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April 6th, 2009

Court Grants Arbitration Case: Railroad Industry

Supreme Court Resolving Labor Disputes

The Supreme Court has agreed to clarify the scope of federal courts’ authority to second-guess arbitration decisions made to resolve labor disputes in the railroad and airline industries.

In 2002 and 2003, Union Pacific Railroad Co. charged five employees with disciplinary violations after a formal investigation and hearing. The employees filed claims through their union, the Brotherhood of Locomotive Engineers and Trainmen, contesting the charges.

But the National Railroad Adjustment Board held that the union had failed to submit conclusive evidence that the parties held a conference to attempt to resolve the dispute — a procedural prerequisite to arbitration — and thus the board determined that it was required to dismiss the claim for lack of jurisdiction. The U.S. District Court for the Northern District of Illinois affirmed the decision.

In April 2008, a three-judge panel on the U.S. Circuit Court of Appeals for the 7th Circuit reversed, holding that the board denied the union due process by requiring evidence of conferencing to be presented in the on-property record, a requirement not clearly enunciated in the statutes, regulations or the collective bargaining agreement of the parties.

The board appealed to the U.S. Supreme Court, noting: “This case presents the court with an opportunity to resolve a pure question of law that has divided the circuits for nearly three decades but has never been squarely presented: whether courts are authorized to set aside Board awards based upon alleged violations of due process that do not fall within the express statutory grounds for relief.”

On Feb. 23, the U.S. Supreme Court granted review in the case. The justices will hear oral arguments in the fall.

Question presented: 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.

Update 9/18: The Supreme Court ruling states that the National Railroad Adjustment Board should not have dismissed an arbitration dispute between the union and the railroad company for lack of authority when the union failed to show proof of the pre-arbitration conferences. Even though the Supreme Court ruled that the Board should not have dismissed the debate, the decision rested on statutory grounds, deciding that the requirement of pre-arbitrational conferences in disputes before the Board was a “claim-processing rule” and “not jurisdictional.” Therefore, the Board had to exercise their authority over the dispute.

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