tire Agreement. The parties are aware the Board's jurisdiction is limited to tile `interpretation and application of Agreements,' not their formulation; consequently, our decision must be

founded upon the intent of the contracting parties as manifested by the language used, coupled with applicable rules of contract construction.

it' It TG

. . . If there are inequities in the system, as the Organization contends, or other exceptions to be added, it is a matter only the parties can remedy by amending or modifying the contract, for we are not empowered to do so."

Given the serious departures by the Board from its authority, as well as the manifest injustice imposed by these Awards, they lack precedent value. We strongly dissent.

A. Ken Gradia

0'7, 00,

Martin'W. Fingerhut

BU. rne R. Henderson

Jo P. Lange Q

1`04 j, 2 (?. o 04 o, L·

Michael C. Lesnik

Attachment

December 7, 2006
Re: Confidentiality Agreement Among Air Line Pilots Association ("ALPA"),
Airlines, Inc,

As you know, we have requested discussions ("Discussions") between
representatives of ALPA and to consider changes in the parties' current
collective bargaining agreement In connection with the Discussions, we understand that
ALFA may wish to review certain non-public information concerning
This letter sets forth the parties' agteernent concerning the confidential treatment of this .
information and any information derived there from (collectively referred to as the
"Evaluation Material").

I. The Evaluation Material is being provided to ALPA solely for the purpose of
assisting ALFA in analyzing and evaluating financial condition in
connection with the Discussion. Neither ALFA nor its Representatives will use the
Evaluation Material for any other purpose. The tern Evaluation Material does not
include information which (i) is or becomes generally available to the public other than as
a result of disclosure by ALPA or ALPA's Representatives in violation of this agreement:
(ii) was available to ALPA for or its Representatives on a non-confidential basis prior to
its disclosure to there by _ _ or their representatives; or (iii) becomes
available to ALPA or its Representatives on a non-confidential basis from a source other
than _ or their representatives unless such is non-public
information which ALPA knows or should know was deliherately disclosed by

?. Except with tile prior consent of _ or, subject to paragraph 7
below, as required by legal process, ALFA will not disclose tile Evaluation Material to
any person for any reason other than to ALPA's Representatives for the purpose of
analyzing and evaluating the financial condition of in connection with
the Discussions. Pr for to rclcasing the Evaluation Material to its Representatives, ALPA
will inform each of them of the confidential nature of the Evaluation Material and obtain
their agreement to treat the Evaluation Material confidentially under the terms of this
agreement. For purposes of this agreement, ALYA's Representatives are the ALPA
crnployces, attorneys, professional advisors and representatives (including ALPA
accoucrtarrts and financial advisors) who review the Evaluation Material in connection
with the Discussions. ALPA will provide with a list of all persons who are
in possession or actually review the Evaluation Material.

3_ ALPA acknowled,;es that the Evaluation Material is the property of
that rewards such material as cenfidential and competitively sensitive, and that
regards disclosure of such material other than in accordance with this
agreement to be detrimental to rlie interests, business and affairs of
and will cause _~ irreparable injury and damage.

1

4. ALFA agrees that will not have any liability to
ALPA or any of its Representatives resulting front the use of the Evaluation Material by
ALPA or its Representatives.

5. Upon request, ALFA will return the Evaluation Material
and any copies thereof to at any time. ALPA will return the
Evaluation Material and all copies thereof at the conclusion of the Discussion.

6. ALFA aciaiowledges that it is aware, and that it will advise its Representatives, of
the restrictions imposed by the United States securities law on persons who receive
material, non-public information concerning a public company or a company issuing
securities to the public.

7. In the event that ALPA or its Representatives are requested in any proceeding to
disclose any Evaluation Material, ALFA will promptly notify
of the request so that may seek an appropriate protective order. If,
in the absence of- a protective order, ALPA or its Representatives are nonetheless
compelled by law to disclose Evaluation Material, ALPA will only disclose that portion
of the Evaluation Material which, in the opinion of its legal counsel, ALPA is legally
required to disclose and will make every reasonable effort to obtain a confidentiality
agreement for the Evaluation Material so disclosed.

8. This agreement will be governed by and construed in accordance with the laws of
the State of without giving effect to choice of law doctrines.

9. This agreement may be waived, amended or modified only by an instrument in
writing executed by all parties.

ID, This agreement may be executed in all number of counterparts; each such
counterpart shall be deemed an of iginal, and all such counterparts shall together
constitute one and the same instrument.

Sincerely,

$y:

Accepted and Agreed:

AIR LINE PILOTS ASSOCIATION, INTERNATIONAL

By:

_~._-

SERIAL NOS. 407 and 40$

NATIONAL RAILROAD ADJUSTMENT BOARD

THIRD DIVISION

INTERPRETATION NO. 3 TO AWARD NOS. 36983 and 36984

DOCKET NOS. MW-36035 and 36053

NAME OF ORGANIZATION: (Brotherhood of Maintenance of Way Employes
( Division - IBT Rail Conference

NAME OF CARRIER: (BNSF Railway Company

This dispute is currently before the Board on remand from the Fifth Circuit Court of Appeals in BNSF Railway Company v. Brotherhood of Maintenance of Way Employes, 550 F.3d 418 (5th Cir. 2008).

A. Prior Proceedinzs Before The Board

The history behind this dispute is more fully set forth in Third Division Awards 36983 and 36984 and Interpretation Nos. I and 2 to those Awards. We will, however, summarize what has transpired in these cases.

On May 12, 2004, the Board issued the Awards in these cases. In pertinent part, the Board found the following [Emphasis in original]:

"The above shows that for the ratios required by Article XV, the Carrier supplied the Organization with summary information on an annual basis taken from the R-1 Reports; refused to supply any documentation supporting those summaries; refused to supply information relative to the ratios computed on a monthly basis; and took the position the Organization had not met its burden of proof that the ratios specified in Article XV were exceeded because the Organization `. . . utterly failed to provide supporting evidence.' The Carrier cannot provide summaries, refuse to provide the Organization with access to the underlying documentation which formed those summaries, and then argue that the Organization failed

Page Z Serial Nos. 407 and 408
Interpretation No. 3 to
Award Nos. 36983 and 36984
Docket Nos. NIW-36035 and MW-36053
to provide `supporting evidence' that the ratios were exceeded. The
Organization cannot provide that `supporting evidence' because the
Carrier is in possession of the `supporting evidence' and the Carrier
refused to allow the Organization to see that `supporting evidence.'
Although we have the discretion to do so, because we believe that the
Carrier acted in good faith and because we are advised that this is the
first dispute under this language to reach this level, we shall not
presently sustain the claim on its merits because the Carrier did not
provide the requested information . . . . [Where the Carrier takes
the position that the Organization has not provided `supporting
evidence' for its claim as it did in this case and that `supporting
evidence' is totally within the Carrier's control and may well dispose
of the entire dispute, basic concepts of fairness require that the
Organization be allowed to examine that source information. We
sue, therefore, require the Carrier to make available to the
Organization the source documentation used to prepare the
summaries relied upon by the Carrier. Should the Carrier fad to
make that source information available, we will sustain the claim.
We have only decided that because the Carrier relied upon its
records as a defense to the claim, refused to allow the Organization to
see the source documents for its summaries that it relied upon and
then took the position that the Organization had not provided
supporting evidence to substantiate the claim, that the Carrier is now
obligated to allow the Organization to inspect the source documents
used by the Carrier in formulating the summaries that the Carrier
used in defending this claim.
We recognize that problems may arise concerning the method of
disclosure of information, who is entitled to see the information,
protections for the Carrier's business records and the like. We shall
leave those questions to be resolved by the parties in the first instance
as they implement the terms of this Award. The Board shall retain
Page 3 Serial Nos. 407 and 40$
Interpretation No. 3 to
Award Nos. 36983 and 36984

Docket Nos. MW-36035 and MW-36053

jurisdiction over disputes, if any, which may arise as a result of this Award."

By letter dated June 23, 2004, the Carrier requested interpretation of the Awards seeking ". . . a ruling as to whether these Awards directing discovery/document production would be sawed if . . . " and then fisted information, documents, procedures and conditions to be met and followed before it was willing to produce documents to the Organization. On June 23, 2005, in Interpretation No. I to Award Nos. 36983 and 36984, the Board denied the Carrier's request for interpretation/clarification. In pertinent part, the Board held:

"Me Carrier therefore seeks an advisory opinion from the Board - `. . . BNSF seeks a ruling as to whether these Awards directing discovery/document production would be satisfied if... [and] BNSF respectfully requests an interpretation/clarification of these Awards and specifically requests that if the information stated above is provided, such production will satisfy the requirements of the above-referenced awards' (Emphasis added. The Board does not give advisory opinions based on hypothetical situations.

We return to the holding in Third Division Award 36983. We simply held that because the Carrier took the position that the Organization did not provide `supporting evidence' to support its claim - which evidence was solely within the Carrier's control - and then refused the Organization's requests to see that supporting evidence - that the Carrier was obligated to permit the Organization to see that evidence. The Board also pointed out that `[a]Ithough we have the discretion to do so, because we believe that the Carrier acted in good faith and because we are advised that this is the first dispute under this language to reach this level, we shall not presently sustain the claim on its merits because the Carrier did not provide the requested information.'

The Board has no intention to give advisory opinions based on hypothetical situations or in any way to micromanage the disclosure of information in this case. The Carrier placed itself in this position because it made the argument that the claims should be denied because the Organization did not have `supporting evidence' which

Page 4 Serial Nos. 407 and 408
Interpretation No. 3 to
Award Nos. 36983 and 36984
Docket Nos. MW-36035 and MW-36053
only the Carrier had, and then refused to allow the Organization to
see that evidence. As pointed out above and as further discussed in
Third Division Award 36983, because the Carrier took that position
we had the discretion to sustain the claim. However, because of the
ramifications of what this case means to the parties and to the
industry, when we issued the Awards we chose not to do so. The
obligation is on the Carrier to produce the required information.
The obligation is on the parties - and not the Board - to set up
procedures for the production of that information and to agree upon
further procedures to protect the confidentiality of the Carrier's
records. The parties are also free through the negotiation process to
come up with some completely different that wilt resolve these
particular disputes or contracting disputes in general. Should that
not be accomplished, then these disputes can be returned to the
Board. The Board will then decide whether the requirements
specified in Third Division Award 36983 have been met and, if they
are not met, whether to sustain the claims. If we are of the opinion
that the Carrier met its obligations, we will then address the merits of
the underlying claims. The Board will not, however, give an advisory
opinion that if the Carrier takes certain action then it will be in
compliance with the requirements specified in Third Division Award
36983.
The Carrier's request for interpretation/clarification is denied. The
parties shall have 60 days from the date of this Interpretation (or to a
mutually agreed upon date) to advise the Board of the status of the
Carrier's compliance with the requirements of these Awards."
These cases returned to the Board for further interpretation because the
parties were unable to agree upon the procedures for production of information. In
seeking dismissal of the claims, the Carrier described the question as:

"The Carrier offered its records relevant to the Board's Awards 36983 and 36984, subject to the requirement that the Organization sign a confidentiality agreement against disclosure of those proprietary documents. But the Organization refused to sign the agreement. Should the Board now dismiss these claims for the

Page 5 Serial Nos. 407 and 408
Interpretation No. 3 to
Award Nos. 36983 and 36984
Docket Nos. MW-36035 and MW-36053
Organization's failure to cooperate with the discovery process
ordered by the Board?"
The Organization did not agree to the Carrier's proffered confidentiality
agreement, but instead proposed the signing of an alternative confidentiality
agreement, which the Carrier rejected. The parties were unable to reach agreement
upon the terms of a confidentiality agreement and, thus, upon ". . . the method of
disclosure of information . . . . " as directed by Third Division Award 36983. The
Organization therefore requested that the Board sustain the claims. In
Interpretation No. 2 to Award Nos. 36983 and 36984, the Board did so:

"In Interpretation No. I to Awards 36983 and 36984, we stated that `[tjhis Board has no intention to . . . in any way to micromanage the disclosure of information in this case.' That is what we are now being asked to do. We decline the invitation to decide which confidentiality agreement should be signed. That was up to the parties to work out, which they were unable to accomplish. The parties attempted in what we deem to be absolute good faith to reach agreement on the types of information to be provided and procedures for production of information in order for the Carrier to comply with the requirements of Awards 36983 and 36984. However, their efforts resulted in impasse and no information has been produced by the Carrier.

But the bottom line here is that in Award 36983, rather than immediately sustaining the claim because the Carrier took the position that the Organization did not provide the supporting evidence for the claim and then refused the Organization's requests for access to that information which was solely in control of the Carrier, we gave the Carrier the opportunity to provide the information to the Organization. Nevertheless, the Board held:

`. . . We shall, therefore, require the Carrier to make available to the Organization the source documentation used to prepare the summaries relied upon by the Carrier. Should the Carrier fail to make that source information available, we will sustain the claim.'

Page 6 Serial Nos. 407 and 408
Interpretation No. 3 to
Award Nos. 36983 and 36984
Docket Nos. MW-36035 and MW-36053
That opportunity was given more than two years ago and, to this day,
no information has been given by the Carrier to the Organization.
Given the Carrier's original position in this dispute that the claims
should be denied because the Organization did not provide the
supporting evidence for the claims and then refused the
Organization's requests for access to that information which was
solely in control of the Carrier, it is now appropriate to draw the
negative inference that had the Carrier produced the information
sought by the Organization, that information would have supported
the Organization's position. See Third Division Awards 18447,
31879 and Public Law Board No. 4454, Award 27 (supplemental)
quoted in Award 36983. Again, in Award 3698;3 we clearly held that
f sjhould the Carrier fail to make that source information available,
we will sustain the claim.' The Carrier has not done so. The claims
will therefore now be sustained. As a remedy, the Claimants shall be
made whole in accord with the provisions of Article XV."

$. The Court Proceedings

1. The District Court's Decision

The Carrier sought judicial review of the Board's Awards. By Memorandum Opinion and Order dated November 16, 2007, Judge John McBryde of the United States District Court for the Northern District of Texas granted the Carrier's motion for summary judgment in BNSF Railway Company v. Brotherhood of Maintenance of Way Employes, 523 F.Supp.2d 498, vacating the Awards and finding, in pertinent part id. at 506 [citations omitted]:

"The Board awards in question obviously are not what the RLA contemplates. The awards are not in conformity with the jurisdictional prerequisites of the Agreement. The Board chose not to decide the issues legitimately presented to it by the claimants but, instead, to go off on a procedural tangent by directing BNSF to provide undefined discovery for the benefit of Brotherhood and by punishing BNSF by awards on the merits in favor of the claimants simply because BNSF failed to comply with the improperly imposed undefined discovery obligation. The court cannot glean from the writings of the Board that they genuinely were interpreting or

Page 7 Serial Nos. 401 and 40$
Interpretation No. 3 to
Award Nos. 369$3 and 36984
Docket Nos. MW-36035 and MW-36053
applying the Agreement. If one were to treat what the Board did as
an interpretation or application of the Agreement, their discovery
mandate certainly did not draw its essence from the Agreement.
The Board's directive to BNSF that it must comply with the
undefined discovery directive at risk of a ruling against it on the
merits of the claims simply reflected the Board's `own notions of
industrial justice.[`j . . . `Mhe Board exceeded the scope of its
junction in fashioning its award . . . ."'

2. The Fifth Circuit's Decision

The Organization appealed the District Court's vacating the Awards. In BNSF Railway Company v. Brotherhood of Maintenance of Way Employes, supra, 550 F.3d at 425-429 the Fifth Circuit disagreed with the District Court's conclusion that the Board exceeded its jurisdiction with respect to the Carrier's refusal to produce the source documents and our drawing an adverse inference from the Carrier's failure to do so [citations and footnotes omitted:

"C. The NRAB acted within its jurisdiction in directing BNSF to produce the source documents.

The NRAB acts within its jurisdiction so long as its decision is drawn from the `essence' of the CBA . . . . The essence of the CBA includes not just the express language contained within the four corners of the document, but also implied terms and the parties' practice, usage, and custom . . . . Under the district court's analysis, the NRAB lacked authority to direct the production of documents because there was no express provision in the CBA allowing it. Were this true, Article XY would be rendered nugatory .... If BNSF (i) could rely on its records as a defense to BMWE's claim that it had increased subcontracting levels, (ii) refuse to allow BMWE to see the source documents for the summaries that BNSF was relying upon, (iii) take the position that BMWE had not provided evidence to support its claim, and finally (iv) assert that the NRAB could not compel production of the source documents, then BNSF would be able to defeat any Article XY claim by refusing to turn over the relevant

Page 8 Serial Nos. 44'7 and 408
Interpretation No. 3 to
Award Nos. 36983 and 36984
Docket Nos. MW-36035 and MW-36053
documents which are in its sole possession. Again, that would
render Article XV a dead letter.
Article XV represents a compromise in national collective bargaining
negotiations. It attempted to solve the larger impasse in those
negotiations regarding subcontracting, but did not address the
practical disputes that would arise regarding the administration of
claims. The NRAB has the duty to arbitrate claims under Article
XV, but was given little guidance in the CBA on how to do so.
Considering the Delphic language in Article XV, it was reasonable
for the NRAB to conclude that implicit in Article XV was a
requirement that BNSF produce documentation that would enable
the NRAB to assess the validity of its defense to BMWE's claim.
Otherwise, BNSF would 1e able to stonewall its way out of any
liability under Article XV. We conclude that it was within the
NRAB's jurisdiction to direct BNSF to produce documentation
supporting BNSF's defense that it had not increased subcontracting
when that documentation was in BNSF's sole possession.
D. The NRAB did not violate its obligation to interpret the Award.
BNSF contends that the NRAB was statutorily obligated to provide
an interpretation of the Award upon request and thereby break the
parties' impasse on the confidentiality of the produced materials.
Section 3 First (m) of the RLA states that `[i]n case a dispute arises
involving an interpretation of the award, the division of the board
upon request of either party shall interpret the award in the light of
the dispute.' =15 U.S.C. § 153(m) (emphasis added). This language
is mandatory and not permissive . . . . BNSF made two requests for
an interpretation, but we are primarily concerned with the second
request. In its second request for interpretation, BNSF submitted
the parties' competing confidentiality agreements and asked the
NRAB to determine which agreement should be signed. The NRAB
did not select a confidentiality agreement, instead sustaining the
claims based on BNSF's failure to turn over the source documents.
Page 9 Serial Nos. 407 and 108
Interpretation No. 3 to
Award Nos. 36983 and 36984
Docket Nos. MW-36035 and MW-36053
The NRAB consistently informed BNSF that it would draw an
adverse inference if BNSF failed to comply with the Award. In the
Award, the NRAB stated that `[s]hould the Carrier fail to make that
source information available, we will sustain the claim.' This warning
was explicit and unequivocal. In Interpretation No. 1, the NRAB
stated:
`The obligation is on [BNSFI to produce the required information.
The obligation is on the parties - and not the Board - to set up
procedures for the production of that information and to agree upon
further procedures to protect the confidentiality of [BNSF's] records.
The parties are also free through the negotiation process to come up
with something completely different that will resolve these particular
disputes or contracting disputes in general. Should that not be
accomplished, then these disputes can return to the Board. The
Board will then decide whether the requirements specified in [the
Award] have been met and, if they are not met, whether to sustain the
claims.'
The NRAB again informed BNSF that the parties were obligated to
settle any concerns over confidentiality and that it was not the role of
the NRAB to assist in protecting BNSF's business records. In its
second request for interpretation, BNSF did not ask the NRAB to
give a detailed explanation of the phrase `source documents.' Instead,
it appears that BNSF understood what would constitute source
documents for the 1992-1996 period because it was prepared to turn
over these documents subject to a satisfactory confidentiality
agreement. At this point, the primary dispute between the parties
was the content of the confidentiality agreement and whether it
would include money damages as a remedy, not which documents
were `source documents.'
In its second request for interpretation, BNSF asserted that if it is
required to turn over the source documents, then it `is entitled to
require a non-disclosure agreement that will effectively protect its
proprietary interest in this confidential financial information.'
BNSF did not give a justification or citation for this generalization.
Lost in the negotiations of the specific details of a confidentiality
Page 10 Serial Nos. 407 and 40$
Interpretation No. 3 to
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Docket Nos. MW-36035 and MW-36053

agreement was the question of whether the NRAB had the authority to require the parties to enter such an agreement. In fact, in its second request for interpretation, BNSF questioned the NRAB's authority to craft its own version of a confidentiality agreement because the matter `is not covered by the Railway Labor Act.' The NRAB may have been hesitant to select one of the confidentiality agreements, or impose its own, because it may have lacked confidence in its junction to do so. Rather, it took the measured approach of allowing the parties to negotiate a compromise. Indeed, had the NRAB chosen one confidentiality agreement over the other, it is likely that this matter would have been on appeal on that issue instead. However, since this issue is not before us, we do not need to answer the question of whether the NRAB could have imposed a confidentiality agreement on the parties.

The NRAB did not fail to interpret the Award. It explained exactly what it was going to do from the Award through Interpretation No. 2. Being bound by the CBA, the NRAB did not want to force one party into a confidentiality agreement when the parties had not previously granted the NRAB such power in the CBA. Whereas the obligation to produce documents was implicit in order for Article XV to be effectuated under the particular circumstances of this dispute, we are not prepared to say the same about the deer of a confidentiality agreement, e.g., whether a breach of the confidentiality agreement should result in damages. Accordingly, the NRAB did the most reasonable thing within its power: it directed the parties to negotiate the terms of a confidentiality agreement. When they failed to do so, the NRAB enforced the terms of the Award and drew an adverse inference against BNSF . . . ."

However, while agreeing that the Board acted properly and within its authority to draw an adverse inference due to the Carrier's failure to produce the source documents upon which it based its defense that the subcontracting complied with Article XV, the Fifth Circuit concluded that the Board erred by sustaining the claims without making a finding on whether the furloughs were a direct result of increased subcontracting (550 F.3d at 424-425, 429 [citations and footnotes omitted]):
Page 11 Serial Nos. 447 and 408
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Docket Nos. MW-36035 and MW-36053

``B. The NRAB ignored an element of Article XV by sustaining the claims without making a finding on whether the furloughs were a direct result of increased subcontracting.

After describing the base level of subcontracting, Article XV states that `[i]n the event that subcontracting increases beyond that level, any employee covered by this Agreement who is furloughed as a direct result of such increased subcontracting shall be provided New York Dock level protection.' The plain meaning of Article XV requires a claimant to prove that the increased subcontracting was the cause of his furlough. As reflected in the district court's opinion, the Award discusses the need to mate a funding on this second element:

'Specifically, we express no opinion on whether the Claimant was `. . . furloughed as a direct result of such subcontracting . . .' Indeed, if there was no `increased subcontracting' as contemplated by Article XV, because this claim seeks protective benefits for the Claimant, then the question of whether the Claimant is entitled to those benefits is moot.'

It follows from this quotation that if subcontracting had increased, then the NRAB would have to reach the causation element before determining whether the claims should be sustained. The Award later threatens that `[s]hould [BNSF] fail to make that source information available, we will sustain the claim.' cfl7 The NRAB did precisely that in Interpretation No. 2: it drew an adverse inference from BNSF's failure to comply with the Award and sustained the claims without making any finding as to whether the employees' furloughs were `a direct result' of the inferred increase in subcontracting.

The logic supporting the adverse inference rule is that a party fails to produce evidence in its control in order to conceal adverse facts. There is no necessary connection between the contents of the source documents (which relate only to subcontracting expenses) and the causal relationship with a claimant's furlough . . . .

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Docket Nos. MW-36035 and MW-36053

Thus, assuming that the NRAB was correct in drawing an adverse inference against BNSF, that inference only established that subcontracting had increased and not that the furloughs were a direct result of that increased subcontracting.

We have previously held that an arbitration panel exceeds the scope of its jurisdiction if it ignores an explicit term in a CBA . . . . By not making any finding as to the necessary element of causation, the NRAB essentially ignored a term of the CBA. Accordingly, sustaining the claims without any finding as to the second element of Article XV was `wholly baseless and without reason' and not an interpretation of the CBA. For this reason, the Award should be vacated and the claims remanded to the NRA$.

Thus, its error was not in drawing the adverse inference - that was permissible - but rather it was in sustaining the claims based solely on that adverse inference without making a finding as to the causation element."

3. The District's Court's Remand

By order dated December 30, 2008, the District Court remanded the Awards to the Board ". . . for further consideration consistent with the opinion of the Fifth Circuit." Further argument was held before the Board on May 8, 2009.

4. Discussion

By letter dated April 1, 2009, the Carrier advised the Organization that it ". . . will provide all relevant `source documentation' for the relevant time periods, in accordance with the Board's previous directives" and concluded that ". . . there is no longer any basis for an `adverse inference' against BNSF on that point." By letter dated April 30, 2009, the Organization responded that it ". . . believes that the recent document production is irrelevant to the issue remaining before the Board . . . the document production is too late . . . [t]he Board . . . decided the issue as to whether contracting-out had increased by drawing an adverse inference against BNSF on that issue, and the Court of Appeals approved that part of the Board's decision." By

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Docket Nos. MW-36035 and MW-36053

letter dated May 4, 2009, the Carrier stated that "[b]ecause the Fifth Circuit affirmed the district court's order vacating the awards, there is no existing Board award in this case . . . [t]he old awards have been and remain vacated . . . BNSF's position is that the Board need not and should not reinstate its adverse inference finding . . . [r]ather, it now can and should decide - in light of the railroad's production of the `source documents' - whether the subcontracting ratio has in fact been exceeded." The Organization responded by letter dated May 5, 2009 that it ". . . disagrees that the case is now a blank slate . . . [t]he only error found by the Court of Appeals was the sustaining of the claims in the absence of ruling on the causation issue . . . [t]hat does not mean that the entire cases are to be re-arbitrated . . . [and the] NRAB rules provide for arbitration based on the record developed on-the-property."

With respect to the scope of the present proceeding, the Organization is correct. Because the Carrier refused to produce the source documents for its defense to the claims, the Board - after giving the Carrier ample opportunity to produce those documents - drew an adverse inference. The Fifth Circuit clearly found that was proper - ". . . [t]hus, [the Board's] error was not in drawing the adverse inference - that was permissible - but rather it was in sustaining the claims based solely on that adverse inference without making a finding as to the causation element." 550 F.3d at 429. The Fifth Circuit then specifically remanded the case to the District Court ". . . with instructions to remand to the NRAB for further consideration consistent with this opinion" (id. at 430) which the District Court did in its December 30, 2008 order (". . . the awards . . . are . . . remanded to the National Railroad Adjustment Board, Third Division, for further consideration consistent with the opinion of the Fifth Circuit.").

We do not read the court opinions as a direction to the Board to start the proceedings anew. Indeed, if the Carrier's position is adopted to allow it to now produce the documents which it repeatedly refused to produce, then the court opinions will have effectively remanded this matter not to the Board, but to the parties on the property to assemble a new record - one which now contains the documents the Carrier initially refused to turn over. Clearly the courts did not do that. The Board drew an adverse inference from the record presented to it and developed on the property under the Board's rules and the Fifth Circuit affirmed our determination that an adverse inference could be drawn. As the Fifth Circuit clearly deternuned, the only question before the Board on remand is causation. The adverse inference remains.

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Docket Nos. MW-36035 and MW-36053

Because of the ramifications of this Award on the parties and the industry with respect to subcontracting for pending and future similar disputes, we will, however, address one aspect of the document production question. In Third Division Award 36983, we held:

"We find that the Organization is entitled to inspect the Carrier's records concerning the relevant information for periods of less than an annual reporting period. Article XV species the base period of 1992-1996 for determining the appropriate ratios. However, Article XV is silent with respect to the periods to be examined `[i]n the event that subcontracting increases beyond that level [of the base period. Under the Carrier's interpretation that it need only disclose information on an annual basis, furloughed employees and the Organization may have to wait up to one year until the Carrier provides its annual information when it files the R-1 Report for the employees and the Organization to know whether the employees are entitled to benefits under Article XV. Yet, although not specifically required by Article YV, the New York Dock benefts `for a [New York Dock] dismissed employee' referred to in Article XV are monthly benefits. Article I(6)(a) of New York Dock provides that `[a] dismissed employee shall be paid a monthly dismissal allowance, from the date he is deprived of employment and continuing during his protective period ....' We do not know if the Carrier keeps such records on a `monthly' basis or on some other periodic basis of less than one year. However, if the Carrier does have such records relevant to determining the ratios on less than an annual basis, we find the Organization is entitled to inspect those records as well."

Should this kind of dispute arise again between these parties, we now see no need for production to occur on less than an annual basis. That is because the Carrier represented to the Board at the argument on May 8, 2009 that it does not maintain less than annual records. We accept that representation. Further, as stated in Award 36983, our concern included the fact that ". . . furloughed employees and the Organization may have to wait up to one year until the Carrier provides its annual information when it files the R-1 Report for the employees and the Organization to know whether the employees are entitled to benefits under Article XV." Aside from postponing payment of benefits to those employees entitled to receive compensation called for in Article XV, that delay raised another potential

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Docket Nos. MW-36035 and MW-36053

concern. That type of delay would have permitted an argument to be made by the Carrier that, depending on the passage of time from when employees are furloughed until the ratio information becomes available under Article XV, claims filed contesting the denial of benefits could be argued by the Carrier as being untimely filed under the Agreement because, after gaining access to the annual information, the actual furlough began at a time beyond the designated period for filing timely claims. For these parties, that is no longer an issue. The Carrier assured the Board at the cement on May 8, 2009 that it would not make such timeliness arguments. Again, we accept that representation. Barring any changes to those representations, less than production on annual basis will not be required for similar pending or future disputes between the parties.

We now turn to the remaining causation issue as directed by the Fifth Circuit

There were four named Claimants in the original claims - R. D. Parkarinen covered by Third Division Award 36983 and B. A. Graves, G. G. Skogen and P: D. Anderson covered by Third Division Award 36984. As noted in Award 36984, on November 27, 2000, Graves and the Carrier entered into a resolution in another dispute and Graves signed a settlement releasing the Carrier, which also covered this matter. As we found in Award 36984, "f tlhe claim with respect to Claimant Graves is therefore dismissed." At the argument on May 8, 2009, the tees advised us that Parkarinen has now signed a similar settlement. Parkarinen's claim to entitlements is now dismissed from these proceedings. That leaves Skogen and Anderson as the Claimants.

The record shows that Skogen and Anderson were furloughed on November 8 and 18, 1998, respectively. There is no dispute to the Organization's position that Skogen and Anderson were qualified Welders.

The record also shows that the welding subcontractor, Chemetron, was performing welding for the Carrier prior to the date Skogen and Anderson were furloughed. In response to the individually flied claims on behalf of Skogen and Anderson, the Carrier stated in separate letters dated March 3, 1999, in pertinent part:

"Reference is made to your letter dated January 5, 1999 . . . received

January 7, 1999, filing claim on behalf of G. G. Skogen . . . [and P. D.

Anderson], for alleged violation when the Carrier subcontracted

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Chemetron Welding to perform work of operating a welding device to flash butt weld rail ends together on District 11, near Elk Point and Watertown South Dakota, and failed to afford furloughed Claimant[s] the level of protection provided by New York Dock conditions for a dismissed employee, starting November 8 [and 18], 19'98.

The BMWE was notified of the work to be performed by Chemetron, and was ongoing prior to Mr. Skogen [and Anderson] being furloughed Mr. Skogen [and Anderson] were not furloughed as a direct result of Contractors working on this project."

In similar letters dated April Z3, 1999 in response to appeals filed by the

Organization, the Carrier asserted, in pertinent part:

"Your assertion that the Claimant[s were] . . . furloughed directly as a result of work contracted out after November 8 [and 18], 1998 is without merit. The two actions clearly are not related, let alone directly related. It is clear that the two actions are not related because Chemetron was on the property as a contractor long before the Claimant[s were] . . . furloughed. Attached to this letter is the Carrier's notice that Chemetron would be used on the Carrier's property during 1998."

Article xV provides, in pertinent part:

"ARTICLE XV - SUBCONTRACTING

Section 1

The amount of subcontracting on a carrier, measured by the ratio of adjusted engineering department purchased services (such services reduced by costs not related to contracting) to the total engineering department budget for the five-year period 1992-1996, will not be increased without employee protective consequences. In the event that subcontracting increases beyond that level, any employee covered by this Agreement who is furloughed as a direct result of such increased subcontracting shall be provided New York Dock

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Docket Nos. MW-36035 and MW-36053

level protection for a dismissed employee, subject to the responsibilities associated with such protection."

We return to the adverse inference found permissible by the Fifth Circuit. Again, according to the Court (550 F.3d at 424 [citation omitted]):

"The logic supporting the adverse inference rule is that a party fads to produce evidence in its control in order to conceal adverse facts. There is no necessary connection between the contents of the source documents (which relate only to subcontracting expenses) and the causal relationship with a claimant's furlough . . . . Thus, assuming that the NRAB was correct in drawing an adverse inference against BNSF, that inference only established that subcontracting had increased and not that the furloughs were a direct result of that increased subcontracting."

Under that rationale, the permissible adverse inference drawn as a result of the Carrier's refusal to produce the documents discussed in the prior Awards, Interpretations and court decisions is ". . . that subcontracting had increased. . . : ' -550 F.3d at 424. In terms of Article XV, that specific adverse inference is that had the Carrier produced the documents requested of it, those documents would have shown that under Article XV, "Etjhe amount of subcontracting on a carrier, measured by the ratio of adjusted engineering department purchased services (such services reduced by costs not related to contracting) to the total engineering department budget for the five-year period 1992-1996 . . . " increased beyond the specified levels in Article XV. The Claimants performed welding work and were furloughed on November 8 and 18,1998. The subcontracting increased (pursuant to the adverse inference) and, as conceded by the Carrier in its letters quoted above, the Claimants were furloughed after the subcontractor (Chemetron) began working. Given the increase in subcontracting beyond the specified levels in Article XV found pursuant to the adverse inference, we therefore find that had the Carrier not brought in an outside contractor to perform the welding work, Skogen and Anderson would have been available to perform the work and would not have been subject to furlough while the subcontractor was performing that work. Simply put, had the Carrier not brought in the subcontractor, there would have been more welding work to be performed by the Carrier's employees - here, Skogen and Anderson. Because of the adverse inference which shows that the amount of subcontracting increased beyond the levels specified in Article XV and because the Carrier brought in Chemetron as a

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subcontractor to perform the work prior to the Claimants being furloughed, we find that the furloughs of Skogen and Anderson were ". . . a direct result of such increased subcontracting. . ." which entitles them to the ". . . New York Dock level protection for a dismissed employee, subject to the responsibilities associated with such protection" as specified in Article XV.

Causation has been shown. We shall again partially sustain the claims. The remaining Claimants Skogen and Anderson shall be made whole in accord with the provisions of Article XV.

Referee Edwin Benn who sat with the Division as a neutral member when Awards 36983 and 36984 as well as Interpretation Nos. I and 2 were adopted, also participated with the Division in making this Interpretation.

NATIONAL RAILROAD ADJUSTMENT BOARD By Order of Third Division

Dated at Chicago, Illinois, this 31st day of July 2009.