Union Pacific Railroad Co. v. Brotherhood of Locomotive Engineers

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Argued October 7, 2009. Decided December 8, 2009.

Authorship: JP Howard of Akin Gump and Anna Christensen of Howe & Russell

Docket: 08-604

Issue: Whether the Railway Labor Act authorizes courts to set aside final arbitration awards for alleged violations of due process by the National Railroad Adjustment Board, and if the Board can adopt a new, retroactive interpretation of the standards governing its arbitration proceedings.

Contents

Briefs and Documents

Decision

AFFIRMED in an opinion by Justice Ginsburg. (December 8, 2009)

Oral Argument

Transcript (October 7, 2009)

Merits Briefs

Amicus Briefs

Certiorari-Stage Documents

Opinion Recap

In Union Pacific Railroad Co. v. Brotherhood of Locomotive Engineers and Trainmen, a railroad company involved in a dispute with its labor union asked the Court to decide whether a federal court could set aside a decision by the National Railroad Adjustment Board (NRAB) on the ground that the NRAB had violated due process when it dismissed the union’s claims “for lack of jurisdiction.” In a unanimous decision delivered Tuesday by Justice Ginsburg, the Court declined to reach that question and instead affirmed the decision below on the ground that the NRAB’s refusal to adjudicate the union’s claims on the basis that it lacked jurisdiction violated the Railway Labor Act (RLA).

The RLA establishes a process for adjudication of labor disputes by which unions and railroads must first meet in “on-property proceedings” to exhausting grievance procedures specified in their collective-bargaining agreements. Before seeking arbitration before NRAB panels, the two sides must also attempt to settle their disputes by “conferencing.” Decisions by the NRAB are binding and may only be appealed to federal courts on three limited grounds, one of which is the “failure of the [Board’s] order to conform, or confine itself, to matters within the scope of the division’s jurisdiction.”

Following on-property negotiations between Union Pacific and the Brotherhood of Locomotive Engineers (the Union), the Union sought arbitration before the NRAB. Both parties, however, initially neglected to provide the NRAB with proof that they had already conferenced on the dispute. The NRAB subsequently dismissed the union’s grievance “for want of jurisdiction”; in its view, conducting a de novo review of the conferencing evidence would exceed its mandate. The Union sought review in federal district court, which affirmed the NRAB decision; on appeal, the Seventh Circuit reversed, holding that the NRAB’s dismissal of the Union’s claims violated due process.

In its opinion, the Court emphasized the difference between the Union’s statutory claim and the constitutional concerns on which the lower court’s decision relied. Although it agreed with the result reached by the Seventh Circuit – that is, that the NRAB should not have dismissed the Union’s claims – the Court held that the proper focus was on the RLA rather than the Due Process Clause. Turning to the statute, the Court explained that judicial review will be precluded as long as the Board “conform[s], or confine[s] itself, to matters [Congress placed] within the scope of [NRAB] jurisdiction.” However, when it improperly deemed the Union’s failure to submit proof of conferencing as a “jurisdictional,” rather than “claims-processing,” obstacle, and thus dismissed the claims for lack of jurisdiction, the NRAB, paradoxically, failed to “conform, or confine itself” to matters within its jurisdiction. Put another way, because Congress had not given the NRAB “authority to adopt rules of jurisdictional dimension,” the very act of defining the proof-of-conferencing issue as “jurisdictional” violated the NRAB’s governing statutes under the RLA. Therefore, the NRAB’s decision was subject to judicial review under the RLA, and the the Seventh Circuit’s decision in favor of the Union was affirmed, albeit on a different ground. Moreover, the Court continued, because the Union was able to prevail on statutory grounds, there is “no due process issue alive” in the dispute.

Although the Court declined to reach the constitutional questions posed in the case – that is, whether the proof-of-conferencing issue was “jurisdictional,” and whether the NRAB’s subsequent dismissal of the Union’s claims was incompatible with due process – the opinion did note that the case nonetheless allowed it to address an important matter: the confusion “over matters properly typed ‘jurisdictional.’” This confusion, the Court wrote, “cloud[s] court as well as Board decisions,” and by defining the leeway adjudication boards have to interpret this term, the Court may have significantly affected the existing relationship between arbitrators and federal courts.

Argument Preview

The Railway Labor Act (“RLA”) creates a set of procedures to settle labor disputes between railroads and unions that require an internal grievance process culminating with an “on-property conference.” If the parties are dissatisfied with the outcome of the “on-property” proceedings, which are defined in their collective bargaining agreement, they may initiate an arbitration proceeding before the National Railroad Adjustment Board (“NRAB”). NRAB decisions are binding and have explicit statutory judicial review only when (1) the Board has failed to meet the requirements of the RLA; (2) the Board has reached outside of its jurisdiction; and (3) the Board or one of its members has engaged in fraud or corruption. In No. 08-604, Union Pacific Railroad v. Brotherhood of Locomotive Engineers and Trainmen, the Court will consider two questions: Whether the RLA authorizes courts to set aside final arbitration awards for alleged violations of due process by the NRAB, and whether the Board can adopt a new, retroactive interpretation of the standards governing its arbitration proceedings.

Background

After Union Pacific Railroad (Union Pacific) charged five of its employees with disciplinary violations, the Brotherhood of Locomotive Engineers and Trainmen – the union representing the employees – filed claims to contest the resulting discipline imposed by Union Pacific. After “on-property” proceedings, the Union submitted the claims to arbitration. In its first submission, the Union failed to include any written evidence that both sides had met in conference. Union Pacific raised the issue for the first time at arbitration, after it submitted its brief on the merits and the record was closed. Rejecting the Union’s offer to submit evidence that the conferencing had in fact occurred, the arbitral panel determined (1) it could consider only evidence in the on-property record; and (2) without evidence that the conference occurred, it lacked jurisdiction. It thus dismissed all five claims.

The Union then filed a petition for review in federal district court. Opposing review, Union Pacific argued that NRAB’s decisions were evidentiary rulings which, absent bad faith or misconduct, could not be set aside; moreover, written evidence of the conference is a mandatory precursor to arbitration that cannot be added later. The Union countered that because neither federal law nor the collective bargaining agreement required conferencing, the panel’s decision violated due process, and in any event nothing required that conferencing must be proved through the on-property record. The district court sided with Union Pacific and dismissed the petition. On appeal, the Seventh Circuit reversed, holding that judicial review of constitutional questions, such as due process, should not be foreclosed unless there is clear evidence of Congress’s intent to do so – evidence that is lacking in this case. The court of appeals further held, on the facts, that due process was denied because the NRAB created a “surprise” rule through adjudication that could not exist without prior notice. Union Pacific’s request for a rehearing en banc was denied by the Seventh Circuit.

Cert.-Stage Proceedings

Union Pacific sought certiorari, arguing that the Seventh Circuit’s decision perpetuates a five-four split in the circuits: the Second, Fifth, Seventh, Eighth, and Ninth Circuits have created a fourth “due process” ground for judicial review outside of the statute, while the Third, Sixth, Tenth, and Eleventh Circuits have held “unequivocally” that courts cannot review NRAB decisions unless one of the three criteria for judicial review is met. Union Pacific argues further that the Seventh Circuit’s decision dangerously expands the concept of due process to allow litigants to “second-guess” the agency’s regular application of its rules to factual situations and the Board’s authority to articulate statutory interpretation through adjudication rather than rule making. Moreover, the Seventh Circuit’s overly expansive reading of due process undermines the purpose of the RLA, which was intended to allow for the efficient settlement of minor disputes, and controverts the finality of arbitration. Indeed, in the majority circuits (allowing review on due process grounds) there are already sixty reported decisions on arbitration over the last three decades.

The Union counters that the circuit split is illusory because the grounds for review under the Fifth Amendment are in effect the same as those in the RLA. Additionally, there is no national importance to be considered because federal courts upset arbitral awards only under exceptional circumstances, and any act constituting a denial of due process is almost certainly one that exceeds the panel’s jurisdiction. Moreover, the NRAB cannot engage in adjudicatory rulemaking because of its special role, which is more a service provider than an agency. Thus, the NRAB does not apply federal law, has no body of case law, does not codify a body of regulations and does not have congressionally confirmed members. Its purpose in effect is to resolve grievances under private labor agreements by adding a neutral party to an arbitral panel. The Union also argues that Congress has never clearly eliminated the jurisdiction of Article III courts to hear constitutional claims arising out of NRAB proceedings, and as an agency NRAB is presumptively subject to constitutional constraints absent clear and convincing evidence that Congress intended otherwise. Finally, the issues for which the railroad now seeks Supreme Court review were only addressed for the first time in its petition for rehearing en banc.

The Court granted certiorari on February 23, 2009.

Merits Briefs

In its brief on the merits, Union Pacific argues that the RLA provision governing judicial review is confined to the three defined statutory grounds, which intentionally do not include due process. Further, the RLA sufficiently guarantees parties the fundamental requirements of due process. But even if the Court were to reach the merits of the Union’s due process objections, it should nonetheless reverse because the Board reasonably interpreted its statute and rules to require a petitioner to provide, in its initial submission, information that is essential to the NRAB’s jurisdiction. Moreover, prior to the Seventh Circuit’s decision the NRAB had ruled in a similar manner several times, so even if the decisions were non-precedential, they were hardly a surprise. And in any event, even if the Board had not previously addressed the issue, retroactivity is a premise of all adjudication: courts declare what the rules always were, rather than what they have become, and “surprise” is not possible. Consequently, if the due process theory advocated by the Union and the Seventh Circuit is upheld, all debatable questions will become “fodder for constitutional litigation.”

The Union disputes the Railroad’s statutory argument, emphasizing that the federal courts exercised due process jurisdiction before the amendments to the RLA; nothing in those amendments, it explains, reflects any intent by Congress to strip the courts of their constitutional jurisdiction. The Union contends further that due process review is especially appropriate when an NRAB panel makes up a new procedural requirement to dismiss cases without a hearing under the collective bargaining agreement, particularly when the Railroad would not have been prejudiced by consideration of the denied evidence and the Union was given no reasonable advance notice that it would be required to submit evidence of conferencing. The Union reiterates the Seventh Circuit’s holding that individual NRAB panels cannot engage in “rule making by adjudication.” The Court may vacate these awards on the statutory ground that the NRAB panel had no authority to dismiss these causes and thereby failed to “confine or conform” itself to its proper and limited jurisdiction under the RLA.

In its reply brief, Union Pacific counters that the three statutory grounds are exclusive. It relies on Union Pacific Railroad Co. v. Sheehan (1978), reasoning that that the Union’s statutory argument rests on congressional silence rather than the specific language used by Congress and recognized in Sheehan. And it reiterates that the Board’s decision did not violate due process for two reasons. First, there was no “surprise” to the Union, because the language of Circular One, an interpretative document released by the agency, makes clear that evidence of the on-property process must be submitted for the Board to have jurisdiction. Second, even if there were “surprise,” it could not amount to a violation of due process because a basic piece of adjudication is the resolution of the application of general rules to specific facts and the Board simply decided on its jurisdiction. Thereby, the Railroad concludes, the only tribunal exceeding its jurisdiction was the Seventh Circuit, which infringed on the Board’s right to address minor issues arising from the application of its foundational rules.

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