united transportation union
GENERAL COMMITTEE of ADJUSTMENT GO-386
Burlington Northern Santa Fe Railroad and Montana Western Railroad

Dear Mr. Fleps:

In regards to the above reference, the undersigned and this Committee have, negotiated on a means to retain the Oregon Electric (OE) as an active Burlington Northern Santa Fe Railroad (BNSF) crewed territory; have served various notices concerning affects and such transactions; have repeatedly sought meetings to discuss affects under the transactions and under trackage rights issues.

Burlington Northern Santa Fe Railroad has responded advising there was no obligation for BNSF to discuss such matters, those issues having been settled by Pittsburgh and Lake Erie (P&LE).

Summary of the Issue:

The United States Supreme Court's ruling in P&LE is a significant holding, but it does not overrule the Court's Telegraphers doctrine regarding partial closures, sales or leases. 'The Court in P&LE ratified the Telegraphers principles but did not apply them because of the unusual facts of the P&LE sale. In that case, the United States Supreme Court crafted a narrow holding based on the unique circumstance that the P&LE Railroad was quitting business entirely. So rare was that circumstance in the railway context that the Court borrowed analysis from the National Labor Relations Act (NLRA). The OE case presents a sharp distinction from P&LE because it is a partial lease where BNSF and UTU have a post-lease relationship.

Whether the decision to lease or sell a rail line is a topic of bargaining under the Railway Labor Act (RLA), is answered across the spectrum contingent on varying facts. The Courts ruling in P&LE is on the extreme margin of the spectrum because of the strong weight of the business prerogative doctrine found in circumstances of complete liquidation of business. On that end of the spectrum, there will seldom be a duty to bargain on the decision to sell. The OE case rests on the opposite end of the spectrum where the decision to sell is almost always a topic of bargaining. This result is reached because the BNSF expressly agreed to bargain the topic with the Union. The P&LE Court, in distinguishing the Pittsburgh facts from the normal railway cases, stated clearly that an express or implied agreement to make the decision to sell a bargaining topic placed the issue squarely within the collective bargaining and status quo provisions of the Act.

BNSF made the decision to include the Union in the decision to sell. This it did by asking for concession bargaining and stating that if the Union met the concession request the line would not be leased. The decision to sell was made contingent on bargaining. BNSF made labor cost savings a part of its business decision about the lease. Because labor cost savings are attained by collective bargaining the RLA's bargaining provisions became part of the business prerogative. Once established the company is bound by the RLA's status quo provision. The railroad is not permitted to abrogate the agreement to bargain about the decision to lease the OE. The lease of the OE violates the agreement to bargain about the lease. The railroad could up the ante and change the terms of agreement requiring further bargaining. But the railroad is not permitted to dispense with its agreement to bargain. The lease is a unilateral change in that agreement. It violates the Act.

A final issue clarified by the Court was the inter-relationship of arguably conflicting Federal laws. The P&LE Court stated clearly that the RLA did not lose its vitality in the face of conflicting results of the Interstate Commerce Act. The Court accorded the two acts giving vitality to each.

Leases and Sales under Pittsburgh and Telegraphers:

The threshold railway labor case is Telegraphers. That case determined that the railroad did have a duty to bargain about partial closures of stations. Two (2) fundamental principals were identified by the Court. First, where partial closures are involved (the Court equated partial line sales to Telegraphers closures in P&LE) the obligation of Carriers to treat with the Union remains because there is a continuing relationship between them. This doctrine is particularly important with the effects of a partial lease. (In P&LE the Court also stated that such a relationship continues where there is an agreement to bargain about the decision to lease.) Second, the Telegraphers Court characterized mandatory bargaining topics as those "actual objective working conditions, broadly conceived." Partial closures (leases) are working conditions subject to bargaining.

In P&LE, the Supreme Court addressed the RLA doctrine specifically in the context of line sales. The Court did not overrule Telegraphers. It created a narrow exception for the unusual circumstances of P&LE. The case was exceptional because the railroad was selling the entire enterprise and going out of business. So unusual were these facts that the Court borrowed doctrine from the NLRA because there were no comparable cases under the RLA. The Court reasoned that complete liquidation is so uniquely a business prerogative that no bargaining responsibility attached to the decision to liquidate. Also of great importance was that the railroad and its Unions no longer had a relationship hence no working conditions remained extant.

The Court stated rules for determining when the decision to sell is and is not a topic for bargaining. P&LE is often incorrectly cited for a general proposition that the decision to lease or sell is never a bargaining topic. P&LE certainly did not make such a blanket holding. In fact, in carving out a narrow exception to the Telegraphers doctrine, the Court was clear about the circumstances that would distinguish a case from P&LE. The Court's primary example of a case distinguishable from P&LE is where the parties have an express or implied agreement to bargain about the decision to lease or sell.

1. The Decision to Sell or Lease

A railroad has a business prerogative to sell or lease all of its rail line. Absent a clear mandate in RLA text or cases Courts will usually hold that the Act requires bargaining about the effects of a lease but not about the decision to lease or sell. The RLA also has a strong preference for agreement by the parties. Carriers and Unions may agree to things not required by the text of the Act. It is here that the requirement to bargain about the decision to lease gains steam. If an agreement between the parties exists that the decision to sell will be bargained for, then the issue loops back to the RLA's bargaining and status quo provisions. A Carrier that leases a line without bargaining violates the agreement to bargain. This runs foul of the Act just as a unilateral change in terms does.

2. Effects Bargaining

The Telegraphers rule that effects bargaining is usually required stems from the RLA's text. The Court's reasoning in Telegraphers and ratified in P&LE is that with partial closures, leases and sales, a working relationship continued to exist between the railroad and its Unions. A lease of this kind is a change in working conditions subject to bargaining. Because the railroad is still in business it is in a position to make displaced workers whole without passing the burden on to a successor.

3. The P&LE Court held that the Carrier was obligated to bargain about effect of the sale only until the sale was consummated and the Carrier ceased to exist. Like the larger ruling, the Court was clear that this holding was based on the fact that the railroad was ceasing business entirely. The Court did not overrule the general proposition on effects bargaining for partial sales and leases.

4. Good Faith Bargaining

At all times, parties are required to bargain in good faith. Going through the motions of bargaining about a goal that a party has no intention to implement is not bargaining in good faith. Bargaining not in good faith violates the RLA.


The Oregon Electric Case:

The Supreme Court in P&LE expends much dialogue on circumstances where the decision to sell would be a topic of bargaining. This it does because the facts of P&LE find no expression or implication that the decision to sell has been agreed to. The Court bases its holding on the absence of this crucial fact. The Court's dicta about express or implied agreement to bargain becomes nearly as significant as the holding itself. It is clear that Court would find an agreement to bargain about the decision to sell or lease very persuasive in finding a result opposite that of P&LE.

The BNSF came to the Union with the offer to allow the decision to lease the OE to be determined by the results of bargaining by the parties. BNSF expressed its agreement to make the Union a party to the business decision. The implication is that BNSF considers the decision to lease the OE to be a change in working conditions. The UTU agreed to bargain about the decision to lease the line. This agreement of the parties is now an agreement made under the RLA. The agreement may only be changed in accordance with the Act's bargaining requirements.

The railroad and Union bargained on the substance of the issue and came to terms. BNSF attained not only its stated goal of $400,000 saved, but the Union found another $100,000 in savings as well. This joint effort fortifies the argument that the decision to lease the OE was intended by BNSF to be a joint Carrier/Union decision.

Status Quo under the RLA:

The RLA required parties to bargain about mandatory topics. The parties are required to maintain agreements made until changed in accordance with the Act. Agreements are often of substance about terms and conditions of employment. Agreements are also procedural, that is an agreement to sit down and bargain. No agreement, substantive or procedural, may be changed unilaterally by the parties. The agreement to bargain about the decision to lease the OE is procedural. The act does not permit a party to walk away from such an agreement without bargaining to change or abrogate its terms.

It is the status quo provision that BNSF has violated by leasing the OE in the face of an agreement to maintain the line with cost reductions, as well as the underlying agreement to include the Union in its decisions about the OE. During the course of substantive negotiations, the Carrier was free to change its goals requiring a return to the table. The Carrier evidently argues that it was free to walk away from the substantive terms agreed to. Even if arguably true, the Carrier remained bound by the underlying procedural agreement to make the lease decision a joint one with the Union until that contract term was changed.

One is left questioning the good faith of the Carrier. The Carrier may argue that it did bargain in good faith. If it does, that becomes evidence that it intended to include the Union in the decision to lease the OE. Conversely, if the Carrier argues that it did not really intend to include the Union in the decision, then it bargained in bad faith. Section 2 of the RLA requires good faith bargaining in its own right.

The undersigned now asks if BNSF is ready and willing to meet and negotiate on the involved issues.

With best wishes, I am,

Yours truly,
/s/J.D. Fitzgerald
General Chairman



cc: W.A. Bell
R.L. Luther
J.L. Schollmeyer
S.D. Ferguson
B.A. Boyd, Jr.
C.J. Miller, III