Free Motion to Vacate - District Court of Colorado - Colorado

Case 1:01-cv-02531-JLK

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 1:01-cv-2531-JLK GENERAL COMMITTEE OF ADJUSTMENT GO-245 OF THE UNITED TRANSPORTATION UNION, Plaintiff, v. BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY, et al., Defendants. ____________________________________________________________________________ MEMORANDUM OF LAW IN SUPPORT OF MOTION BY PLAINTIFF TO VACATE DISMISSAL AND TO REINSTATE ORDER COMPELLING ARBITRATION ____________________________________________________________________________ Plaintiff General Committee of Adjustment GO-245 of the United Transportation Union has filed an unopposed motion pursuant to Rule 60(b)(6), Fed. R. Civ. P., asking this Court to vacate the Order of Dismissal, dated April 10, 2006, and to reinstate the Order of June 28, 2005, which directed defendant General Committee of Adjustment GO-009 of the United Transportation Union "to participate in the appropriate RLA adjustment board proceeding to resolve the dispute between it, GO-245 and [defendant] BNSF [Railway Company] regarding the meaning and application of Article 50 of the Consolidated Yard Schedule." Docket No. 39, Order at 14. This Memorandum of Law is respectfully submitted in support of that Motion. STATEMENT OF THE CASE This litigation has its genesis in an agreement effective January 1, 2001, by which defendants

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Burlington Northern and Santa Fe Railway Company (BNSF),1/ the United Transportation Union (UTU) on behalf of General Committee of Adjustment GO-009, and the Brotherhood of Locomotive Engineers (BLE)2/ established the manner in which BNSF engineers subject to that agreement may exercise whatever seniority they had to positions represented by the UTU, including as relevant here, certain UTU-represented positions in the consolidated yards in Kansas City. Docket No. 1, Complaint at 6, ¶ 13. GO-245 and GO-009 had "joint jurisdiction" over ground service positions in the Consolidated Kansas City Yards, and even though the Flowback Agreement "affected" the jobs subject to that joint jurisdiction, neither BNSF nor GO-009 obtained GO-245's approval before they entered into the Flowback Agreement. Docket No. 1, Complaint at 7, ¶ 15. Their failure to obtain GO-245's approval before they entered into the Flowback Agreement, plaintiff maintained, was prohibited by the Railway Labor Act, 45 U.S.C. § 151, et seq., since both BNSF and GO-009 were parties to a collective-bargaining agreement with GO-245­the Consolidated Yards Schedule­by which they had agreed that they would not enter into an agreement which "affected" the consolidated yards without first obtaining GO-245's approval. In support of its position, GO-245 relied upon Article 50 of the Consolidated yards Schedule, which provided that GO-245 and GO-009 held "joint jurisdiction in the Consolidated Kansas City Yards and neither may make an agreement, nor a precedent settlement, not an agreed understanding, which affects the Consolidated Kansas City

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Defendant BNSF has since changed its name to BNSF Railway Company.

Since this complaint was filed, defendant BLE has merged with the International Brotherhood of Teamsters to become a division of the Teamsters' Rail Conference; it is now known as the Brotherhood of Locomotive Engineers & Trainmen (BLE&T). -2-

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Yards without the other General Committee's approval." Docket No. 1, Complaint at 5, ¶ 11 quoting Consolidated Yard Schedule at Art. 50. When BNSF and GO-009 refused to consult GO-245 in devising the Flowback Agreement, GO-245 asked GO-009 and BNSF to utilize the Railway Labor Act's "minor dispute" resolution procedures3/ to ascertain whether GO-245's interpretation of Article 50 of the Consolidated Yard Schedule as requiring its approval was correct. After GO-009 refused to "adjust" that dispute, GO245 amended its complaint to add GO-009 as a defendant and to seek an order compelling GO-009 to utilize the Railway Labor Act's adjustment board procedures to resolve that contract-interpretation dispute. Docket No. 2, Amended Complaint. Defendants moved to dismiss the amended complaint (Docket Nos. 8, 10, 13) and plaintiff cross-moved for partial summary judgment. Docket No. 21. On June 28, 2005, this Court entered an Order on Pending Motions, ruling that (Docket No. 39, Order at 14-15): For the reasons stated above, I DENY the motions to dismiss filed by Defendants UTU and GO-009, BNSF and BLE (Docket Nos. 8, 10, 13) and GRANT Plaintiff GO-245's motion for partial summary judgment (Docket No. 21). I further ORDER Defendant GO-009 to participate in the appropriate RLA adjustment board proceeding to resolve the dispute between it, GO-245 and BNSF regarding the meaning and application of Article 50 of the Consolidated Yards Schedule. Finally, this action is STAYED and ADMINISTRATIVELY CLOSED until such time as the adjustment board has ruled in this dispute or one or more of the parties shows good cause that this action should be reopened. The parties shall

"Minor disputes" under the Railway Labor Act are disputes arising out of different interpretations of collective-bargaining agreements and are subject to the Act's "compulsory and binding arbitration" adjustment board provisions if unresolved after "conferences" on the "property"­i.e., on the carrier. Consolidated Rail Corp. v. RLEA, 491 U.S. 299, 303 (1989). -3-

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promptly inform this court when the adjustment board issues its decision. Following that ruling, BNSF, GO-009 and GO-245 entered into two letter agreements, dated January 1, 2006, which resolved both the interpretation dispute as to the meaning of Article 50 of the Consolidated Yards Schedule and the underlying dispute as to the manner in which the Flowback Agreement would operate in the Consolidated Kansas City Yards. Docket No. 41, Joint Status Report at Attachment. First, the January 1, 2006 letter agreement between GO-009, GO-245 and BNSF provided that (January 1, 2006 BNSF Letter to J.A. Houston, and R.S. Knutson at 1, ¶ 1): The "joint jurisdiction" provision of Article 50 of the Kansas City Consolidated Yard Schedule is applicable to the implementation of the "Flowback" agreement within KC Terminal. Any subsequent change, interpretation or application of the "Flowback" agreement within KC Terminal will require the consensus of both former Santa Fe UTU Committee (GO-009) and UTU GO-245. And second, the letter agreements resolved GO-245's concerns with the Flowback Agreement by limiting the impact of that agreement on its members. The letter agreements limited the positions available to engineers flowing back to ground service by restricting their ground service seniority to former Santa Fe positions (Letter at 2, ¶ 2.2), and expressly provided that those employees would not be eligible "for the accumulation or accreditation of shares under [the terms of the former Burlington Northern's (BN) "crew consist" agreement] . . . when working in ground service by virtue of the `Flowback' Agreement." Id. at ¶ 2.3. The former provision­i.e., ¶ 2.2­protected former BN positions from being occupied by the returning engineers, while the latter provision­i.e., ¶ 2.3­protected the monies due to members from GO-245's "productivity fund" from being deluded by being shared with the returning engineers. -4-

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Shortly after the letter agreements were finalized in March 2006, the parties filed a Joint Status Report with this Court. Docket No. 41. Since the letter agreements resolved both the dispute to be arbitrated pursuant to this Court's June 28, 2005 Order and the underlying controversy that brought about this litigation, the parties jointly asked this Court to "close this case, with each party to bear its own costs." Joint Status Report at 2. On April 10, 2006, this Court granted that request by entering an Order of Dismissal providing that the case was dismissed. Docket No. 42, Order of Dismissal. Several UTU members whose seniority in the Consolidated Kansas City Yards was affected by the January 1, 2006 letter agreements challenged GO-245's authority to enter into those agreements. Declaration of Randall S. Knutson, executed December 15, 2006 at 3, ¶ 4. Their protests were considered by UTU International President Paul C. Thompson who decided on December 1, 2006, that the retroactive application of the agreements, as the letter agreements required, "would run the substantial risk of being found to be irrational by a federal court" (Knutson Ex. 1 at 3), and, thus, to have breached the UTU's duty to represent fairly all of the employees for whom it bargains collectively. A prospective application of the agreements' restrictions, President Thompson opined, would avoid that challenge. Id. But, as President Thompson reported in his December 1, 2006 communication, GO-245 was not willing to forego the retroactive aspect of the agreements because it "considered retroactive application of that provision [i.e., ¶2.3 of the agreements, the provision making flowback engineers ineligible to participate in GO-245's Productivity Fund] to be a material term of subject agreements." Id. Accordingly, he ruled that (Id.): . . . [He could not] permit anything other than prospective -5-

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application of ¶2.3 of subject agreements, and with the consent of the [UTU] Board of Directors, I will inform the carrier to pay all trainmen on the former BN entitled thereto their shares in the GO-245 Productivity Fund, including trainmen who got there from former ATSF trainmen positions after they flowed back from engine service, and that the subject agreements are void as settlements of the federal litigation in Denver, meaning arbitration as described in that case must go forward. . . . On December 4, 2006, President Thompson implemented his repudiation of the settlement agreements by informing the BNSF that he, with the approval of the UTU's Board of Directors, "determined to void the January 1, 2006 BNSF letter agreements (effective May 1, 2006) . . . ." Knutson Ex. 2.4/ He also informed the BNSF that: "All train service employees entitled to participation in former BN Productivity Trust Funds should be paid December 18, 2006 from those funds regardless of how they came to occupy train service positions." Id. GO-245 has been informed that the BNSF has accepted President Thompson's determination to "void" the settlement agreements. Knutson Declaration at ¶ 7. This motion to vacate the Order of Dismissal and to reinstate the order compelling GO-009 to adjust the minor dispute over the interpretation of Article 50 of the Consolidated Yards Schedule has followed.

President Thompson informed the BNSF that he was acting pursuant to Article 38, lines 1-4 of the UTU Constitution. Knutson Ex. 2. That provision of the UTU Constitution, which is entitled "Savings Clause," provides as follows: "The International President, with the approval of the Board of Directors, may take such action as may be deemed necessary to meet situations not covered in this Constitution in order to protect the interest of the membership and the United Transportation Union." -6-

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ARGUMENT I. UTU'S AND BNSF'S REPUDIATION OF THE SETTLEMENT AGREEMENTS CONSTITUTES "EXTRAORDINARY CIRCUMSTANCES" WHICH WARRANT RELIEVING PLAINTIFF FROM THE JUDGMENT DISMISSING THIS CASE BASED UPON THAT SETTLEMENT.

Rule 60(b), Fed. R. Civ. P., provides that federal courts: "[o]n motion and upon such terms as are just, . . . may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: . . . (6) any other reason justifying relief from the operation of the judgment." Rule 60(b)(6) is a "catch-all" provision that provides a federal court with "a `grand reservoir of equitable power to do justice in a particular case.'" Moore's Federal Practice 3D § 60.48[1], quoting Compton v. Alton Steamship Co., 608 F.2d 96, 106 (5th Cir. 1979), quoting Moore's Federal Practice at §60.27[2] (1950 Ed.). This provision does not give a court unfettered discretion, however, for before the court may relieve a party from a final judgment, there must be "extraordinary circumstances" justifying that relief. Compare, Klapprott v. United States, 335 U.S. 601 (1949) (party permitted to set aside the judgment entered while imprisoned and unable to defend himself against the judgment he subsequently sought to set aside), with, Ackermann v. United States, 340 U.S. 193 (1950) (party not permitted to set aside the judgment he chose not to appeal where he sought to set aside that judgment after a party that did appeal was successful). As a comparison of Klapprott, with Ackermann shows, "extraordinary circumstances" ordinarily means "lack of fault" on the movant's part. Moore's Federal Practice 3D at § 60.48[3][b]. As Moore's explains (Id.; footnote omitted): "A number of courts have permitted relief from a judgment entered pursuant to a settlement agreement when, subsequent to the judgment, one of the -7-

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parties fails to perform according to the terms of the settlement agreement." E.g., Fairfax Countywide Citizens Association v. County of Fairfax, 571 F.2d 1299, 1302-03 (4th Cir.), cert. denied, 439 U.S. 1047 (1978) ("We are in agreement with the Sixth Circuit that, upon repudiation of a settlement agreement which had terminated litigation pending before it, a district court has the authority under Rule 60(b)(6) to vacate its prior dismissal order and restore the case to its docket").5/ That view of Rule 60(b)(6), however, is not unanimous, for the Third Circuit takes a contrary view, which Moore's describes as the "minority" view. Moore's Federal Practice 3D at § 60.48[3][d] n. 29. The Third circuit considers the ability of a litigant to "file a separate action on the settlement agreement itself" as precluding finding "extraordinary circumstances." Sawka v. Healtheast, Inc., 989 F.2d 138, 140-41 (3rd Cir. 1993).6/

As Fairfax Countywide Citizens shows, there was a split in the Circuits over whether, once the judgment was set aside, the district court could enforce the settlement agreement. That split was resolved by Kokkonen v. Guardian Life Insurance Co., 511 U.S. 375 (1994), where the Court held enforcement of the settlement agreement required its own jurisdictional basis. In Kokkonen, the Court noted the distinction between reopening a case pursuant to Rule 60(b)(6) due to repudiation of the settlement agreement and then enforcing the settlement once the case was reopened. As the Court explained (511 U.S. at 378): It must be emphasized that what respondent seeks in this case is enforcement of the settlement agreement, and not merely reopening of the dismissed suit by reason of breach of the agreement that was the basis for dismissal. Some Courts of Appeals have held that the latter can be obtained under Federal Rule of Civil Procedure 60(b)(6). After citing Fairfax Countywide Citizens Association for that proposition, the Court cited to Sawka as a "but see" cite. While the Court did not expressly resolve the split in the circuits over the application of Rule 60(b)(6), the fact that it did not resolve the case before it by addressing the reach of Rule 60(b)(6), which, if Sawka were correct, would have obviated the need to address the independent jurisdiction question which the Court proceeded to resolve in Kokkonen, means that the Court views Rule 60(b)(6) as, at the very least, arguably authorizing the relief requested herein. -86/

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The Tenth Circuit has not adopted the Third Circuit's approach to Rule 60(b)(6) and, indeed, its reading of Rule 60 precludes applying the Third Circuit's draconian construction of the Rule's relief. First, in the en banc ruling of Pierce v. Cook & Co., 518 F.2d 720 (10th Cir. 1975), cert. denied, 423 U.S. 1079 (1976), the court observed that (518 F.2d at 722; citations omitted in part): A Rule 60(b) motion is addressed to the sound discretion of the court. . . . Quoting 7 Moore Federal Practice at p. 308 (1950 ed.), Radack v. Norwegian America Line Agency, Inc., [318 F.2d 538, 542 (2d Cir. 1963)] . . . says that Rule 60(b) gives the court a "grand reservoir of equitable power to do justice in a particular case." The court goes on to say that "the rule should be liberally construed when substantial justice will thus be served." . . . Reading Rule 60(b)(6) as providing that "[r]elief under [that rule] `is appropriate to accomplish justice' in an extraordinary situation" (518 F.2d at 723), the court set aside its earlier decision in Pierce, a diversity case, in light of a subsequent ruling by the State's highest court reversing the case upon which the Tenth Circuit had earlier relied to uphold the district court's ruling. As the Pierce court stated (Id.): The unusual combination of events which have occurred make the situation extraordinary. The federal courts in which plaintiffs were forced to litigate have given them substantially different treatment than that received in state court by another injured in the same accident. The outcome determination principle mandated by Erie v. Tompkins has been violated. And second, in the earlier decision of Chief Freight Lines Co. v. Local Union No. 886, IBT, 514 F.2d 572 (10th Cir. 1975), the appellate court upheld a district court's decision to reopen a strike injunction case dismissed after the parties reached a settlement agreement calling for the arbitration of the dispute. 514 F.2d at 575. Following the dismissal, the parties arbitrated the dispute, where the

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union prevailed. When the company refused to implement the arbitral award, the union threatened to strike. Id. The company thereupon returned to court and asked to reopen the case, which the court granted ex parte. Id. On appeal, the union challenged that ruling, arguing that the district court "could not reopen a case that had been previously dismissed without prejudice." 514 F.2d at 576. According to the union, "once an action has been dismissed without prejudice, the litigation is terminated and the position of the parties is as though no suit had ever been brought." Id. The Tenth Circuit rejected that position. As the Chief Freight Lines court observed, the status of a dismissed case "is subject to the power granted the Court under Rule 60, F.R.Civ.P. By the terms of Rule 60(b), the Court may relieve a party from a final judgment, order or proceeding. At the hearing . . . , the Court indicated that it acted under subsection (6) of Rule 60(b), which permits the Court to act for `any . . . reason justifying relief from the operation of the judgment.'" 514 F.2d at 576. The Tenth Circuit upheld the District Court's ruling. As the appellate court explained (514 F.2d at 576-77): The decision whether to grant relief under Rule 60(b) is a matter addressed to the sound discretion of the trial court, . . . and the decision will not be disturbed except for a manifest abuse of discretion. . . . Appellants have not demonstrated, and we do not find, any abuse of discretion on the District Court's part in setting aside its dismissal order. . . . Pierce and Chief Freight Lines clearly support reopening the case at bar and reinstating the order compelling arbitration. Here, as in Chief Freight Lines, the parties asked the district court to dismiss their litigation because they had agreed upon a way to resolve that suit­here an agreement, while in Chief Freight Lines an agreement to arbitrate. And here, plaintiff has been denied the

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benefit of its bargain with defendants UTU, GO-009 and BNSF because those parties, over plaintiff's objections, have repudiated the settlement agreements. Over GO-245's objections, UTU determined that the agreements were "void" (Knutson Exs. 1 and 2) and BNSF has accepted that unilateral abrogation of a collective-bargaining agreement. Declaration of Randall S. Knutson, executed December 15, 2006 at ¶ 7. Plaintiff GO-245 has thus been placed in a position of having entered into the settlement agreements in good faith, but because of the actions of the other parties to those agreements which are essentially unreviewable on the merits,7/ it has been deprived of the consideration which led it to seek the Order of Dismissal. This, as in Pierce, constitutes "extraordinary circumstances" which justifies the setting aside of the Order of Dismissal and the reinstating of the Order directing GO-009 and BNSF to arbitrate before the appropriate Railway Labor Act adjustment board the dispute over the proper interpretation of Article 50 of the Consolidated Yards Schedule. CONCLUSION For the reasons set forth herein, plaintiff GO-245 respectfully submits that this Court should, in the exercise of its discretion under Rule 60(b)(6), Fed. R. Civ. P., set aside the Order of Dismissal, entered on April 10, 2006, and reinstate the Order entered on June 28, 2005, directing GO-009 to participate in the appropriate RLA adjustment board proceeding to resolve the dispute between it, GO-245, and BNSF regarding the meaning and application of Article 50 of the Consolidated Yard

See, Faulk v. UTU, 160 F.3d 405, 407-08 (7th Cir. 1998), cert. denied, 527 U.S. 1038 (1999) ("We defer to a union's interpretation of its own constitution so long as the interpretation is not unreasonable. . . . This deference to a union's reasonable interpretation of its own constitution is predicated on a federal policy of noninterference in internal union affairs"). -11-

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Schedule. Plaintiff further requests that this Court then stay this proceeding pending notification of the award of the adjustment board. Respectfully Submitted this 19th day of December, 2006

/s/ Martin D. Buckley Martin D. Buckley Michael J. Belo BERENBAUM, WEINSHIENK & EASON, P.C. 370 Seventeenth Street, Suite 4800 Denver, Colorado 80202 Phone: (303) 825-0800 Fax: (303) 629-7610

/s/ John O'B. Clarke, Jr. John O'B. Clarke, Jr. HIGHSAW, MAHONEY & CLARKE, P.C. 1050 17th Street, N.W., Suite 444 Washington, D.C. 20036 Phone: (202) 296-8500 Fax: (202) 296-7143 Attorneys for Plaintiff General Committee GO-245

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CERTIFICATE OF SERVICE I hereby certify that I have this 19th day of December, 2006, caused a copy of the foregoing Memorandum of Law In Support Of The Unopposed Motion By Plaintiff To Vacate Dismissal And To Reinstate Order Compelling Arbitration, to be served by email (as marked) and by first-class mail, postage prepaid, and properly addressed to the following: David M. Pryor (email) BNSF Railway Company 2500 Lou Menk Drive, AOB-3 Fort Worth, Texas 76131-2828 Walter J. Downing Hall & Evens, L.L.C. 1125 17th Street, Suite 600 Denver, Colorado 80202 John A. Edmond (email) Guerrieri, Edmond & Clayman, P.C. 1625 Massachusetts Ave., N.W., Suite 700 Washington, D.C. 20036-2243 Richard Rosenblatt Richard Rosenblatt & Assoc., LLC 8085 East Prentice Ave. Greenwood Village, Colorado 80111 Harold A. Ross (email) 23195 Stoneybrook Dr. North Olmsted, Ohio 44070 Thomas B. Buescher Buescher, Goldhammer, Kelman & Dodge, P.C. 1563 Gaylord Street Denver, Colorado 80206 /s/ John O'B. Clarke, Jr. John O'B. Clarke, Jr. -13-