- Are final arbitration awards determined by the National Railroad Adjustment Board subject to review for violations of due process?
- Was the National Railroad Board applying a “retroactive” interpretation of the procedural requirements in its arbitration proceedings by dismissing a complaint because of untimely submission of evidence of prior conferencing between the parties?
Five railroad employees filed claims through their union, the Brotherhood of Locomotive Engineers and Trainmen (“Brotherhood”), contesting disciplinary charges imposed by the Union Pacific Railroad (“Railroad”). The National Railroad Adjustment Board dismissed the case for lack of jurisdiction because the Brotherhood had failed to submit written evidence that the parties had met in conference. The District Court affirmed the Board’s decision. However, the Seventh Circuit Court of Appeals reversed in favor of the Brotherhood. The Seventh Circuit found that the due process rights of the Brotherhood were denied, because it was not clear when and how evidence of conferencing should be presented, and dismissal for reasons that were not clear at the time of filing functioned as a denial of its due process rights. The Railroad subsequently appealed this decision to the Supreme Court arguing that because submission of evidence is solely within the arbitrator’s discretion, the Board’s award should be final and binding. In granting certiorari, the Supreme Court’s decision will test the scope of the federal government’s power to review arbitration disputes between private parties. The Court’s decision will also affect future labor disputes and collective bargaining agreements in the railroad industry.
Questions as Framed for the Court by the Parties
The Railway Labor Act (“RLA”), 45 U.S.C. §§151 et seq., sets forth a comprehensive framework to resolve labor disputes in the railroad industry through binding arbitration before the National Railroad Adjustment Board (“the Board”). The statute provides that the Board's judgment “shall be conclusive . . . except . . . for”: (1) “failure . . . to comply” with the Act, (2) “failure . . . to conform or confine” its order “to matters within . . . the [Board’s] jurisdiction,” and (3) “fraud or corruption” by a Board member. 45 U.S.C. §153 First (q). This case involves the Board’s denial of employee grievance claims for failure to comply with its rules governing proof that the dispute had been submitted to a “conference” between the parties. 45 U.S.C. §152 Second. The Seventh Circuit held that the award must be set aside because the Board violated due process through retroactive recognition of a supposedly “new rule.” The questions presented are:
- Whether the Seventh Circuit erroneously held, in square conflict with decisions of the Third, Sixth, Tenth, and Eleventh Circuits, that the RLA includes a fourth, implied exception that authorizes courts to set aside final arbitration awards for alleged violations of due process.
- Whether the Seventh Circuit erroneously held that the Board adopted a “new,” retroactive interpretation of the standards governing its proceedings in violation of due process.
For employees in the railroad industry, the Railway Labor Act (“RLA”) governs the resolution of labor disputes between rail carriers and unions regarding their collective bargaining agreements. 45 U.S.C. § 151. The procedure for resolving these disputes, referred to as “on-property” proceedings, entails investigations, hearings, and appeals on the railroad property. See Brotherhood of Locomotive Engineers and Trainmen General Committee of Adjustment, Central Region (“Brotherhood”) v. Union Pacific Railroad Co.,No. 06-2542 (April 2008) at 2.
If the parties are unable to reach a resolution through this process, the dispute is submitted to a conference. 45 U.S.C. § 152 Second. If, however, the parties fail to resolve their differences in conference, the aggrieved party may then initiate an arbitration proceeding before the National Railroad Adjustment Board (“the Board”), which will issue a binding decision on both parties. 45 U.S.C. § 153 First (i).
In this case, the Petitioner, Union Pacific Railroad Company (“Railroad”) charged five of its railroad employees with disciplinary violations after a formal investigation and hearing. See Brotherhood, No. 06-2542 at 3. The employees contested these charges by filing claims through their union, the Brotherhood of Locomotive Engineers and Trainmen (“Brotherhood”), Respondent. See id. After unsuccessful attempts with the Railroad to resolve the case informally through hearings and conferences, the Brotherhood initiated an arbitration proceeding with the Board. See id. In their on-property submission to the Board, the Brotherhood included notices of the discipline, hearing transcripts, and all relevant exhibits relating to the contested charges. See id. However, it did not include written evidence that the parties had met in conference. See id. The Railroad did not object to these submissions nor did it mention the Brotherhood’s failure to provide evidence of conferencing. See id.
At the hearing, the Railroad argued that because the Brotherhood did not submit evidence of conferencing in their on-property record, the Board must presume that conferences had not in fact occurred and therefore decline jurisdiction over the suit. See Brotherhood, No. 06-2542 at 4. The Brotherhood subsequently submitted this evidence in the form of phone logs and informal notes. See id. However, the Board ultimately voted not to consider this untimely submission of evidence, and therein dismissed the claims for lack of jurisdiction without considering the merits of the case. See id. at 4-5. The Railroad appealed this decision to the District Court. See id. at 5.
The U.S. District Court for the Northern District of Illinois found that conferencing is indeed required before parties can refer their disputes to the Board and that the Board did not violate the Brotherhood’s right to due process by refusing to consider their claim. See Brotherhood, No. 06-2542 at 5. On appeal, the Brotherhood argued that the Board violated its due process rights and acted outside the scope of its jurisdiction by requiring evidence of conferencing in the on-property record. See id. The U.S. Circuit Court of Appeals for the 7th Circuit reversed the District Court, holding that the Board denied the Brotherhood due process because evidence of conferencing in the on-property record was not a requirement clearly enunciated in the statutes, regulations, or the collective bargaining agreement of the parties. See id. at 21-22. The Railroad subsequently appealed to the U.S. Supreme Court. On February 23, 2009, the Supreme Court granted certiorari.
Is a constitutional claim of a due process violation in the arbitration process entitled to judicial review?
Petitioner, Union Pacific Railroad Company (“Railroad”), asserts that three statutory grounds for judicial review included in the RLA are exclusive. See Brief for Petitioner, Union Pacific Railroad Company at 13. The three reasons specified in the statute are (1) “failure of the division to comply with the requirements of this chapter,” (2) “failure of the order to conform, or confine itself, to matters within the scope of the division’s jurisdiction,” or (3) “for fraud or corruption by a member of the division making the order.” See id. at 14 (citing 45 U.S.C. §153 First (q)).The Railroad supports this argument by looking at the clear language of the RLA amendment, drawing attention to the word “except.” See id. The Railroad also relies on the statutory and legislative history of the amendment for support. See id. at 17. The Railroad argues that Congress intervened in 1966 to equalize the playing field; prior to 1966 carriers could obtain judicial review while such review was prohibited to employees. See id. at 18-19. The Railroad cites to the Congressional Record, quoting congressmen who explained the statute as “limit[ing] the review available to carriers, and expand[ing] the review available to employees, so that each side is entitled to obtain review of Board decisions on these grounds and these grounds only.” Id. at 23 (citing House Debate, 1 Legis. Hist. at 1354 (Rep. Staggers)) (emphasis in original). In contrast, the Railroad claims the legislative history does not demonstrate that any members of Congress expressed a desire to preserve the due process review. See id. at 22. The Railroad also argues that allowing due process review would undermine the finality and timeliness of Board decisions. See id. at 23-24. The Railroad argues that the overriding purpose of the RLA was to promote stability in labor-management relations, to keep minor disputes out of court, and to make decisions by the Board final. See id. Allowing judicial review of due process, according to the Railroad, would undermine these goals because due process is a vague claim that can be brought in almost any case, even on matters that are unrelated to the merits of the claim itself. See id.
In contrast, the Respondent, Brotherhood of Locomotive Engineers and Trainmen (“Brotherhood”), argues that its due process claim is entitled to judicial review because the federal courts have had jurisdiction to review such claims for sixty years. See Brief for Respondent, Brotherhood of Locomotive Engineers and Trainmen at 21. The Brotherhood points out that the courts were reviewing due process violations at the time Congress created statutory review of Board actions, and that when Congress amended the RLA it was seeking to expand the remedial options available to employees. See id. The Brotherhood finds no language in the statute that indicates the three statutory forms of review established in the RLA are exclusive; rather, the Brotherhood finds it significant that the statute does not employ restrictive words such as “exclusive” or “only.” See id. at 27. The Brotherhood stresses that there is no limiting language in the statute or in the legislative history; “[t]here is not a single remark, not one, by any legislator suggesting any desire to cut back review or roll back the very sparing use of due process.” See id. at 28. The Brotherhood also points out that the Supreme Court requires the congressional intent to be “clear and convincing” in order to preclude judicial review of a constitutional claim, and that it this case the congressional intent is at least arguable, and does not approach the high standard necessary to preclude judicial review. Id. at 26.
The Railroad finds support for its arguments in the Supreme Court case Union Pacific Railroad Co. v. Sheehan. See Brief for Petitioner at 15 (citing Union Pacific Railroad Co. v. Sheehan, 439 U.S. 89, 93 (1978)). The Railroad argues that Sheehan interpreted the statute to list the three exclusive ways in which judicial review is available. See id. The Railroad highlights that Sheehan declares the Board’s decisions “may be set aside only for the three reasons specified therein.” Id. (citing Sheehan, 439 U.S. at 93). The Railroad also draws attention to the multiple U.S. circuit courts that have adopted Sheehan’s position. See Brief for Petitioner at 16-17. These courts include the Sixth Circuit, Eleventh Circuit, Third Circuit, and most recently, the Tenth Circuit, which stated that Sheehan “preclude[s] judicial review of due process claims beyond those specifically articulated in the Railway Labor Act.” See Id. at 16 (citing Kinross v. Utah Railway Co., 362 F.3d 658, 662 (10th Cir. 2004)). The Railroad argues that these cases reinforce the overriding purpose of the RLA and carry out its legislative intent. See Brief for Petitioner at 23-24.
The Brotherhood counters by arguing that Sheehan does not govern this case because the lower court in Sheehan used due process to review an express provision of the collective bargaining agreement (“CBA”). See Brief for Respondent at 33-34. Accordingly, the Brotherhood argues, Sheehan prohibits due process review over an application of the CBA, not an application of the RLA. See id. at 33-35. Otherwise, the Brotherhood contends that the Sheehan court would not have issued a short per curiam opinion to rule out “literally decades of procedural due process review without giving significant discussion of this issue.” Id. at 35-36. The Brotherhood concedes that some circuits have indeed interpreted Sheehan to preclude review not covered in the statute, but notes that a minority of circuits have taken this view. See id. at 35. The Second, Fourth, Fifth, Eighth Ninth, and Seventh Circuits have weighed in on the issue in favor of retaining due process review. See id. The Brotherhood argues that due process review fits within the statutory scheme and federal labor policy because it is used in a limited fashion to review procedural misconduct not based on the merits of a CBA interpretation. See id. at 36. The Brotherhood supports this by showing that due process review has been in effect for over fifty years and there has not been a flood of litigation. See id.
Did the Board violate the Brotherhood’s right to due process?
The Railroad does not believe the Board violated the Brotherhood’s due process rights by dismissing the claim. See Brief for Petitioner at 39. The Railroad draws attention to the Board’s role as an appellate body that rules on the basis of the record. See id. at 41. TheRailroad highlights that even while overturning the District Court, the Seventh Circuit recognized that the Board panels had previously dismissed claims that did not have evidence of conferencing in the on-property record. See id. at 42-43. Although these decisions do not have stare decisis effect, they do have precedential value and provide notice to the Brotherhood. See id. at 43. Furthermore, the Railroad refutes the characterization of the Board’s holding as new rule. Seeid. at 47-48. The Railroad argues that requiring evidence of conferencing to appear in the on-property record is a straightforward application of the statutes. See id. at 49. The statute requires conferencing and “a full statement of the facts and all supporting data bearing upon the disputes,” and the Railroad maintains that in this instance, the Board simply interpreted the statutes, rather than invent any new rules Id. at 48-49, citing 45 U.S.C. § 153.
The Brotherhood argues that the Board violated its right to due process by using a rule that it never before applied and dismissed the cases at hand without a hearing. See Brief of Respondent at 37. The Brotherhood distinguishes the cases that the Railroad claims provided precedent and notice of the conferencing requirement. See id. at 46-47. According to the Brotherhood, in the cases the Railroad cites, there was no conferencing in the record because no conferencing had actually occurred. See id. at 46. Here, both parties agree a conference was held. See id. at 13-14. Furthermore, those cases cannot serve notice to the Brotherhood because they are not indexed in a systemic way that would make them searchable. See id. at 46-47. Publishing in bound volumes stopped in 1972 and it was not until 2005 that decisions became available online. See id.The Brotherhood objects to the Railroad’s claim that the statutory language indicates the requirement of a “full statement of the facts” definitively requires details of that evidence of conferencing must be submitted. See id. at 40. The Brotherhood argues that “full” may not require evidence of conferencing if there is not a dispute as to whether conferencing occurred. See id. The Brotherhood also notes that there would be no prejudice to the Railroad if the evidence is allowed. See id. at 43-44. The Railroad also notes that in cases where conferencing did not occur many panels issue a stay until conferencing happens. See id. at 51-52. The Brotherhood feels that a dismissal with prejudice in this case, where conferencing did occur, is therefore unfair. See id.
The crux of this case turns on whether the decisions of the Board are subject to due process review by the federal courts. Respondent, Brotherhood of Locomotive Engineers and Trainmen (“Brotherhood”), argues that the Board violated its due process rights and failed to act within its jurisdiction by dismissing the claim without notice of the requirement. See Brief for Respondent, Brotherhood of Locomotive Engineers and Trainmen at 18. Petitioner, Union Pacific Railroad Company (“Railroad”), counters by arguing that the decision to admit or exclude evidence should be left solely within the arbitrator’s discretion and that therefore the Board’s award should be final and binding. See Brief for Petitioner, Union Pacific Railroad Company 10-11. The Supreme Court’s decision in this case will undoubtedly affect the future of all labor disputes in the railroad and airline industries in the United States since both of these industries are regulated by the RLA. See Brief of Amicus Curiae National Railway Labor Conference Association of American Railroads, et.al. (“National Railway Labor Conference”) in Support of Petitioner at 2. Indeed, there are far-reaching implications for both sides.
The National Railway Labor Conference points out that a ruling upholding the Seventh Circuit Court of Appeal’s decision holding that the finality of the Board’s decision could be challenged on independent due process grounds may preclude the prompt resolution of future labor disputes in the railroad industry. See Brief of National Railway Labor Conference at 26. According to the National Railway Labor Conference, prompt resolution of the labor disputes are of utmost importance, as a high volume of cases are brought to the Board each year. See id.at 6. The sheer number of cases pending in arbitration in the railroad industry implies that if the Board’s decision is not final and susceptible to the legal complexities of due process review, it may disrupt the entire dispute resolution process. See id.at 6-7. The National Railway Labor Conference further argues that the failure to resolve these disputes may not only encourage strikes and interruptions to interstate commerce, but also strain labor-management relations. See id. at 7-8, 11.
Contrary to the contention of the National Railway Labor Conference, the National Division of the Brotherhood of Locomotive Engineers and Trainmen (“Brotherhood National Division”) argue in their amicus brief that upholding the Seventh Circuit’s decision will not delay arbitration proceedings. See Brief of Amicus Curiae Brotherhood of Locomotive Engineers and Trainmen, National Division ("Brotherhood National Division") in Support of Respondent at 4. The Brotherhood National Division argues that affirming the Seventh Circuit’s decision is unlikely to disrupt future arbitration proceedings. See Id. at 19-21. They point out that railroad arbitration awards have been, and continue to be, challenged on various non-statutory grounds, including non-statutory public policy review. See Id. at 17-18. The Brotherhood National Division argues that the rationale for providing review on public policy grounds applies equally to due process review. See Id.They argue that furthermore, the full resolution of disputes by arbitration has always been a lengthy process, and it would not be inordinately lengthened so long as the statutory process was maintained. See Id. at 5-6.
On the other hand, the National Railway Labor Conference argues that upholding the Seventh Circuit’s decision would “invite legal complexity and protracted litigation into a process that is, by congressional design, intended to be efficient, practical, and sensitive to the peculiar customs and practices of the airline and railroad industries.” See Brief of National Railway Labor Conference at 5. This added complexity would result because arbitration proceedings are generally informal compared to federal court litigation, which is inherently more complex and cumbersome. See id. at 20. Finally, due process review of adjustment Board awards may also undermine the public policy preference for resolution of such disputes by an arbitrator. See id. at 20. It is also inconsistent with the RLA’s purpose of finalizing awards and preventing prolonged litigation of minor disputes. See Brief for Petitioner at 23-24.
The Brotherhood of Locomotive Engineers and Trainmen assert that if the Supreme Court rejects the Seventh Circuit’s decision, other parties may be denied the opportunity to obtain a ruling on the merits simply because of a “procedural misstep.” See Brief of Brotherhood National Division at 23. In other words, even if it was not clear that the party should include the evidence with the submissions, the Board may still dismiss the case without ever considering any of the facts or evidence. See id. at 24.
The Court’s decision in this case thus will not only have far-reaching effects on interstate commerce and future labor disputes in the railroad industry, but also address thorny questions regarding the scope of the federal government’s power in arbitration proceedings.
The Supreme Court’s decision in this case will determine the scope of judicial review in all labor disputes in the railroad and airline industry. The Union Pacific Railroad Company (“Railroad”) contends that a 1978 Supreme Court case prohibits judicial review of due process claims, and that a decision for the Brotherhood of Locomotive Engineers and Trainmen(“Brotherhood”) may complicate and prolong the generally informal arbitration process. The Brotherhood counters by arguing that their due process rights were violated because they had no notice that evidence of conferencing should have been included in their on-property record, and that therefore a decision for the Railroad would inhibit employees from obtaining a ruling on the merits because of a procedural misstep.