In a narrow ruling, Supreme Court backs ICC and railroads - Interstate Commerce Commission

Railway Age, May, 1991 by Gus Welty

Let's say the Interstate Commerce Commission approves a railroad consolidation that brings the interstate Commerce Act and the Railway Labor Act into apparent conflict. Which takes precedence? Legal opinion has been divided on this one. But on March 19, the U.S. Supreme Court handed down its decision in cases abbreviated as Norfolk & Western vs. American Train Dispatchers Association and CSX Transportation vs. Brotherhood Railway Carmen.

The vote was 7-2, with Mr. Justice Kennedy delivering the opinion of the Court, which began this way: "The Interstate Commerce Commission has the authority to approve rail carrier consolidations under certain conditions. A carrier in an approved consolidation `is exempt from the antitrust laws and from all other law, including State and municipal law, as necessary to let [it] carry out the transaction...' These cases require us to decide whether the carrier's exemption...`from all other law' extends to its legal obligations under a collective-bargaining agreement. We hold that it does."

The syllabus preceding the decision notes that the exemption's language as rightly interpreted by the ICC but questioned in lower courts "is clear, broad and unqualified, bespeaking an unambiguous Congressional intent to include any obstacle imposed by law. That language neither admits of a distinction between positive enactments and common-law liability rules nor supports the exclusion of contractual obligations. Thus, the exemption effects an override of such obligations by superseding the law-here, the Railway Labor Act-which makes the contract binding."

This determination, the syllabus says, "makes sense of the Act's consolidation provisions, which were designed to promote economy and efficiency in interstate transportation by removing the burdens of excessive expenditure."

One section of the Act requires the ICC to approve consolidations in the public interest and another conditions the approval on satisfaction of certain labor-protective conditions, but the exemption "guarantees that once employee interests are accounted for and the consolidation is approved, the RLA-whose major disputes resolution is virtually interminable-will not prevent the efficiencies of consolidation from being achieved."

Moreover, this reading of the law Will not, as the lower court feared, lead to bizarre results, since [the pertinent section] does not exempt carriers from all law, but rather from all law necessary to carry out an approved transaction."

The Supreme Court majority said it in language somewhat less straightforward (if that's possible).

As Mr. Justice Kennedy put it, "The immunity provision ... means what it says: A carrier is exempt from all law as necessary to carry out an ICC-approved transaction. The exemption is broad enough to include laws that govern the obligations imposed by contract ... A contract has no legal force apart from the law that acknowledges its binding character. As a result, the exemption... from `all other law' effects an override of contractual obligations, as necessary to carry out an approved transaction, by suspending application of the law which makes the contract binding."

Further, the Court majority held, "The obligations imposed by the law that gives force to the carriers' collective-bargaining agreements, the RLA, does not survive the merger in this case ... The RLA is the law that... is superseded when an ICC-approved transaction requires abrogation of collective-bargaining obligations."

If the appropriate sections of the law did not apply "to bargaining agreements enforceable under the RLA, rail carrier consolidations would be difficult, if not impossible, to achieve. The resolution process under the RLA would so delay the proposed transfer of operations that any efficiencies the carriers sought would be defeated."

In the case at issue, the Court said, the term "all other law" does in fact apply "to the substantive and remedial laws respecting enforcement of collective-bargaining agreements. Our construction of the clear statutory command confirms the interpretation of the agency charged with its administration and expert in the field of railroad mergers. We affirm the Commission's interpretation... not out of deference in the face of an ambiguous statute but rather because the Commission's interpretation is the correct one."

Got that?

And if you did, is there as much here as meets the eye? Or more? Or less?

One expert, at first reading, saw the decision as extremely significant, then backed off just a bit.

The Court, after all, did say that neither the conditions for ICC approval of a transaction nor the standard for necessity was before it. It could be, the Court said, that the scope of the immunity provision is limited by the provisions of law which condition approval of a deal upon satisfaction of certain labor-protective conditions. And it could be that the breadth of the exemption is defined by the scope of an approved transaction. With a sigh, perhaps, Mr. Justice Kennedy noted that "We express no view on these matters, as they are not before us here."