Unpublished Disposition, 860 F.2d 1088 (9th Cir. 1988)

MEMORANDUM^* 

Plaintiff-appellant Brotherhood of Locomotive Engineers ("BLE") appeals from the order of the district court granting summary judgment to defendants-appellees Portland Terminal Railroad Company ("PTRC") and Burlington Northern Railroad Company ("BN"). We affirm in part and reverse in part.

PRTC is a terminal company owned in part by BN. Terminal companies perform "interchange functions," i.e. they transfer rail cargo from one railroad to another where their lines intersect.

On January 3, 1984, BLE served a notice on PTRC under section 6 of the Railway Labor Act ("RLA"), 45 U.S.C. § 156 (1982), requesting that PTRC confer with it over proposals, inter alia, that BLE engineers be given job security and the exclusive right to perform engineering services at PTRC. The parties agreed that these proposals should be handled on a national level. They referred the proposals to the National Mediation Board (NMB) for binding arbitration.

On December 19, 1985, the parties reached a tentative moratorium agreement whereby they agreed to refrain until April 1, 1988 from filing any new notices under section 6 of the RLA with respect to issues raised in BLE's January 3, 1984 section 6 notice. The NMB confirmed this moratorium agreement in an arbitral award dated May 19, 1986.

In 1985, BLE became concerned that certain changes in interchange procedures at PTRC would ultimately lead to the elimination of engineering jobs. The district court described the changes at PTRC as follows:

In 1985, BN leased a portion of ... [PTRC's] yard and constructed two new tracks specially designed to take advantage of containerization. The new tracks were constructed so that containers could be switched from a car on one track to a car on the other without having to switch cars. Although this change requires a minimal change in operation, i.e., dropping the cars off at the new tracks, it eliminates the interchange function of the terminal. Hence, the change threatens the jobs of terminal employees.

On February 4 and 5, 1986, BLE filed notices under section 6 requesting that PTRC and BN confer with it over proposals that no engineering position at PTRC be eliminated and exclusive rights to perform certain tasks at PTRC be given to BLE engineers. PTRC and BN refused to confer with BLE arguing, inter alia, that these section 6 notices were barred by the December 19, 1985 moratorium agreement.

On October 14, 1986, PTRC and BN sought a determination by the National Railroad Adjustment Board ("NRAB") that the moratorium agreement barred the February 1986 section 6 notices. The NRAB sent a notice to BLE instructing it to file an answer by November 21, 1986. BLE filed a timely request for an extension of time to file an answer but it was not received by the NRAB. On March 12, 1987, the NRAB issued an award in PTRC and BN's favor holding:

On October 14, 1986, ... [PTRC and BN] forwarded a Claim to the First Division National Railroad Adjustment Board, contending that ... [BLE's] Section 6 Notices of February 4 and 5, 1986 were barred and withdrawn by a moratorium provision of the May 19, 1986 BLE National Agreement. [BLE] ... failed to file an answering Submission, as required. Given ... [BLE's] failure to file a Submission, this Board is compelled to sustain the case based on the Submission before it.

Award Claim Sustained.

On October 10, 1987, BLE filed this action in the district court seeking, inter alia, to enjoin PTRC and BN from altering the status quo at PTRC and "to cease and desist in ... [their] refusal to confer and negotiate over the ... section 6 notices of February 4 and 5, 1986." BLE also sought to have set aside the March 12, 1987 arbitration award on due process grounds.

The district court granted summary judgment to PTRC and BN with respect to both claims. The district court held that it lacked jurisdiction to enjoin PTRC and BN from refusing to bargain over the February 1986 section 6 notices because the dispute between the parties was an "omitted case minor dispute" under the RLA. The district court refused to set aside the arbitral award holding that "the Supreme Court in Union P. R.R. Co. v. Sheehan, 439 U.S. 89 (1978) foreclosed such review."

"A grant of summary judgment is reviewed de novo. Our review is governed by the same standard used by the trial court under Fed. R. Civ. P. Sec. 56(c)." Coverdell v. Department of Social and Health Serv., 834 F.2d 758, 761 (9th Cir. 1987) (citation omitted).

"Whether a dispute constitutes a major dispute or a minor dispute under the RLA is a matter of law which we review de novo." Brotherhood of Locomotive Eng'rs v. Burlington N. R.R. Co., 838 F.2d 1087, 1089 (9th Cir. 1988); accord IAM v. Aloha Airlines, Inc., 776 F.2d 812, 815 (9th Cir. 1985).

"Under the Railway Labor Act, all disputes between railroads and their employees are either 'major disputes' or 'minor disputes.' " Brotherhood of Locomotive Engrs, 838 F.2d at 1090. "Major disputes 'concern [either] the formation of collective bargaining agreements or efforts to secure new rights and incorporate them into future agreements.' Minor disputes involve the interpretation or application of existing collective bargaining agreements." Id. (citations omitted).

Major disputes are settled by "noncompulsory adjustment." Id. The parties must maintain the status quo pending exhaustion of the noncompulsory adjustment process. "The duty to maintain the status quo may be enforced by obtaining injunctive relief in a federal district court." Id. at 1091. Minor disputes are settled by "compulsory and binding arbitration." Id. " [F]ederal courts have no subject matter jurisdiction over minor disputes." Id.

"The test in our circuit for determining whether a dispute involves only the interpretation or application of an existing agreement (and is therefore minor) or involves the formation of a collective agreement or a unilateral effort to change working conditions (and is therefore major) ... is whether the railroad's actions are 'arguably justified' by the collective agreement." Id. (citations omitted) (emphasis in original). A dispute which is "arguably" premature in light of a moratorium agreement is also a minor dispute under the RLA. St. Louis S.W. Ry. Co. v. United Transp. Union, 646 F.2d 230, 233 (5th Cir. 1981); International Longshoremen's Ass'n v. Toledo Lakefront Dock & Pellet Co., 776 F.2d 1341, 1344 (6th Cir. 1985).

"The [arguably justified] test is not a stringent one." O'Donnell v. Wein Air Alaska, Inc., 551 F.2d 1141, 1146 (9th Cir. 1975). "When in doubt, courts construe disputes as minor." Brotherhood of Locomotive Engineers, 838 F.2d at 1091. However, the "major-minor dispute dichotomy does not relate to artfully contrived formalistic demands or responses but to matters of substance." Switchmen's Union v. Southern P. Co., 398 F.2d 443, 447 (9th Cir. 1968).

In the December 18, 1985 moratorium agreement, the parties agreed to refrain until April 1, 1988 from filing new notices under section 6 with respect to issues "specifically dealt with" in BLE's January 3, 1984 section 6 notice. In its January 3, 1984 notice, BLE sought, inter alia, "guaranteed employment" for its workers, and the exclusive right of engineers to perform engineering work.

In its February 4 and 5, 1986 notices under section 6, BLE proposed that " [n]o position in existence on the Portland Terminal Railroad Company will be abolished ..."; that " [l]ocomotive [e]ngineers ... shall have the EXCLUSIVE RIGHT to perform all engineer's work" at PTRC; and that these exclusive rights continue " [i]n the event the Carrier sells any or all of its trackage to another railroad...."

PTRC and BN contend that the moratorium agreement arguably barred BLE from filing the February 4 and 5, 1986 section 6 notices. We agree. BLE's January 3, 1984 proposal for guaranteed employment for engineers is arguably identical to its February 4 and 5, 1986 proposals that no engineering positions at PTRC be eliminated. Both proposals sought job security for BLE engineers. BLE's January 3, 1984 proposal that only engineers perform engineering work was arguably identical to its February 4 and 5, 1986 proposals that engineers have the exclusive right to perform engineering work. Both proposals sought to preserve traditional engineering tasks for BLE's engineers.

Since the 1984 and 1986 proposals were arguably identical, the 1986 proposals were arguably barred by the moratorium agreement. Accordingly, the dispute was minor and the district court did not err in granting the summary judgment motion of PTRC and BN. St. Louis S.W. Ry. Co., 646 F.2d at 233.

BLE contends that the alteration of the interchange procedures at PTRC was not arguably justified by the collective agreement. BLE argues that an implied-in-fact term of the collective bargaining agreement required that PTRC preserve jobs for BLE engineers. BLE contends that PTRC and BN sought to change this implied term by leasing PTRC track to BN and thereby allowing BN employees to perform work traditionally done by PTRC engineers.

In response, PTRC and BN cite several provisions of the collective agreement which they claim arguably permitted them to alter interchange procedures, including a 1972 amendment to the original collective bargaining agreement. The 1972 amendment provides in part:

PT [RC] crews may be permitted or required to assist ... [parent company crews] in the yarding of trains, in the handling of transfer deliveries and/or assisting such crews in picking up and setting out of cars and such work shall not be construed as violative or any provision of the controlling agreement....

The claim of PTRC and BN that this amendment arguably justifies their alteration of interchange procedures has merit. The amendment arguably recognizes the right of parent crews to "handl [e] ... transfer deliveries" on their own, without the participation of PTRC engineers. This is implicit in the amendment's grant of power to management to decide whether to "permit [ ] or require [ ]" PTRC engineers to assist "in the handling of transfer deliveries." Since the 1972 amendment arguably permitted PTRC and BN to alter interchange procedures by bypassing PRTC engineers, the dispute over the alteration of these procedures was minor.

Since we conclude that the alteration of interchange procedures is arguably justified by the 1972 Amendment to the collective bargaining agreement, we need not decide whether the alteration is arguably justified by any other term of the collective bargaining agreement or whether the dispute over alteration procedures was an "omitted case" minor dispute.

The district court has jurisdiction in minor disputes to issue injunctions preserving the status quo pending a decision on the merits by the NRAB. Trans Int'l Airlines, Inc. v. Int'l Bhd. of Teamsters, 650 F.2d 949, 966-67 (9th Cir. 1980), cert. denied, 449 U.S. 1110 (1981). We will reverse the grant or denial of an injunction only where the district court abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact. Colorado River Indian Tribes v. Town of Parker, 776 F.2d 846, 849 (9th Cir. 1985). "A district court's failure to exercise discretion constitutes an abuse of discretion." Taylor v. Social Security Administration, 842 F.2d 232, 233 (9th Cir. 1988).

BLE contended in the district court that an injunction preserving the status quo should be issued even "if the Court determines this is a minor dispute." The district court failed to address this claim in its order granting the summary judgment motions of PTRC and BN. Since the district court failed to exercise its discretion with respect to this claim, we remand the claim to the district court for consideration.

BLE contends that the NRAB violated BLE's constitutional rights to due process, and the procedural rules of the RLA, when it ruled in favor of PTRC and BN on their claim that the December 19, 1985 moratorium agreement barred BLE's February 4 and 5 section 6 notices. BLE contends that the Constitution and the RLA's procedural rules required that the NRAB hear BLE's opposition to that claim prior to the issuance of its award. BLE contends that the arbitral award must be set aside, and that it must be allowed to oppose the claim.

The procedures employed by the NRAB were not violative of either due process or the RLA. The NRAB denied BLE's request for an extension of time to file an answer because it never received that request. The procedural rules of the NRAB provide that " [r]equests for extensions ... received on or before expiration of the time limit [for filing an answer], or bearing a postmark within such time limit will be accepted as timely filed." (emphasis added). The NRAB did not violate BLE's due process rights when it denied BLE's request for an extension based on BLE's failure to comply with this procedural rule. Cf. Thomas v. Arn, 474 U.S. 140, 155 (1985) (" 'the State certainly accords due process when it terminates a claim for failure to comply with a reasonable procedural ... rule' " (quoting Logan v. Zimmerman Brush Co., 455 U.S. 422, 437 (1982) (emphasis in original)).

Moreover, the NRAB did not violate Section 3, first (g) of the RLA, 45 U.S.C. § 153(g), by failing to issue an award on the merits of the claim of BN and PTRC that the moratorium agreement barred the February 4 and 5 section 6 notices. We agree with the district court's conclusion that the "NRAB's order went to the merits of the dispute and found for BN and ... [PTRC]." As the district court correctly noted, the:

NRAB's award found that ' [g]iven Respondent's failure to file a submission, this Board is compelled to sustain the case based on the submission before it.' That is, NRAB found that, based upon defendants' submission, the section 6 notices were barred by the moratorium agreement. Hence, NRAB considered the submission as well as the moratorium agreement and found that the moratorium agreement barred the section 6 notices.

While the NRAB's decision went to the merits of the claim of BN and PTRC that the moratorium agreement barred the section 6 notices, it did not address the question whether alteration of the interchange procedures was barred by the collective agreement. Thus, the merits of BLE's collective bargaining claim have not been determined. Accordingly, BLE may assert in subsequent proceedings before the NRAB that the alteration of the interchange procedures violated the collective bargaining agreement. See Lawlor v. Nat'l Screen Serv., 349 U.S. 322, 329 (1954) (a prior judgment is res judicata only to subsequent suits which involve the same cause of action); see also Hooker v. Klein, 573 F.2d 1360, 1367 (9th Cir. 1978) (prior judgment may not be res judicata to subsequent action that is not based on same claim or cause of action.

This court reviews a district court's decision not to enter a default for abuse of discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980).

PTRC and BN failed to file a timely answer to BLE's amended complaint dated April 28, 1987. BLE moved for a default judgment. The district court denied BLE's motion because PTRC and BN "filed a timely ... [Fed. R. Civ. P. ] 12 motion and has made other efforts to defend this suit."

The district court did not abuse its discretion in denying the motion for default. PTRC and BN vigorously defended this case, filing: 1) timely answers to BLE's original complaint; 2) an opposition to BLE's request for a preliminary injunction; and 3) a motion to dismiss under Fed. R. Civ. P. 12. The tardiness of PTRC and BN in filing their answer to BLE's amended complaint was excusable neglect.

The district court's order granting summary judgment against BLE on its claims that the dispute was minor and that the Board violated its due process rights is affirmed. The district court's order granting summary judgment against BLE on its request for a status quo injunction is reversed and remanded to the district court for an exercise of its discretion. The district court's order denying BLE's motion for a default judgment is affirmed.