Brotherhood of Maintenance of v. Norfolk Southern Railway Compa

Filing

Filed opinion of the court by Judge Bauer. AFFIRMED. William J. Bauer, Circuit Judge; Daniel A. Manion, Circuit Judge and Ilana Diamond Rovner, Circuit Judge. [6558663-1] [6558663] [12-3415]

Case: 12-3415

Document: 26

Filed: 03/11/2014

Pages: 14

In the

United States Court of Appeals
For the Seventh Circuit
No. 12-3415
BROTHERHOOD OF MAINTENANCE OF
WAY EMPLOYEES DIVISION/IBT,
Plaintiff-Appellant,
v.
NORFOLK SOUTHERN RAILWAY
COMPANY,
Defendant-Appellee.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 10 C 7425 — Virginia M. Kendall, Judge.

ARGUED OCTOBER 31, 2013 — DECIDED MARCH 11, 2014

Before BAUER, MANION, and ROVNER, Circuit Judges.
BAUER, Circuit Judge. The Brotherhood of Maintenance Way
Employees (“the Brotherhood”) filed for a permanent injunction to ban Norfolk Southern Railway Company’s (“Norfolk”)
use of accident reconstruction reports in employee disciplinary
investigations unless Norfolk adheres to additional pre-hearing
procedures. The United States District Court for the Northern

Case: 12-3415

Document: 26

Filed: 03/11/2014

2

Pages: 14

No. 12-3415

District of Illinois found that it lacked jurisdiction to grant the
Brotherhood’s request and dismissed the action. The Brotherhood appealed.
I. BACKGROUND
The Brotherhood represents members of the maintenanceof-way craft employed by Norfolk. Maintenance-of-way
members work to ensure that railways remain clear, safe, and
navigable. This lawsuit arose after Norfolk fired four of its
employees, all Brotherhood members, because they made false
statements about injuries they suffered while on duty. The
parties’ collective bargaining agreements entitle the Brotherhood members to an investigation before Norfolk takes any
disciplinary action. The Brotherhood and Norfolk dispute what
evidentiary rules and pre-hearing procedures are required in
those investigations. Their collective bargaining agreements
and the Railway Labor Act govern the disciplinary process. In
this case, the Brotherhood does not seek to overturn any prior
disciplinary actions, only to impose new procedures that it
believes will rectify problems in the Norfolk disciplinary
proceedings.
A. The Collective Bargaining Agreements
In 2001, the Brotherhood and Norfolk amended their
existing collective bargaining agreements. This amendment,
called the System Discipline Rule (“Discipline Rule”), outlines
the procedures Norfolk must follow when disciplining the
Brotherhood members. The Discipline Rule does not allow
Norfolk to discipline, dismiss, or place an unfavorable mark on
an employee’s record without first conducting a “fair and
impartial investigation.”

Case: 12-3415

Document: 26

No. 12-3415

Filed: 03/11/2014

Pages: 14

3

Pursuant to the Discipline Rule, Norfolk must provide
written notice describing the precise charge to the employee
and the Brotherhood at least ten days before the disciplinary
hearing. The parties refer to the disciplinary hearing as an
“investigation.” At the investigation, either the employee or
Norfolk can call witnesses to testify. An employee is entitled to
the assistance of authorized representatives throughout the
process. The Discipline Rule does not require an external
investigator to conduct the investigation; typically a single
Norfolk-appointed officer conducts them.
After the investigation, the hearing officer determines
whether the employee should be dismissed. An employee has
the right to appeal the results of the investigation to a higher
officer at Norfolk. If an employee remains unsatisfied, he or
she may petition the Special Board of Adjustment (“SBA”)1 for
a final adjudication on the matter.
B. The Railway Labor Act
The Railway Labor Act (“RLA”) governs labor disputes
between employees, employers, and labor unions. 45 U.S.C.
§ 151. The courts divide the disputes into two classes: “major”
and “minor.” 45 U.S.C. § 152 ¶¶ Sixth, Seventh; Elgin J. & E. Ry.
v. Burley, 325 U.S. 711, 722–23 (1945); Consolidated Rail Corp. v.
Ry. Labor Executives’ Ass’n, 491 U.S. 299, 302 (1989). In a major
dispute, a union and a railway seek to change the terms of their

1

The parties created the SBA by agreement, but the Discipline Rule permits
either party to appeal instead to the National Railroad Adjustment Board,
Public Law Board, or other Special Board of Adjustment formed by the
Railroad Labor Act.

Case: 12-3415

4

Document: 26

Filed: 03/11/2014

Pages: 14

No. 12-3415

collective bargaining agreements. 45 U.S.C. § 152 ¶ Seventh;
Consolidated, 491 U.S. at 302. To do so, the parties must enter
into an extensive negotiation and mediation process. 45 U.S.C.
§§ 155, 156; Consolidated, 491 U.S. at 302.
Minor disputes, on the other hand, are those “arising out of
grievances or out of the interpretation or application of
agreements concerning rates of pay, rules, or working conditions.” 45 U.S.C. § 152 ¶ Sixth; Consolidated, 491 U.S. at 303.
When minor disputes occur, the parties must handle the
dispute in “the usual manner” and may petition for arbitration
before a RLA Adjustment Board. 45 U.S.C. § 153 ¶ First (i);
Ryan v. Union Pac. R.R. Co., 286 F.3d 456, 457 (7th Cir. 2002) (the
usual manner of the parties was prescribed by the terms
of their collective bargaining agreement). Adjustment Board
awards are final and binding upon both parties, 45 U.S.C. § 153
¶ First (m), and subject to “one of the most deferential standards of judicial review in all of federal law,” Bhd. of Locomotive
Eng’rs & Trainmen v. Union Pac. R.R. Co., 719 F.3d 801, 803 (7th
Cir. 2013).
Sub judice, the parties followed the procedures typical of a
minor dispute. As prescribed by the Discipline Rule, investigations were held in all four disciplinary actions. As prescribed
by the Discipline Rule and 45 U.S.C. § 153 ¶ First (i), the
Brotherhood then appealed Norfolk’s decision to terminate
each of its members and petitioned for review before a RLA
Adjustment Board.

Case: 12-3415

Document: 26

No. 12-3415

Filed: 03/11/2014

Pages: 14

5

C. The Disciplinary Actions
Norfolk fired four employees after investigation hearing
officers concluded that each employee made false statements
related to their claims of on-duty injuries.2 In each investigation, Norfolk submitted an accident reconstruction report by
Richard T. Hughes, P.E. (“Hughes”), a consulting engineer.
Hughes reenacted each accident, and in each case, he concluded that it was unlikely that the injuries sustained by the
employees occurred as they described. Hughes never testified
at any of the investigations, yet his reports were submitted as
evidence. Norfolk never provided notice to the accused
employees that it would rely on an expert report in their
investigations. Norfolk’s use of Hughes’ reports at the
disciplinary investigations is the heart of this dispute.
We highlight the disciplinary proceeding of Steven Kawa
(“Kawa”) because it adequately represents the alleged harm
that has befallen each of the Brotherhood members. Kawa
claimed he suffered cervical injuries when he drove a truck
over a bump in the road at 55 miles per hour. Kawa was jostled
and said he hit his head on the ceiling of the truck cab. Kawa
drove for another 25 to 30 miles before he asked a co-worker to
drive due to pain in his neck. Kawa went to a hospital that
same day and was examined. Not one of the other three

2

Norfolk fired Allen Gibson after his investigation on January 29, 2009,
Steven Kawa after his investigation on July 31, 2009, and William Orr and
Donald Glista after a joint investigation on May 10, 2010. Norfolk conducted
a joint hearing for Orr and Glista because they both reported an injury
arising from the same incident.

Case: 12-3415

6

Document: 26

Filed: 03/11/2014

Pages: 14

No. 12-3415

employees who rode in the truck saw Kawa hit his head or
reported any injuries of their own.
After the incident, Norfolk documented Kawa’s description
of the event in a personal injury report. A Norfolk manager
was skeptical of Kawa’s injury because Kawa had previously
asked for an extended leave of absence. The Norfolk manager
reenacted the incident twice in the same truck, at the same
speed, and in the same location. The manager was thrown
upward by the bump, but he did not hit his head on the ceiling.
The manager then hired Hughes to verify the results of the
manager’s tests. Hughes used the same data as the manager
and concluded that it was an “extremely remote” chance that
the bump in the road caused Kawa’s injury. Subsequently,
Norfolk notified Kawa to appear for an investigation regarding
any false statements he may have made about his injury.
At the investigation, the manager testified and presented a
document detailing his reenactment of the incident. Without
disclosing it to Kawa prior to the investigation, the manager
read Hughes’ report into the record and introduced it as
evidence; Hughes did not testify. Kawa’s union representative
objected to the admission of Hughes’ report on the grounds
that Hughes was not qualified as an expert and the report’s
findings were inaccurate. However, neither Kawa nor his
union representative objected to the introduction of Hughes’
report on the basis that the report was a violation of the
Discipline Rule. After the investigation, Norfolk dismissed
Kawa from its employment.
The Brotherhood appealed on Kawa’s behalf to Norfolk
management. The Brotherhood attacked the weight of the

Case: 12-3415

No. 12-3415

Document: 26

Filed: 03/11/2014

Pages: 14

7

evidence against Kawa, and asserted that “[s]ince Mr. Hughes
was not available for the Organization to question at the
hearing, I can only assume that [Hughes’ report] will not have
any bearing on the outcome of this investigation.” Again, the
Brotherhood did not argue that Norfolk’s submission of
Hughes’ report violated the Discipline Rule. Additionally, and
for the first time in the proceeding, the Brotherhood introduced
an affidavit from Tony Machetta (“Machetta”) about the
purpose and function of the tether straps installed on the
driver’s seat of the truck. The Brotherhood did not provide
information about Machetta’s qualifications as an expert or
subject him to cross-examination. Norfolk management
confirmed Kawa’s dismissal, explaining that the evidence did
not support Kawa’s appeal.
Next, the Brotherhood requested a hearing before the SBA.
The SBA was composed of a Norfolk representative, a Brotherhood representative, and a neutral member. In its petition, the
Brotherhood raised many issues about the investigation and
argued that the facts did not support Norfolk’s termination of
Kawa. The Brotherhood still did not object to Norfolk’s
submission of Hughes’ report as a violation of Kawa’s right to
a fair and impartial investigation under the Discipline Rule.
The SBA ruled that substantial evidence supported the
conclusion that Kawa made a false statement concerning an
on-duty injury and Norfolk’s dismissal of Kawa was warranted.
The Brotherhood then filed a complaint in federal district
court seeking to overturn the SBA award that confirmed
Kawa’s dismissal. The Brotherhood’s efforts to vacate the
award proved fruitless.

Case: 12-3415

8

Document: 26

Filed: 03/11/2014

Pages: 14

No. 12-3415

In a separate lawsuit filed in district court (the instant
matter before us), the Brotherhood requested a permanent
injunction. The Brotherhood wants to prevent Norfolk from
using Hughes’ reports, or any expert-witness testimony, in
employee investigations unless Norfolk follows new courtimposed procedures. The Brotherhood requested a court order
mandating Norfolk to: (1) disclose expert witnesses to the
Brotherhood and accused employees before investigations; (2)
provide copies of expert reports to the Brotherhood and
accused employees before investigations; (3) present experts
for cross-examination at investigations; (4) allow the Brotherhood time to hire its own experts; and (5) qualify experts under
the Daubert or Kumho Tire standards. The district court declined
to exercise jurisdiction over this action because the Brotherhood’s suit constituted a minor dispute within the exclusive
jurisdiction of a RLA Adjustment Board.3
On appeal, the Brotherhood seeks reversal of the district
court’s decision and the opportunity to proceed to trial.

3

We take a quick moment to correct a procedural misstatement at the
conclusion of the district court’s Memorandum Opinion and Order. The last
two sentences read, “The claims of Brotherhood of Maintenance of Way
EMPLOYEES Division/IBT must be dismissed for want of jurisdiction.
Norfolk Southern Railway Company’s Motion of Summary Judgment
is therefore granted.” The last sentence of the order granting Norfolk’s
motion should have been omitted because the district court already
dismissed the Brotherhood’s claims for want of jurisdiction. When “the
court determines at any time that it lacks subject-matter jurisdiction, the
court must dismiss the action.” Fed. R. Civ. P. 12(h)(3); Arbaugh v. Y&H
Corp., 546 U.S. 500, 506 (2008).

Case: 12-3415

Document: 26

Filed: 03/11/2014

No. 12-3415

Pages: 14

9
II. DISCUSSION

This court reviews de novo the district court's dismissal of
cross-motions for summary judgment. Wisconsin Cent., Ltd. v.
Shannon, 539 F.3d 751, 756 (7th Cir. 2008).
There are two preliminary matters to clarify. First, the
Brotherhood failed to develop its argument that Norfolk did
not perform its duty under 45 U.S.C. § 152 ¶ First in “good
faith” in the district court. Therefore, the Brotherhood waived
this argument and we will not consider it on appeal. Frey Corp.
v. City of Peoria, 735 F.3d 505, 509 (7th Cir. 2013) (“When a party
fails to develop an argument in the district court, the argument
is waived, and we cannot consider it on appeal.”). Second, the
district court already ruled that the Brotherhood failed to
establish that Hughes’ reports were fraudulent. Brotherhood of
Maintenance of Way Employees v. Norfolk Southern Railway Co.,
903 F. Supp. 2d 583 (N.D. Ill. 2012). The Brotherhood does not
challenge that ruling in this appeal and did not introduce any
new evidence supporting their theory that Hughes’ reports are
false and misleading, so we will not revisit this allegation.
The only remaining issue is whether this Court may
exercise jurisdiction over this dispute. The Brotherhood argues
that this Court has jurisdiction over its lawsuit because its
complaint raised a federal question—whether Norfolk violated
a provision of a federal statute, 45 U.S.C. § 152 ¶ First.4 The
Brotherhood contends that Norfolk breached its duty to

4

“It shall be the duty of all carriers, their officers, agents, and employees
to exert every reasonable effort to make and maintain agreements … .” 45
U.S.C. § 152 ¶ First.

Case: 12-3415

10

Document: 26

Filed: 03/11/2014

Pages: 14

No. 12-3415

“maintain agreements” by not providing the Brotherhood
members a fair and impartial investigation as mandated by the
Discipline Rule. Norfolk disagrees and argues that the Discipline Rule justified its use of Hughes’ reports. Therefore,
Norfolk argues that this matter is subject to the exclusive
jurisdiction of the RLA arbitrators, pursuant to 45 U.S.C. § 153,
and cannot be reached by the federal courts.
When the parties disagree about the appropriate classification of a dispute, the party seeking to establish that a dispute
is minor and under the exclusive arbitral jurisdiction of a RLA
Adjustment Board faces a “relatively light burden.” Consolidated, 491 U.S. at 307; Brotherhood of Ry., Airline & S.S. Clerks,
Freight Handlers, Exp. & Station Employees v. Atchison, Topeka &
Santa Fe Ry. Co., 847 F.2d 403, 406 (7th Cir. 1988). To be
considered minor, an employer’s action only needs to be
“arguably justified” by a contractual right under the terms of
the collective bargaining agreement. Consolidated, 491 U.S. at
307. An employer’s contractual claim may rely upon implied
contractual terms, which the parties established through past
practices. Consolidated, 491 U.S. at 312; Atchison, 847 F.2d at 406.
Only if the employer’s assertion of a contractual right is
“frivolous or obviously insubstantial” will the court construe
the dispute as major, and have jurisdiction to hear the case on
its merits. Consolidated, 491 U.S. at 307.
Consolidated is the seminal case which set the standard to
determine whether railway labor disputes are major or minor.
Id. at 301. In Consolidated, a union contested a railroad’s
decision to test employees for drugs during all periodic and
return-from-leave physical examinations, instead of only
testing occasionally. Id. at 300. The collective bargaining

Case: 12-3415

No. 12-3415

Document: 26

Filed: 03/11/2014

Pages: 14

11

agreement was not in the record and neither party relied upon
an express provision of the contract to support their contentions. Id. at 311. Instead, the Court looked to the past practices
between the parties and found that “[d]rug testing always had
some place in [the railroad’s] physical examination, although
its role changed with time.” Id. at 313. The union argued that
the railroad materially departed from the terms of the parties’
agreement when it increased the frequency of drug testing, but
the Court disagreed. Id. at 316. It held that the case constituted
a minor dispute that was within the exclusive jurisdiction of
any Board formed under the RLA. Id. at 320.
Applying the Consolidated standard to the instant case, we
agree with the district court’s ruling that this dispute is minor.
The Discipline Rule requires Norfolk to provide the Brotherhood members with a fair and impartial investigation, but it
does not provide extensive procedural requirements or
evidentiary rules on how to meet that requirement. The only
portion of the Discipline Rule which remotely discusses the
presentation of evidence at investigations is paragraph (f),
which states that “[p]ertinent witnesses called by the carrier [or
employee] to testify in disciplinary investigations will be
compensated.” The Discipline Rule does not explicitly address
pre-investigation disclosures, the admissibility of hearsay
testimony, or the role of expert witnesses.
The Brotherhood’s conduct in Kawa’s case illustrates the
implied terms of the Discipline Rule. The Brotherhood submitted Machetta’s affidavit after the initial investigation, but did
not qualify Machetta as an expert or make him available for
cross-examination. The Discipline Rule did not contain an
express provision permitting the Brotherhood’s action, but the

Case: 12-3415

12

Document: 26

Filed: 03/11/2014

Pages: 14

No. 12-3415

Brotherhood submitted the affidavit anyway. Both parties
enjoyed latitude to introduce testimony and evidence in the
four recent disciplinary proceedings.
Norfolk also produced evidence from previous disciplinary
actions in which the Brotherhood introduced expert testimony
without offering the expert for cross-examination. In three
investigations regarding the termination of employees who
tested positive for marijuana, the Brotherhood submitted
sworn statements from Dr. Klawans on behalf of its members.
Though Dr. Klawans was never subject to cross-examination,
the Adjustment Board considered his reports.5 The use of
hearsay reports by lay persons and experts has played a
consistent role in the disciplinary hearings of the Brotherhood
members. Based on the parties’ past practices, Norfolk’s use of
Hughes’ reports in the investigations was arguably justified by
the implied contractual terms of the parties’ collective bargaining agreements.
The Brotherhood attempts to use 45 U.S.C. § 152 ¶ First as
a vehicle to establish this Court’s jurisdiction, and relies on
CNW and Ryan for support. Chicago & N. W. Ry. Co. v. United
Transp. Union, 402 U.S. 570 (1971); Ryan, 286 F.3d 456. Neither
case, however, provides a sound rationale for extending
jurisdiction in this case.

5

These investigations are not conclusive of what contract terms were
implied in this case, because these disciplinary actions occurred in the
1980s, long before the Discipline Rule existed. However, these examples
deflate the Brotherhood’s contention that its members have fallen victim to
Norfolk’s unilateral misconduct.

Case: 12-3415

No. 12-3415

Document: 26

Filed: 03/11/2014

Pages: 14

13

The CNW Court held that a federal court could exercise
jurisdiction and issue the railroad’s request to enjoin the union
from holding a labor strike. 402 U.S. at 584. In that case,
however, the railroad filed suit after it exhausted the formal
procedures mandated for a major dispute under 45 U.S.C.
§ 155 ¶ First. Id. at 573. The Court recognized that the dispute
in CNW was a unique scenario and warned that “the vagueness of the obligations under § 2 First [45 U.S.C. § 152 ¶ First]
could provide a cover for freewheeling judicial interference in
labor relations.” Id. at 583. Federal courts should only issue
injunctions when it is the only practical remedy capable of
enforcing the unions’ and railroads’ duty to make and maintain agreements. Id.
In this case, other practical remedies are available to the
Brotherhood. It can renegotiate the terms of its collective
bargaining agreement with Norfolk under the formal procedures required by 45 U.S.C. § 155 ¶ First. Or, it can seek an
interpretation of the Discipline Rule before a RLA Adjustment
Board. 45 U.S.C. § 153 ¶ First (i). Furthermore, policy reasons
lead us to decline jurisdiction because “[r]eferring arbitrable
matters to the Board will help to ‘maintain agreements,’ by
assuring that collective-bargaining contracts are enforced by
arbitrators who are experts in ‘the common law of [the]
particular industry.’” Consolidated, 491 U.S. at 310 (citing
Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 579
(1960)).
This case is also distinguishable from Ryan. The Ryan court
held that it had jurisdiction and decided the case on the merits.
Ryan, 286 F.3d at 460. In Ryan, five trainmen sought a declaration that they were entitled to representation in grievance

Case: 12-3415

Document: 26

Filed: 03/11/2014

14

Pages: 14

No. 12-3415

proceedings by their union, the Brotherhood of Locomotive
Engineers, instead of the United Transportation Union, which
traditionally represented them. Id. at 457. The only issue before
the court was how to interpret 45 U.S.C. § 153 ¶ First (i),
specifically the phrase “shall be handled in the usual manner.”
Id. at 458. The court repeated that its decision “was not … an
interpretation of the collective bargaining agreement, but an
interpretation of the Railway Labor Act.” Id. at 460. In contrast,
the Brotherhood is not asking us to interpret a federal statute
but to interpret its collective bargaining agreement—what
constitutes a “fair and impartial hearing”—a function exclusively reserved for a RLA Adjustment Board.
III. CONCLUSION
This dispute grew out of the application of the parties’
collective bargaining agreement in employee disciplinary
actions. Norfolk met its burden of proving that its use of
Hughes’ reports at investigations was justified by a contractual
right, albeit an implied one. Therefore, we agree with the
district court that the Brotherhood’s suit is a “quintessential”
minor dispute and “find no basis for asserting jurisdiction over
the subject matter of this dispute,” Atchison, 847 F.2d at 412.
The district court’s decision is AFFIRMED.