Employees Protective Association, Appellant, v. Norfolk and Western Railway Company, Brotherhood Oflocomotive Engineers, and Special Board Ofadjustment No. 813, Appellees, 571 F.2d 185 (4th Cir. 1977)

This is the second time this case has been before this court. In 511 F.2d 1040 (1975), we reversed the action of the district court¹  in dismissing plaintiff's complaint for lack of jurisdiction over the subject matter of the case. We remanded the case to the district court "for the limited purpose of deciding whether Board No. 813 exceeded its jurisdiction in making the award under attack in this case." The issue is more specifically stated in appellants' brief as follows: "Appellants' (Employees Protective Association, et al (the Association)) position is that the Board lacked jurisdiction altogether, inasmuch as there was no unresolved dispute or controversy for it to resolve. The precise issue submitted by the Appellee, Norfolk and Western Railway (hereinafter called the N&W), to arbitration process had been specifically settled by agreement approximately 13 years earlier, at the time of the merger between the N&W and the Virginian Railway Company (hereinafter called the Virginian). That issue or question, namely, whether the language of Section 1(a) of the Merger Protection Agreement executed in 1959, at the time of said merger, empowered the N&W to compel integration of seniority rosters of protected employees, was specifically resolved by agreement between Mr. Gilbert, then International President of the Brotherhood of Locomotive Firemen & Engineers (sic, Enginemen), acting on behalf of all affected operating employees, and the N&W's president, Stuart T. Saunders, that the railroad would not attempt to force the operating employees to merge their seniority rosters. The only matter for this court to determine now is whether appellants sufficiently proved this agreement by a preponderance of the evidence presented in the hearing on November 25 and 26, 1975. Clearly, if appellants have proven that this precise issue had been settled by agreement, there was no longer a dispute for settlement by arbitration."

The district court held that Arbitration Board No. 813 did not exceed its jurisdiction. We affirm, but not for the same reasons as were stated by the district court. Securities and Exchange Commission v. Chenery, 318 U.S. 80, 88, 63 S. Ct. 454, 87 L. Ed. 626 (1943).

* On April 6, 1959, the Norfolk and Western Railway Company (N&W) and the Virginian Railway Company (Virginian) jointly petitioned the Interstate Commerce Commission for permission to merge the Virginian into the N&W. At that time the employees of the N&W were represented by Brotherhood of Locomotive Engineers (BLE) and some or all of the employees of the Virginian were represented by the former Brotherhood of Locomotive Firemen and Enginemen (BLF & E).² 

The Railway Labor Executives Association (RLEA) opposed the merger. RLEA is an organization composed of the chief executives of some 15 or more unions representing various crafts in the transportation field. Both BLE and BLF & E were represented in RLEA. Because of this opposition, the N&W, Virginian and RLEA negotiated an agreement "for the protection of employees as result of merger of Norfolk & Western Railway Company and Virginian Railway Company." This protective agreement was executed June 18, 1959. As a result of the agreement, RLEA withdrew its opposition to the merger.

The protective agreement of June 18, 1959 gave railroad employees more protection than previously afforded. In prior mergers, most railroad employees affected were protected by the Washington Job Protection Agreement of 1936.³  That agreement gave protection for only five years, while the protective agreement of June 18, 1959 gave personnel employed at the time of merger protection until the age of 65.

For this controversy, the pertinent part of the June 18, 1959 agreement is paragraph 1(a).⁴  Although that paragraph is set forth in its entirety in the margin, the portion which relates to the issue in this case, i. e., the integration of seniority rosters, is as follows:

". . . in the event that the employee organizations . . . elect not to have presently working employees of either railroad occupy available positions on the merged railroad through integration of seniority rosters . . . then, in that event, said employees shall be entitled only to . . . protection afforded by the terms of the Washington Job Protection Agreement . . ."

Some of the witnesses for the N&W claim that that company's right to compel integration of seniority rosters is established by the above quoted language.⁵ 

In 1962, another merger was accomplished between the N&W and the Nickel Plate railroad, which merger is described and discussed in our earlier opinion. Following are two pertinent paragraphs (511 F.2d 1040, at 1042):

"In 1962 N&W sought ICC approval of a second merger with the New York, Chicago and St. Louis Railroad (Nickel Plate). Since the 1959 Agreement would not protect N&W employees (including former Virginian employees) from consequences attributable to the Nickel Plate merger, RLEA and the two carriers entered into an Agreement for Protection of Employees, which included an arbitration provision, set out in the margin.

"As a result of the 1962 Agreement N&W employees were subject to two different sets of merger-protective provisions, the applicable protection depending upon whether the adverse employment effect could be traced to the Virginian or the Nickel Plate merger. Therefore, a Memorandum of Understanding was executed, which provided, inter alia, that the arbitration provisions of the 1962 Agreement would be controlling."

The especially pertinent provision of the protective agreement of January 10, 1962 is as follows:

"1(b) In consideration of the foregoing employee benefits, Norfolk and Western and the other carriers heretofore named shall be entitled to transfer the work of the employees protected hereunder throughout the merged or consolidated system and the labor organizations will enter into implementing agreements providing for the transfer of employees to follow their work, and the employees, their organizations and the carriers will cooperate to that end."

The memorandum of understanding executed the same day as the protective agreement provides:

"It is understood and agreed that the said agreement (1962 Nickel Plate Protective Agreement) does not diminish the rights and benefits of the employees subject to the Agreement of June 18, 1959, or implementing agreements made thereto in the Norfolk and Western Virginian merger case except that said Agreement effective January 10, 1962, shall apply with respect to arbitration, retraining of employees and transfer of work."

Before the Board and in this court, the N&W has also claimed its power to integrate justified by the last two quoted provisions.⁶ 

The Association claims that an oral agreement or understanding was reached between H. E. Gilbert, representing RLEA and Stuart T. Saunders, President of N&W, to the effect that no integration of seniority rosters would be required, at least for operating crafts. Gilbert was the Association's principal witness at the trial in the district court. In 1959, he was president of BLF & E and represented RLEA in its original opposition to the N&W Virginian merger and in negotiating the protective agreement of June 18, 1959.

The Association sought to prove this Gilbert-Saunders agreement by the testimony of Gilbert and by various BLF & E memoranda and correspondence. Gilbert testified that he first voiced his objection to paragraph 1(a) of the June 18, 1959 agreement, insofar as it might require integration of seniority rosters, before that agreement was signed. He explained that under the BLF & E Constitution no agreement could be made which involves integration of seniority rosters without a vote of the membership of the union. Gilbert testified that his first understanding with Saunders was on June 16, 1959. It also appears from Gilbert's testimony and from correspondence and memoranda that a meeting occurred in Washington, D. C., on December 14, 1959, which was attended by Saunders and two other N&W officers and by representatives of RLEA, and seven unions, including BLE and BLF & E. At that time, Saunders recognized his conversation of June 16, 1959 and agreed that modification would be made. This Gilbert-Saunders understanding was referred to as a gentlemen's agreement which was carried out by long practice over many years.

In December 1959 and in March and April 1960, at least five agreements were made with representatives of various groups of employees. Some of these involved integration of seniority rosters and were concurred in by union representatives who considered that they were putting paragraph 1(a) of the June 18, 1959 agreement into effect. However, for 13 years intervening between 1959 and 1972, no attempt was made to integrate the seniority rosters of engineers.⁷  Both mergers were approved by the Interstate Commerce Commission.⁸  The ICC Report, at p. 439, expressly referred to the protective agreement of June 18, 1959 and found, at p. 441, that that agreement constituted compliance with Section 5(2) (f) of the Interstate Commerce Act⁹  by subjecting the findings to the agreement. Richard Keene, general solicitor for N&W, testified that he examined the transcript of evidence in the Interstate Commerce Commission proceeding and found no reference to the Gilbert-Saunders agreement.

On September 5, 1972, the N&W took steps to obtain integration of seniority rosters of engineers, represented by BLE and Trainmen, Firemen, and Conductors represented by UTU.¹⁰  On October 3, 1972, R. B. Curtis, representing BLE, requested that in the future the N&W meet with BLE separately from the representative of UTU. On October 11, 1972, he served notice in writing denying the validity of the N&W's demand to integrate, contending that integration was not required under either the June 18, 1959 agreement or the January 10, 1962 agreement. On October 17, 1972, the N&W served notice to arbitrate, and on October 23, 1972, BLE declined to arbitrate. On October 26, 1972, N&W requested the National Mediation Board to take jurisdiction and to assign a neutral arbitrator as chairman. On November 3, 1972, BLE filed a response with the National Mediation Board in which it objected to arbitration on the ground that the dispute ". . . does not involve the mere interpretation or application of a collective agreement. Rather, it involves a question of law, which an arbitrator lacks the power to decide." On February 2, 1973, the Federal Mediation Board created Special Board of Adjustment No. 813, and appointed C. Robert Roadley as the neutral member. The Mediation Board specifically stated that the appointment was made without prejudice to the right of BLE to submit its objection to the arbitration procedure to the Board.¹¹ 

R. B. Curtis, who was BLE's principal representative in the proceedings prior to the appointment of Special Adjustment Board No. 813, served as the organization representative on that board. Curtis testified that in the Board proceedings he objected to the Board's jurisdiction along the same lines as he had previously objected. He did not assign the Gilbert-Saunders agreement as a basis for his objection to jurisdiction. He testified that his reason for this omission was that he had no knowledge of such agreement, and that the agreement first came to his attention after the termination of the activities of Board 813 and while Board 820¹²  was in progress.

Special Board of Adjustment No. 813 rendered two decisions. On April 25, 1973, it announced its opinion and made its interim award. The Board held that it had jurisdiction, under the terms of the arbitration provisions of the 1959 and 1962 agreements, to consider the carrier's demand for integration.¹³  It ordered, however, that the parties first attempt to resolve the issue by negotiation. The attempted negotiation failed, and then Board No. 813 filed its final opinion and award on November 19, 1973. In this award, the Board decided that, under the authority of Section 1(a) of the protective agreement of June 18, 1959, the carrier (N&W) was entitled to force integration.¹⁴  Board 813, however, rejected the basis for integration demanded by the carrier, i. e., that all engineers on any of the three lists east of Roanoke be integrated into a composite list and appear on the merged list according to date of seniority on the respective lists, called dovetailing. Instead, it ordered the alternate basis for integrating asked by BLE which was called "percentage equity allocation."

The Association's suit is essentially one brought under 28 U.S.C. § 1337 to set aside the award of Special Board of Adjustment No. 813.¹⁵  Its sole basis of attack upon the award is as indicated at the beginning of this opinion, that the Gilbert-Saunders agreement deprived the Board of jurisdiction. But the N&W denied the existence of the Gilbert-Saunders agreement, and the district judge was not convinced that such agreement has been established. He thus found that Special Board of Adjustment No. 813 did have jurisdiction.

Assuming that the evidence sustains the existence of the Gilbert-Saunders agreement, we do not concur with the Association as to the legal effect of that agreement. Its entire argument is based upon the premise that that agreement removed the entire issue of integration of seniority rosters of engineers from the scope of the arbitration clause. This understanding would not, and could not, do that, absent a modification of the arbitration clause itself, which is not even claimed. We express no opinion as to whether this agreement could have the effect of amending section 1(a) of the 1959 protective agreement or section 1(b) of the 1962 protective agreement. That it might have such an effect is an argument that must be addressed to the arbitration board. Its decisions on such matters are generally final. The same remarks apply as to whether the Gilbert-Saunders agreement should be considered an implementing agreement under the protective provisions.

The Association correctly contends that an arbitrator's decision is binding only as to matters that the parties have agreed to submit to arbitration. However, the scope of an arbitrator's authority is to be determined by an inspection of the arbitration clause. In Steelworkers v. Warrier & Gulf Co., 363 U.S. 574, 80 S. Ct. 1347, 4 L. Ed. 2d 1409 (1960), one of the famous Trilogy Cases,¹⁶  the Court states on page 582, 80 S. Ct. on page 1353;

". . . Yet, to be consistent with congressional policy in favor of settlement of disputes by the parties through the machinery of arbitration, the judicial inquiry under § 301 must be strictly confined to the question whether the reluctant party did agree to arbitrate the grievance or did agree to give the arbitrator power to make the award he made. An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage."We do not agree with the lower courts that contracting-out grievances were necessarily excepted from the grievance procedure of this agreement. To be sure, the agreement provides that 'matters which are strictly a function of management shall not be subject to arbitration.' But it goes on to say that if 'differences' arise or if 'any local trouble of any kind' arises, the grievance procedure shall be applicable."

The Association's argument that there is no dispute to present to an adjustment board is unconvincing. Section 1(d) of the 1962 agreement provides for arbitration of any "dispute or controversy . . . with respect to the interpretation or application of any provision of this agreement." The 1959 agreement provides the same in all essential respects. Certainly there is here both a dispute regarding the application of section 1(a) of the 1959 agreement and section 1(b) of the 1962 agreement.

But, the Association argues, the integration of seniority rosters was removed from the scope of both arbitration clauses by the Gilbert-Saunders agreement. Even if we assume that the parties did attempt to settle the issue, otherwise arbitrable, by agreement, any disagreement as to the existence or effect of that settlement agreement would itself be a matter for the arbitrator to decide.

Several of the leading cases on the scope of an arbitrator's authority deal with attempts to limit the coverage of an arbitration clause otherwise than by a limitation in the clause itself. In Steelworkers v. American Mfg. Co., 363 U.S. 564, 80 S. Ct. 1343, 4 L. Ed. 2d 1403 (1960), another of the Trilogy Cases, an employee had been injured and his claim for workmen's compensation settled by the employer on the basis the employee was 25% Permanently partially disabled. As a result of the settlement, the employer refused to take the employee back to work and refused to arbitrate his reinstatement claim upon the ground that the grievance had been removed from the arbitration clause by settlement of the compensation claim on the basis of permanent disability. The employee claimed reinstatement, saying he was not disabled, contrary to the claim he asserted in his settlement. The Supreme Court ordered arbitration, and on pages 567 and 568, 80 S. Ct. on pages 1346 the Court stated:

"The collective agreement calls for submission of grievances in the categories which it describes, irrespective of whether a court may deem them to be meritorious. . . . The function of the Court is very limited when the parties have agreed to submit all questions of contract interpretation to the arbitrator. It is confined to ascertaining whether the party seeking arbitration is making a claim which on its face is governed by the contract. Whether the moving party is right or wrong is a question of contract interpretation for the arbitrator . . ."

We think the American Manufacturing reasoning should apply here. In that case, it was contended that a claim which on its face raised an issue under a contract provision was removed from the scope of the arbitration clause because of a settlement agreement. Here, there is no doubt that, but for the claimed effect of the Gilbert-Saunders agreement, the issue as to the applicability of section 1(a) of the 1959 agreement or 1(b) of the 1962 agreement would be appropriate for arbitration. We think the Gilbert-Saunders agreement is, in principle, not different from the settlement agreement in American Manufacturing.

We also think applicable the case of Operating Engineers v. Flair Builders, Inc., 406 U.S. 487, 92 S. Ct. 1710, 32 L. Ed. 2d 248 (1971). In that case, the company resisted a union's demand to arbitrate an issue which fell within the scope of the arbitration clause, as written, on the ground that the union's right to arbitration had been lost by laches. In rejecting the claim that the laches question should be decided by the court, the Court stated, on pp. 491, 492, 92 S. Ct. on p. 1712:

"We need not reach the question posed by petitioner, for we find that the parties did in fact agree to arbitrate the issue of laches here. Although respondent denies that it ever signed a binding contract with petitioner, the District Court found to the contrary and held that the company 'was bound by the memorandum agreement to arbitrate labor disputes within the limits of the arbitration clause.' That clause applies to 'any difference,' whatever it may be, not settled by the parties within 48 hours of occurrence. There is nothing to limit the sweep of this language or to except any dispute or class of disputes from arbitration. In that circumstance, we must conclude that the parties meant what they said that 'any difference,' which would include the issue of laches raised by respondent at trial, should be referred to the arbitrator for decision. The District Court ignored the plain meaning of the clause in deciding that issue.

". . . But once a court finds that, as here, the parties are subject to an agreement to arbitrate, and that agreement extends to 'any difference' between them, then a claim that particular grievances are barred by laches is an arbitrable question under the agreement. . . ."

Of course the issue in Operating Engineers v. Flair Builders, Inc., is not exactly the same as the issue now before us because there the arbitration clause referred to "any difference," whereas here reference is to "any dispute or controversy . . . with respect to the interpretation or application of any provision of this agreement."¹⁷  The decision is significant for its showing that the coverage of an arbitration clause is to be determined from the wording of the clause itself, and not from something else which may have occurred which is pertinent to the issues to be submitted to the arbitrator.

The issue as to the existence and legal effect of the Gilbert-Saunders agreement was pertinent to the application of sections 1(a) of the 1959 agreement and 1(b) of the 1962 agreement. It should, therefore, have been submitted to Special Adjustment Board No. 813. That issue is not pertinent to the scope of the arbitrator's authority as found in the arbitration clause, sections 1(d) of both agreements.

We are not unmindful that evidence as to the Gilbert-Saunders agreement was apparently not submitted to the Adjustment Board because BLE was not aware of such evidence at that time. It does appear, however, that the issue as to whether the N&W had the power to compel the integration of seniority rosters under the terms of the two agreements was extensively submitted to Adjustment Board No. 813.¹⁸  We think the question was clearly within the scope of the arbitration clause for it is "with respect to the interpretation or application of . . . (a) provision of . . . (the) agreement."

Because of the ground on which we have based our decision, it is not necessary for us to express an opinion on the other principal points raised in the appeal. The Association argues persuasively that the finding that the Gilbert-Saunders agreement did not exist, having been carried out by the parties for about 13 years, is clearly erroneous. The Norfolk & Western argues strenuously that under the case of Nemitz v. Norfolk & Western Ry. Co., 404 U.S. 37, 92 S. Ct. 185, 30 L. Ed. 2d 198 (1971), the Gilbert-Saunders agreement, assuming its existence, could have no effect because it was a modification of the employee protective agreements and had not received the approval of the ICC.

We express no opinions on these questions. However, we do believe we should indicate that by our affirmance we do not express any opinion that the findings of fact of the district court, that the GilbertSaunders agreement did not exist, are correct. By the same token, our affirmance should not be taken as expressing any opinion that Nemitz might not preclude the enforcement of the Gilbert-Saunders agreement in all events.

Because we believe Special Board of Adjustment No. 813 did not exceed its jurisdiction, the judgment of the district court is

AFFIRMED.