Dispute Concerning Continuing Protection

Under New York Dock Conditions After

Subsequent Decline in Business

4/ Section 11347 provides in pertinent part:

When a rail carrier is involved in a transaction for which approval is sought under 5511344..., the Interstate Commerce Commission shall require the carrier to provide a fair arrangement at least as protective of the interests of employees who are affected by the transaction as the terms imposed under this section before February 5, 1976, and the terms established under 565 of title 45...

_6l Claimants: T.R. Johnson, W.F. Blake, L.R. Spiggle, R.S. Latta, N.D. DeSerry and W.J. Edwards.

7/ Discovery is not a normal part of the pre-haring stage in the arbitration process but arbitrators, typically, draw adverse inferences against the party not making necessary information available to the other side.

-- Washington Job Protection Agreement, Docket 67, BRAC v. Erie Railroad Co., Bernstein. (Undated in Organization Exhibit No. 22. The coordination concerning which the disp·ite was decided arose in 1956) ;

-- Sheet Metal Workers International Association v. Seaboard System RR, Award No. 1 (R.E. Peterson, neutra) (C-1) September 16, 1986) ;

-- Cincinnatti Union Terminal Company v. BRAG, Issues 7 and 7A (M.M. Rohman, neutral) (C-1) (1973) .

-- Seafarers International Union of North America and the Chesapeake and Ohio Railway Company,, Rodney E. ennis, Apri 22, 1985;

-- International Brotherhood of Teamsters v. Conrail, Fred Blackwell , ugust 9, 1984;

-- Case No. 10, Special Board of Adjustment, No. 675 (Douglas);

Like the finding above, If, as seems to be the case, the burden is meant to apply to initial protection, the case decision is irrelevant to this proceeding.

In the case study of the merger of the Louisville 6 Nashville

Deliberations and agreement with respect to consolidations

as, for example, the C 3 0 in 1947, suggest most strongly that economic

_1Z/ It Is not known whether the organization in the proceeding before the I.C.C. with respect to this transaction, asking for a conclusive presumption for 10 years that employees were adversely affected by the transaction, was stimulated by the decline in business question, but the signs point in that direction.

d S. Emeric , Director

bor Relations, CSX-T

Carrier Board Member

Date

ZZ

J,

0' ? 7

Dispute Concerning Continuing Protection Under New

York Dock Conditions After Subsequent Decline In Business

T

Robe J . bles

Date

~ ~a, i~r '?

United Transportation Union

and

The Chesapeake and Ohio Railway Company

Dissents, especially dissents from arbitration decisions, are usually a futile gesture which are frequently ignored. However, this case requires that a dissent be filed, because the Neutral's decision in this case has no basis in law or iR fact. Instead of interpreting the intent of the employee protective conditions actually imposed in this case by the Interstate Commerce Commission ('ICC" or "Commission"), the Neutral has taken it upon himself to decide what Congress and the Commission should have imposed. Since Mr. Ables is neither the Congress nor the IC C, he does not have this power.

Several years after agreeing to provide the New York Dock benefits to its employees, and after accepting the economic benefits of the Interstate Commerce Commission's orders upon which those benefits were imposed by taking actions which adversely affected the claimants in this case, the Chesapeake & Ohio Railway Company (C&O) decided that it no longer owed a protective obligation to the claimants. According to the C&0,

the initial adverse impact upon the employees was sufficiently long ago and attenuated by other causes that the initial adverse impact was no longer the cause of the loss of earnings which the claimants are still experiencing. Believing that this conclusion gave it a right to discontinue employee benefits during the employees' protective periods, the C&0 informed the claimants in November 1984 that it was suspending their protective allowances "due to a decline in business." However, it did not at that same time reinstate the work which it had removed in 1981 when it initially affected the employees by rerouting their work across the CEO's sister carrier pursuant to the ICC order. In fact, that wc-k is still being performed today, but by employees who had no claim to it before the 1981 coordination. To the discredit of the arbitration process, the C&0's decision was upheld by the Neutral in this case.

In upholding the carrier's decision to suspend the New York Dock protective benefits, the Neutral in this case did not rely upon any specific provision of the protective conditions. Indeed, he could not rely upon the terms of the conditions, because the plain language of those provisions rejects his novel and previously discredited construction of these statutorily mandated protections.

Article 1, Section 5(a) of the New York Dock conditions provides that (emphasis added):

So long after a displaced employee's disp acement as a is unable, in the normal exercise of his seniority rights under existing agreements, rules and practices, to obtain a position producing compensation equal to or exceeding the compensation he

received in the position from which he was displaced, he shall, during his protective period, be paid a monthly displacement allowance . . . .

Article 1, Section 6(a) of the New York Dock conditions is similar in that it provides that (emphasis added): "A dismissed employee shall be paid a monthly dismissal allowance, from the date he is deprived of employment and continuing during his protective period . . . ." Those provisions are not silent on whether these allowances may be stopped mid-term, for both provisions provide that the protective allowances "shall cease prior to the expiration of the protective period in the event" of certain enumerated occurrences, none of which include a decline in business or an attenuation of the initial impact. See, Article 1, SS5(c), 6(d).

Since the language used in Sections 5(c) and 6(d) clearly shows that the specifically enumerated causes were intended to be exclusive, and were not intended to be representative of the types of circumstances which would lead to a cessation of the protective allowances, it is erroneous to infer the presence of other, unstated causes--such as a decline in business exception. This conclusion is compelled by the familiar maxim of construction expressio unius est exclusio alterius, which means literally that the expression of one thing is the exclusion of others. See, In re Chicago, Milwaukee, St. Paul & Pac. R.R., 658 F.2d 1149, 1158 (7th Cir. 1981), cert. denied, 455 U.S. 1000 (1982).

Besides being contrary to the plain language of the protective conditions, reading a decline in business provision into the New York Dock's displacement and dismissal allowances is

prohibited by the intent and 'legislative history" of those provisions. Contrary to the CEO's implied belief, the New York Dock conditions did not suddenly appear out of the blue. Rather, those conditions have a definite history which shapes their meaning. Moreover, those conditions are required by statute to provide certain minimum levels of protection which the ICC, and, thus, an arbitrator, do not have the power to abrogate.

Section 11347 of the Interstate Commerce Act, 49 U.S.C. 511347, expressly states that whenever the Commission approves a unification application, it must require the applicants to provide a fair arrangement to protect the interests of employees whe-, are affected by the transaction being approved. While the ICC has a broad discretion to devise what is fair and equitable in a particular case, Congress has qualified that discretion by providing that the fair arrangement shall be "at least as protective of the interests of employees who are affected by the transaction as the terms imposed under this section before February 5,

[T)he plain language of 49 U.S.C. 611347

requires that the ICC, in formulating a new

set of employee prctective conditions,

Dock conditions accomplish this combining of benefits for control cases, such as the one involved in this case.

In light of this background, it should be obvious to all that prior interpretations of the protective conditions which are the building blocks from which the New York Dock conditions have been constructed, are not only relevant, but may well be controlling. Any doubt as to the obligation to look to prior interpretations of the New Orleans conditions (including, in particular, the Washington Job Protection Agreement (WJPA) portion of those protections) and of Appendix C-1, should be laid to rest by Article V of those conditions which provides that: "[T]he terms of this appendix are to be resolved in favor of this intent to provide employee protections and benefits no less than those established under 49 U.S.C. 11347 before February 5, 1976 and under section 565 of title 45 [here, benefits established under New Orleans and Appendix C-1].' Art. V, 51.

As may be expected, the C&0's belief that the New York Dock conditions contain a decline in business exception to a carrier's obligation to provide allowances to displaced and dismissed employees during their protective periods, is not novel, for it was raised and soundly rejected prior to 1976 in both WJ PA and Appendix C-1 cases.

In WJ PA Docket 67, Referee Be rnstein addressed this issue, and concluded that the plain language of the WJPA's displacement allowance provision (WJ PA S6) did not support the carrier's argument that an admittedly non-merger related subsequent loss of earnings justified a cessation of the employee's displacement

allowance. Referee Bernstein buttressed his conclusion by explaining that the carrier's position was contrary to the intent of the protective arrangement, for as he explained:

The five year protection period (here, a six year protective period] for a displaced employee would make little sense and provide little protection if each subsequent loss of earnings had to be directly related to the coordination. It is the first adverse effect of a coordination which makes the employee eligible for the benefits of Section 6 (i.e., WJ PA displacement allowance]

Thereafter the protection of the Agreement is his for the specified five years in the ordinary case.

WJ PA Docket 67 at 3 (emphasis in original). That decision has been the consistent interpretation of the WJPA and, I submit, is controlling here in view of both the specific commands in Section 11347 and the ICUs rule of construction set forth in Article V, Section 1 of the New York Dock conditions.

Referee Bernstein's decision does not stand alone, for it was followed by Mr. Murray Rohman in Arbitration Under Art. 1, 511 of Appendix C-1 Between Cincinnati Union Terminal and BRAC, issued July 13, 1973 (M.M. Rohman, Neutral). Shortly after

Appendix C-1 was promulgated by Secretary of Labor James D. Hodgson in 1971, the CEO, on behalf of the Cincinnati Union Terminal, took the position that C-1's displacement and dismissal allowances had a decline in business exception and could be suspended if the employees were subsequently affected by a decline in business or non-transaction related cause. Mr. Rohman addressed that argument under two separate formulations and rejected it after looking to the language of C-1's displacement

and dismissal allowance provisions; as !!r. Rohman stated (Id. at 16):

Thus, it is apparent that an employee who is affected by a transaction and placed in a worse position or deprived of employment, is entitled to the protective benefits of Appendix C-1. These benefits may be forfeited or suspended subsequently, only within the explicit provisions of Section 5 (c) or Section 6 (d) of Article 1, Appendix C-1.

Mr. Rohma n's decision does not stand alone, for Robert E. Peterson reached an identical interpretation of Appendix C-1 in Arbitration Under Art. 1, 511 of Appendix C-1 Between SMW and Seaboard System R.R., issued September 16, 1986 (R.E. Peterson, Neutral).

Since the New York Dock conditions' displacement and dismissal allowance provisions are essentially identical to similar provisions in Appendix C-1, which in turn were intended to provide the displacement and coordination allowances of the n6J PA (with certain modifications not relevant here) ,11 it logically follows that a displacement or dismissal allowance under the New York Dock conditions may not be suspended due to a subsequent decline in business. Indeed, this is the interpretation which has been given to the New York Dock conditions by Charles M. Rehmus, a noted Railway Labor expert, in Arbitration Under Art. 1, sll of New York Dock Conditions Between Union Pac. R.R. and UTU, issued February 14, 1986 at 15-16 (C.M.

Rehmus, Neutral), and which had been accepted by the CEO until November 1984. See, Ables' Opinion at 12.

In November 1984, the C&0 decided to assert that the New York Dock conditions gave it the right to claim once again that the protective conditions had a decline in business exception. That argument was accepted by Rodney E. Dennis in a New York Dock Art. 1, S11 Arbitration Between SIU and CEO, issued April 22, 1985, in an opinion which did not discuss the language of Article 1, Sections 5 and 6 of the protective conditions or even acknowledge Referee Bernstein's or Mr. Rohman's awards on this issue under New York Dock's predecessor protections. Indeed, it appears that Mr. Dennis was totally unaware of the fact that, until his decision, neither the New York Dock conditions nor either of its predecessor protective arrangements had been construed as giving a carrier the right to suspend protective allowances due to an implied decline in business formula.

In this case, the Organization relied upon the plain language in the protective conditions and upon the manner in which they have been applied since WJ PA Docket 67 to argue that the C60's position should be rejected. Indeed, Mr. Ables noted that Referee Bernstein's decision "is attention-getting because it is good contract law . . ." (Opinion at 19). Nevertheless, Mr. Ables surmised that a decision for either side in this case would only add to a 'box score' of decisions on which the parties would rely in future cases, and he therefore concluded that he should look to 'additional persuasive information' to settle this question once and for all. Opinion at 20. To the dismay of the

employees who have been deprived of statutorily mandated benefits by this decision, the 'additional information" which Mr. Ables found to be so persuasive, was a twenty-five year old report which he himself had made of merger and coordination cases that had occurred three and four decades ago. After reexamining his report, which not even the CEO had considered to be relevant, Mr. Ables concluded that the Organization and the employees acted "at their peril in not concluding an (implementing] agreement (under Article 1, Section 4] specifically excluding a decline in business as a basis for reduction or suspension of protective payments." Opinion at 26 (footnote ommitted). That conclusion, I submit, is ludicrous and totally ignores the role of an arbitrator under Article 1, Section 11 of the New York Dock conditions.

In concluding that the parties should have addressed this issue in an implementing agreement, Mr. Ables failed to recognize the differences between the agreements he examined in writing his report in the early 1960's and implementing agreements under the New York Dock conditions. Agreements between rail labor and management in 1940 and 1950 were not implementing agreements as that term is commonly understood today, but rather, were basic protective arrangements devising the protective formula itself or were agreements implementing general protective conditions such as the Chicago & North Western conditions, 261 I.C.C. 672 (1946), which provided that for four years from the effective date of the ICC order, the 'transaction will not result in employees of the carrier or carriers by railroad affected by such order being

placed in a worse position with respect to their employment . . . ." 261 I.C.C. at 675. For example, the C&0's acquisition of the Pere Marquette Railway Company in 1947 involved both a negotiated protective arrangement to which Mr. Ables referred, and the imposition of the Chicago s North Western conditions for nonagreement employees. Pere Marquette Ry.--Merger, 267 I.C.C. 207, 253 (1947). Those agreements are far different in intent and effect from an implementing agreement under Article 1, Section 4 of the New York Dock conditions.

A New York Dock implementing agreement has two specific purposes: The first is to apply the terms and conditions of the protections to the particular transaction at issue; and the second is to provide a basis, "accepted as appropriate" in the particular case, upon which the selection and assignment of forces "made necessary by the transaction shall be made . . . ." Art. 1, S4. While the parties may agree in the implementing agreement under post-1976 ICC protective conditions to increase the basic levels of protection, they may not decrease those levels of protection. Norfolk & Western Ry. v. Nemitz, 404 U.S. 37 (1971). If, as the plain langugage of the New York Dock conditions makes clear, there is no decline in business formula in the conditions which would authorize the suspension of displacement or dismissal allowances, providing for such a suspension in an implementing agreement would substantially abrogate levels of protection provided by an ICC order, and would, therefore, be unlawful. Norfolk & Western Ry. v. Nemitz, supra, 404 U.S. at 44-45.

Mr. Ables' reliance on the UTU's "failure" to address the decline in business question in its 1981 implementing agreement in this case, is a non sequitur because it begs the question presented for decision. If the conditions do not provide for a suspension due to a decline in business, then the "failure" to address this issue in an implementing agreement shows nothing. The question presented here must be decided by examining the language and, if necessary, the intent of the provisions to determine the substantive protections provided by the conditions. Unfortunately, Mr. Ables has not done this.

A fundamental and most egregious error in Mr. Ables' decision in this case, is found in his determination to ign-)re his role under Article 1, Section 11 of the New York Dock conditions. An appointment as a neutral does not give an arbitrator license to apply his own personal opinions and bias in deciding a claim. See, Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 149 (1968). This is particularly true here, for an arbitrator appointed to construe employee protective provisions imposed by the ICC under 49 U.S.C. 511347, must construe those employee protective provisions so as to enforce the intent of Congress and the ICC in imposing those conditions. Obviously, to perform this function, the Neutral must examine the language of the conditions (e.g. , Reiter v. Sonotone, 442 U.S. 330, 337 (1979)) and, if that language is ambiguous, he may then examine its 'legislative history.' E.g., TVA v. Hill, 437 U.S. 153, 184n.29 (1978). Mr. Ables looked neither to the language nor to its history in deciding the issue

in dispute. Instead, he looked to an outdated, wholly irrelevant study which he himself had made years ago to decide what he believes should be the intent of the New York Dock conditions. Simply put, neither Congress nor the ICC gave Mr. Ables the power to reform the intent of the New York Dock conditions.

Once Mr. Ables acknowledged that the awards upon which the CEO relied were either flawed or irrelevant, and that the awards upon which the Organization relied were persuasive (e.g., "the Bernstein explanation is attention-getting because it is good contract law that exceptions stated in a contract do not permit implying other exceptions when applying the agreement" (Opinion at 19)), his resolution of this dispute should have turned upon an examination of the applicable language and indications of ICC intent. Instead, he turned to his personal opinion and found that 'persuasive.' In doing so, he exceeded his jurisdiction under Article 1, Section 11 of the New York Dock conditions, and has imposed a view of the employee protective conditions which effectively nullifies the protections provided by those protective conditions by requiring employees to reprove that each decline in earnings is attributable to the initial transaction. See, WJ PEA Docket 67.

Mr. Ables' decision has also left many questions unanswered. For example, while the decision states that the carrier has the burden of showing that an intervening event is the cause of the employee's worsened position (Opinion at 16), the decision contains no such showing. Here, the undisputed evidence established that the carrier did not include in its

decline in business calculations any allowance for the work which was transferred in 1981, the removal of which caused the initial adverse effect. On the other hand, the Organization presented evidence which it asserted showed that if this work were returned, the employees would not have sustained the same loss of earnings. But as an examination of Mr. Ables' decision shows, that evidence was ignored, and, indeed, the decision is totally silent on the facts which the Neutral concluded were sufficient to establish the carrier's admittedly heavy burden.

If this case were one concerning the initial entitlement to a displacement or dismissed allowance, the employees should have prevailed, for as Secretary of Labor Hodgson explained i.i promulgating Appendix C-1:

(The railroad, to meet its burden in determining whether an employee has not been affected by a transaction) must show affirmatively that something other than any transaction affected the employee. Further, it is intended that a claiming employee shall prevail if it is established that a discontinuance had an effect upon the employee, even if other factors may also have affected the employee . . . .

CRU v. Hodgson, supra, Affidavit of James D. Hodgson at 8. Surely, the railroad's burden should be more difficult to sustain in suspending protective benefits. New York Dock's silence on this point, I submit, is strong evidence that there is no decline in business formula in Article 1, Sections 5(a) or 6(d) of those protections.

Another question left hanging by Mr. Ables is what formula should be used to determine whether there has been a decline in business. Should the parties look to system gross tonnage or

revenues, or should they look to the amount of work performed on the particular line or at the shop in which the employees work? Further, are the protections suspended for an indefinite time period? And, if so, who has the burden of showing that the suspension should end? Also, is the protective period extended by the length of the suspension? And finally, if the protections are suspended during a decline in business, are they also suspended (with a correlative increase in the protective period) in cases where an employee's earnings exceeds his protective guarantees due to an upturn in business unrelated to the transaction?

I agree that these questions are to be resolved by negotiations between the Organization and carrier, but not in negotiations for an implementing agreement under the New York Dock conditions. Rather, these questions are all relevant to attrition agreements--an entirely different species of employee protection. They are foreign to a New York Dock implementing agreement, because New York Dock does not contain a decline in business formula authorizing the suspension of displacement or dismissal allowances.

For these reasons I dissent.