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United States District Court, Northern District of Illinois, E.D

November 22, 1972


The opinion of the court was delivered by: Bauer, District Judge.


This cause comes on the Defendant's Motion to Dismiss the Complaint.

The basis of this action involves alleged violations of protective arrangements for employees which have been established under the Rail Passenger Service Act, 45 U.S.C. § 565, and an alleged failure to follow the opinion and award rendered by arbitration. The named plaintiffs are eleven former Railway Terminal employees of the Chicago Union Station Company whose jobs were terminated by the advent of the National Railroad Passenger Corporation (AMTRAK) on or about May 1, 1971. The defendants are: the Chicago Union Station Co., hereinafter CUS; D.M. Baughman, Manager of CUS; the Burlington Northern Inc.; and other Rail Transportation Companies, the identities of which are not presently known.

Plaintiffs' amended complaint alleges jurisdiction pursuant to the Railway Labor Act, Section 3, First (p), 45 U.S.C. § 153 First (p). The plaintiffs seek a mandatory injunction order directing defendants CUS and D.M. Baughman to honor Referee Dolnick's Opinion and Award through the payment of the approximate sum of $16,832 to each of the named plaintiffs, which represents separation pay. The plaintiffs also seek the cost of maintaining this action.

The instant cause of action arose from the following factual setting:

  1.  The United States Congress, as a result of
      the decline in passenger service, enacted
      Public Law 91-518, now 45 U.S.C.A. § 501, et
      seq., which has the stated purpose of forming a
      rail passenger corporation for providing
      modern, efficient intercity rail passenger

  2.  Section 543 of the Act provides that a
      corporation for profit be formed to provide
      intercity passenger service. It was not to be
      an agency or establishment of the United
      States Government.

  3.  Section 561 of the Act states that on or
      before May 1, 1971, the corporation is
      authorized to contract with railroads to
      relieve them of their responsibilities for
      providing intercity rail passenger service.

  4.  Section 565 of the Act provides for
      protective arrangements for employees who may
      be affected by discontinuances of intercity
      rail passenger service.

  5.  The National Railroad Passenger Corporation,
      hereinafter referred to as Amtrak, was to set
      up a basic rail system, and railroads
      contracting with it were allowed to
      discontinue their own passenger service on
      May 1, 1971. Thereafter, pursuant to the
      contract, the railroads were to provide to
      Amtrak, for a fee, the servicing and
      operating of the passenger trains.

  6.  On April 16, 1971, numerous railroads in the
      country, including the Burlington Northern,
      executed a

      contract entitled "The National Railroad
      Passenger Corporation Agreement," more
      commonly known as the Amtrak Agreement. The
      CUS was not a party to the agreement.

  7.  As required by § 565(b) of the Act, there
      was attached to the Amtrak Agreement an
      Appendix C-1. This Appendix provided
      protection for railroad workers who were
      affected by the May 1, 1971 changes, and the
      start-up of Amtrak. Also as required by § 565,
      this Appendix C-1 was certified by the
      Secretary of Labor that the labor protective
      provisions contained therein afforded affected
      employees fair and equitable protection by the

  8.  On May 1, 1971, Amtrak operations commenced
      out of CUS and certain passenger trains were
      discontinued and the handling of mail was
      changed on or about that date, affecting the
      employment status of certain employees,
      including the named plaintiffs in this
      action, most of whom had been mail handlers.

  9.  In May or June of 1971, the plaintiffs herein
      were offered employment by the Burlington
      Northern and they refused same.*fn1

  10. Subsequent to May 1, disputes arose between
      CUS employees and CUS regarding their
      employment status and rights under the Amtrak
      Agreement, Appendix C-1. On May 18, 1971, the
      Union representing the CUS employees (the
      Brotherhood of Railway, Airline and Steamship
      Clerks, Freight Handlers, Express and Station
      Employees, hereinafter referred to as the
      BRAC) by telegram, requested the National
      Mediation Board in Washington D.C., to
      appoint a neutral referee as provided in
      Article 1, Sec. 4(A) of Appendix C-1 of the
      Amtrak Agreement, for purposes of arbitrating
      conditions to be included in an implementing
      agreement between CUS and BRAC.

  11. CUS objected to the appointment, taking the
      position that CUS was not a party to the
      Amtrak Agreement and that the provisions
      therein requiring the parties to enter into
      an implementing agreement had no force and
      effect on CUS.

  12. The National Mediation Board appointed a
      referee, Mr. David Dolnick, and he
      subsequently issued his first award on August
      23, 1971, which, in essence, stated that he
      had jurisdiction with the resultant right and
      power to direct CUS to enter into an
      implementing agreement with the BRAC. In his
      second opinion and award of October 25, 1971,
      he directed the CUS and BRAC to enter into an
      implementing agreement.

The Defendants in support of their Motion to Dismiss the Complaint contend:

  1.  This Court lacks jurisdiction to hear the
      present action;

  2.  Plaintiffs have failed to exhaust the
      administrative remedy of arbitration; and

  3.  Plaintiffs' prayer for relief does not
      contain any request which this Court can act

The Plaintiffs in opposition to the Motion to Dismiss contend that the Railway Labor Act confers jurisdiction on this Court to enter an order directing compliance with Referee Dolnick's award.

This Court is of the opinion that jurisdiction in the Federal District Court is not proper at the present stage of the controversy.

    THIS CASE UNDER 45 U.S.C. § 153 First (p)

It is well settled that the Railway Labor Act establishes a comprehensive system for disposing of all disputes between railway employees, unions, and railway companies. See Gunther v. San Diego & Arizona Eastern Ry.,
382 U.S. 257, 86 S.Ct. 368, 15 L.Ed.2d 308 (1965); Elgin, J & E Ry. Co. v. Burley, 325 U.S. 711, 65 S.Ct. 1282, 89 L.Ed. 1886 (1945); Illinois Central R.R. v. Brotherhood of Railroad Trainmen, 398 F.2d 973 (7th Cir. 1968); Atchison, T. & S.F. Ry. Co. v. Public Law Board No. 296, D.C., 340 F. Supp. 1136 (1972).

This controversy stems from the Amtrak Agreement, a private operating agreement between two corporations. This Agreement contains provisions to protect employees who are affected by the implementation of the Agreement and the elimination of certain jobs and services. This Agreement is not a labor or "collective bargaining agreement" between an employer and his employees or their representatives. The Agreement provides for the processing of employment disputes resulting from operations under the contract by such means as arbitration.

While the instant action involves mediation of a railroad dispute by an independent referee selected by the National Mediation Board pursuant to authority created by the Amtrak Agreement, there is no necessity to conclude that this dispute falls within the purview of the Railway Labor Act. This Court is of the opinion that the Railway Labor Act is not applicable because the instant action arose under a private contract involving two corporations. Referee Dolnick in his two opinions and awards carefully avoided any reference to the Railway Labor Act as the foundation for the arbitration. Referee Dolnick clearly indicated that the National Mediation Board received its authority to appoint him upon request of the parties pursuant to the Amtrak Agreement and not under the Railway Labor Act. The Referee stated:

  "The undersigned referee was appointed by the
  National Mediation Board, pursuant to the
  authority vested in that Board by Appendix C-1,
  Article 1, Section 4(a), issued by the Secretary
  of Labor on April 16, 1971, in accordance with
  the authority granted to him by Public Law

In Brotherhood of Railway, Airline and Steamship Clerks, Freight Handlers, Express and Station Employees v. Special Board of Adjustment No. 605, 410 F.2d 520 (7th Cir. 1969), a case similar to the instant action, the 7th Circuit held that federal jurisdiction was lacking. That case involved a dispute over the elimination of certain freight handling jobs which resulted from a tri-party agreement between the Union, the Railroad, and a Freight Handling Company. The arbitration of the dispute was conducted by a neutral referee appointed by the National Mediation Board (Special Board of Adjustment No. 605) and an award adverse to the Brotherhood was rendered. The Brotherhood filed a petition for review in the federal district court alleging jurisdiction under 45 U.S.C. § 153 First (q). The Appellate Court in affirming the District Court's summary dismissal of the action based upon the lack of jurisdiction stated:

  The plain wording of Section 3, First (q) relates
  only to statutory boards. The Special Adjustment
  Board No. 605 is not a statutory board at all but
  solely the product of a contract between private
  parties. Board No. 605 is a common law board of
  arbitration established by parties who happened
  otherwise to be subject to the Act. Not every form
  of arbitration in the railroad industry is subject
  to the review provisions of Section 3 of the
  Railway Labor Act. Even though the creation of
  Board No. 605 was sanctioned by the Act, it was not
  a statutory board and therefore not subject

  to the review provision of Section 3, First (q).
  (Emphasis added).*fn2 Id. at 523.

It is clear that in the instant case the arbitration by a neutral referee pursuant to the Amtrak Agreement as opposed to arbitration under the Railway Labor Act does not present a sufficient basis for Federal Court jurisdiction under 45 U.S.C. § 153 First (p). Thus the plaintiffs' complaint has failed to state proper grounds for the exercise of jurisdiction by this Court.


In Republic Steel Corporation v. Maddox, 379 U.S. 650, 85 S.Ct. 614, 13 L.Ed.2d 580 (1964), the Supreme Court held that a grieved employee must exhaust his administrative remedies before invoking the jurisdiction of the Federal District Court:

  "As a general rule in cases to which federal law
  applies, federal labor policy requires that
  individual employees wishing to assert contract
  grievances must attempt use of the contract
  grievance procedure agreed upon by employer and
  union as the mode of redress.

  A contrary rule which would permit an individual
  employee to completely sidestep available
  grievance procedures in favor of a lawsuit has
  little to commend it. In addition to cutting
  across the interests already mentioned, it would
  deprive employer and union of the ability to
  establish a uniform and exclusive method for
  orderly settlement of employee grievances. If a
  grievance procedure cannot be made exclusive, it
  loses much of its desirability as a method of
  settlement. A rule creating such a situation
  `would inevitably exert a disruptive influence
  upon both the negotiation and administration of
  collective agreements.' Teamsters Local v. Lucas
  Flour Co., 369 U.S. 95, 103, 82 S.Ct. 571, 7
  L.Ed.2d 593." Id. at 652, 85 S.Ct. at 616.

See also: Walker v. Southern Ry. Co., 385 U.S. 196, 87 S.Ct. 365, 17 L.Ed.2d 294 (1966); Locomotive Engineers v. L & N Ry. Co., 373 U.S. 33, 83 S.Ct. 1059, 10 L.Ed.2d 172 (1963); Parsons v. Norfolk & Western Ry. Co., 442 F.2d 1075 (4th Cir. 1971); Railway Executives Ass'n v. Atchison, Topeka, and S.F. Ry. Co., 430 F.2d 994 (9th Cir. 1970); O'Mara v. Erie Lackawanna Railroad Company, 407 F.2d 674 (2d Cir. 1968); Slagley v. Illinois Central R.R. Co., 397 F.2d 546 (7th Cir. 1968).

The plaintiffs have failed to pursue arbitration under the Railway Labor Act, 45 U.S.C. § 151 et seq. In addition each plaintiff has failed to exhaust his remedies under the Rail Passenger Service Act and the Amtrak Agreement. Appendix C-1 provided job protection for railroad employees affected by a "transaction", defined as a discontinuance of intercity passenger service. Article III of Appendix C-1 deals with employees in the position of plaintiffs, i.e., terminal company employees as opposed to railroad employees. Article III provides basically that terminal employees are to be entitled to the protection of C-1 to the same extent as railroad employees if they apply for employment with each carrier owning the terminal, each carrier using the terminal and Amtrak. Once the employee has done this, he is entitled to the benefits of C-1; however, rights once gained can also be terminated under Article III if the CUS' employee fails, without good cause, to accept comparable employment, which does not require a change of place of residence. All plaintiffs filled out the required applications and all were offered employment with a carrier. Whether the jobs were, in fact, comparable was not raised in plaintiffs' complaint. Plaintiffs have taken the position that, in lieu of employment, they were entitled to separation pay under Article I, Paragraph 7 of C-1 and have demanded same.

Appendix C-1 provides for the arbitration of disputes at Article 1 § 4(a). Referee Dolnick who arbitrated the general dispute between CUS and its employees provided as an award of the arbitration that the parties enter into an Implementing Agreement. Paragraph 12 of the Implementing Agreement sets forth the procedure for contesting the denial of any employee's claim. The provision clearly states that the remedy for those with unresolved claims after initial arbitration (such as the plaintiffs in the instant action) is further arbitration of their specific claim as provided for under Appendix C-1. The plaintiffs have filed their complaint without complying with Paragraph 12 of the Implementing Agreement.

Thus the plaintiffs in the instant action have failed to seek available administrative remedies. Because of this failure, this Court lacks jurisdiction over the present action.


Contrary to the assertions of the plaintiffs, the heart of the controversy in this case concerns whether the employment offered to the plaintiffs was comparable under the terms of the Amtrak Agreement. If the proffered employment was comparable, the plaintiffs are not entitled (according to Appendix C-1 and the Referee's Award) to the separation allowances which they seek in this action.

The plaintiffs have mistakenly analyzed the main issue as one of merely computing the amount of damages. However, the issue of comparable employment is not a question of the amount of damage, but rather involves a threshold question of whether the plaintiffs stated a valid claim.

It is the opinion of this Court that the question of comparable employment is best left to the determination of an arbitrator or an arbitration board, because of the peculiar competency necessary to correctly determine such an issue. Such an intricate and specialized question is better left to experts in the field. It is within this Court's discretion to decline to interpret in such specialized fields. See Transportation-Communication Employees v. Union Pacific Ry. Co., supra; Order of Railway Conductors v. Pitney, 326 U.S. 561, 66 S.Ct. 322, 90 L.Ed. 318 (1946).

In fact, the provisions of Appendix C-1 and the Referee's Award containing the Implementing Agreement provide for such determination by arbitration. Paragraph 12 of the Implementing Agreement states:

  "12.  Denial of any claims filed pursuant to this
        implementing agreement will be handled by
        the General Chairman directly with the
        General Manager of CUS. If unresolved
        within 20 days following the commencement
        of conferences between the General Chairman
        and General Manager, either party may
        proceed to arbitration pursuant to the
        provisions of Section 11 of Article 1 of
        Appendix C-1. For the purposes of claims
        filed pursuant to Appendix C-1 and this
        implementing agreement, the time limits in
        existing collective bargaining agreements
        shall not be applicable."

Thus the issue in the case at bar is best decided by those with the peculiar knowledge involved rather than by a Federal District Court.

Thus the Federal District Court lacks jurisdiction in this case for the following reasons:

  1.  The Railway Labor Act does not authorize
      jurisdiction over such disputes;

  2.  The plaintiffs have failed to exhaust
      administrative and contractual remedies; and

  3.  The issues of this controversy are best
      determined by experts in the field.

Accordingly, it is hereby ordered, adjudged, and decreed that the Defendants' Motion to Dismiss the Complaint is granted.

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