United Transportation Union v. Birmingham Southern Railroad et al

Filing 38

MEMORANDUM OPINION. Signed by Chief Judge Sharon Lovelace Blackburn on 9/28/2012. (KAM, )

FILED
2012 Sep-28 AM 11:22
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
UNITED TRANSPORTATION
UNION,

)
)
)
Plaintiff,
)
)
vs.
)
)
BIRMINGHAM SOUTHERN
)
RAILROAD COMPANY;
)
TRANSTAR, INC.
)
)
Defendants.
)
)
)
BIRMINGHAM SOUTHERN
)
RAILROAD COMPANY,
)
)
Counterclaim plaintiff,
)
)
vs.
)
)
UNITED TRANSPORTATION
)
UNION, and CAROL J. ZAMPERINI, )
)
Counterclaim defendants.
)

CASE NO. 2:11-cv-04128-SLB

MEMORANDUM OPINION
This case is currently before the court on counterclaim defendant United
Transportation Union’s Motion to Dismiss Counts II through VII of BSRR’s Counterclaim
(“Motion to Dismiss”), (doc. 18).1 Upon consideration of the submissions, the arguments of

1

Reference to a document number, [“Doc. ___”], refers to the number assigned to each
document as it is filed in the court’s record.

counsel, and the relevant law, the court finds that the Motion to Dismiss, (doc. 18), is due to
be granted.
I. STANDARD OF REVIEW
Under Fed. R. Civ. P. 12(b)(6), a party may move the court to dismiss a case based
on a failure to state a claim upon which relief can be granted. When deciding a motion to
dismiss under Rule 12(b)(6), the court “must accept the allegations set forth in the complaint
as true.” Gonzalez v. McNary, 980 F.2d 1418, 1419 (11th Cir. 1993); see also Rivell v.
Private Health Care Sys., Inc., 520 F.3d 1308, 1309 (11th Cir. 2008).
The allegations in the complaint are taken as true and construed in the light
most favorable to the plaintiffs. [Hoffman-Pugh v. Ramsey, 312 F.3d 1222,
1225 (11th Cir. 2002).] However, the complaint’s “[f]actual allegations must
be enough to raise a right to relief above the speculative level.” Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1965, 167 L. Ed. 2d 929
(2007); see also Watts v. Florida Int’l Univ., 495 F.3d 1289, 1295 (11th Cir.
2007). “The Supreme Court’s most recent formulation of the pleading
specificity standard is that ‘stating such a claim requires a complaint with
enough factual matter (taken as true) to suggest’ the required element.” Watts,
495 F.3d at 1295 (quoting Twombly, 127 S. Ct. at 1965). This rule does not
“impose a probability requirement at the pleading stage.” Twombly, 127 S. Ct.
at 1965. Instead, the standard “simply calls for enough fact to raise a
reasonable expectation that discovery will reveal evidence” of the required
element. Id. “It is sufficient if the complaint succeeds in ‘identifying facts
that are suggestive enough to render [the element] plausible.’” Watts, 495 F.3d
at 1296 (quoting Twombly, 127 S. Ct. at 1965).
Rivell, 520 F.3d at 1309-10.
“[T]he threshold that a complaint must meet to survive a motion to dismiss is
‘exceedingly low.’” Holley v. City of Roanoke, 162 F. Supp. 2d 1335, 1338 (M.D. Ala. 2001)
(quoting Ancata v. Prison Health Servs., Inc., 769 F.2d 700, 703 (11th Cir. 1985)).
2

However, taking the facts as true, a court may grant a motion to dismiss when, “on the basis
of a dispositive issue of law, no construction of the factual allegations will support the cause
of action.” Marshall County Bd. of Educ. v. Marshall County Gas Dist., 992 F.2d 1171, 1174
(11th Cir. 1993) (citations omitted). A court need not accept legal conclusions as true, but
only well-pleaded factual allegations are entitled to an assumption of truth. Ashcroft v. Iqbal,
129 S. Ct. 1937, 1949-50 (2009) (citation omitted).
II. FACTUAL AND PROCEDURAL HISTORY2
A.

Previously Paid COLA Dispute

Counterclaim plaintiff Birmingham Southern Railroad Company (“BSR”) is a
common railroad carrier engaged in interstate commerce and a “carrier” within the meaning
of the Railway Labor Act (“RLA”), 45 U.S.C. § 151 et seq. (Doc. 6 ¶ 3.) Counterclaim
defendant United Transportation Union (“UTU”) is a national labor organization and the
collective bargaining representative for four classes of BSR employees. (Id. ¶ 4.) Between
July 2004 and April 2005, UTU and BSR entered into four local collective bargaining
agreements (the “Local Agreements”) – one for each craft of BSR employee represented by
UTU.3 (Id. ¶ 35.) The Local Agreements provided for the payment of specified general

2

The facts are for purposes of the motion to dismiss only. They may not be the
actual facts.
3

Many railroads negotiate their labor agreements with UTU at the national level
through a single bargaining representative. (Doc. 6 ¶ 34.) Other railroads, like BSR,
customarily negotiate their labor agreements with UTU individually, entering into what
are known as “local” agreements. (Id.)
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wage increases and cost-of-living payments. (Id. ¶ 36.) The Local Agreements also provided
that cost-of-living allowances (“COLA”) payable thereunder “will be disposed of in the
manner provided in the next national agreement after 2004.” (Id.)
The “next national agreement” (the “National Agreement”) came into effect on July
1, 2008. (Id. ¶ 37.) The National Agreement contained provisions relating to COLA
previously paid to UTU-represented employees. (Id.) In light of the National Agreement’s
treatment of previously paid COLA, BSR believed that it was entitled to recover COLA
previously paid to its UTU-represented employees under the Local Agreements. (Id. ¶ 38.)
BSR proposed to deduct $45.00 from the future paychecks of each UTU-represented
employee until the requisite amount was fully recovered. (Id.) UTU objected to BSR’s
proposal, contending that BSR was not authorized to recover previously paid COLA . (Id.
¶ 39.)
After a series of unsuccessful negotiations, BSR and UTU agreed to resolve their
COLA dispute in arbitration under the provisions of Section 7 of the RLA, 45 U.S.C. § 157.
(Id. ¶ 40-41.) Accordingly, BSR and UTU entered into an arbitration agreement (the
“Arbitration Agreement”) on September 17, 2008, which created a tripartite arbitration board
known as Board 594. (Id. ¶ 42; see doc. 6-1.) The Arbitration Agreement provided that
Board 594 shall consist of Francis X. Quinn (“Quinn”), UTU’s appointed arbitrator; Joseph
A. Cassidy, Jr. (“Cassidy”), BSR’s appointed arbitrator; and counterclaim defendant Carol
J. Zamperini (“Zamperini”), the “Chairwoman.” (Doc. 6 ¶ 9; doc. 6-1 at 1.) Zamperini was

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intended to serve as Board 594’s neutral arbitrator. (Doc. 6-1 ¶ 11.) The Arbitration
Agreement also provided that Board 594’s award “will constitute a valid and binding award
provided a majority of the members of the Board have affixed their signatures to the award.”
(Doc. 6-1 at 2.)
Board 594 conducted a hearing and rendered its award, labeled as “Award No. 1,” on
November 28, 2008. (Id. ¶ 47.) In Award No. 1, Board 594 concluded that BSR was not
entitled to recoup previously paid COLA from its UTU-represented employees. (Id. ¶ 49.)
BSR petitioned for review of Award No. 1 in the Northern District of Alabama pursuant to
Section 9 of the RLA, 45 U.S.C. § 159. (Id. ¶ 50.) The petition was denied on August 12,
2010. (Id.)
B.

Discontinuance of COLA Prospectively/Interpretation of Award No. 1

A “separate and distinct” COLA dispute arose between BSR and UTU concerning the
interpretation of the Local Agreements. (Id. ¶ 51.) BSR interpreted the Local Agreements
as authorizing the discontinuance of COLA prospectively. (Id. ¶ 52.) BSR discontinued the
payment of COLA on September 1, 2008. (Id. ¶ 55.) UTU disputed BSR’s interpretation
of the Local Agreements and demanded that BSR reinstate the payment of COLA. (Id. ¶ 56.)
Although this dispute arose before the parties entered into the Arbitration Agreement, the
question of prospective COLA was not submitted to Board 594. (Id. ¶ 53.)
On June 16, 2010, UTU asked the members of Board 594 for an interpretation of
Award No. 1 to specify that Award No. 1 should be interpreted as having decided that BSR

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was not authorized to discontinue the payment of COLA prospectively. (Id. ¶ 62.) The
Arbitration Agreement included a provision stating, “Any difference arising as to the
meaning or the application of the provisions of [Board 594’s] award will be referred to the
Board for a ruling.” (Doc. 6-1 at 2.) Board 594 refrained from taking any action because
BSR’s petition for review of Award No. 1 was still pending before the Northern District of
Alabama. (Doc. 6 ¶ 62.)
After the Northern District of Alabama denied BSR’s petition to impeach Award No.
1, Zamperini engaged in a series of ex parte communications in the form of email messages
with Quinn, UTU’s appointed arbitrator, and other UTU representatives. (Id. ¶ 64.) These
ex parte communications began in early September 2010 and continued for more than two
weeks. (Id.) In these emails, UTU again requested an interpretation from Board 594 of
Award No. 1 regarding the payment of COLA prospectively. (Id. ¶ 66.) Zamperini
responded and asked UTU for its reasons regarding why Board 594 retained jurisdiction to
issue an interpretation. (Id. ¶ 67.) UTU responded and supported its position with legal
arguments. (Id. ¶ 68.) On or about September 15, 2010, UTU transmitted a proposed
interpretation of Award No. 1 to Quinn. (Id. ¶ 71.) Zamperini became persuaded by UTU’s
legal arguments and issued a proposed interpretation of Award No. 1 without soliciting
arguments from BSR. (Id. ¶¶ 72-73.) Zamperini’s proposed interpretation adopted UTU’s
position that Award No. 1 addressed the issue of prospective COLA. (Id. ¶ 75.) A copy of
the proposed interpretation was emailed to Cassidy, BSR’s appointed arbitrator, on

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September 25, 2010. (Id. ¶ 73.) The email included copies of some of Zamperini’s ex parte
communications with UTU representatives. (Id.) BSR was unaware of the ex parte
communications between Zamperini and UTU prior to September 25, 2010. (Id. ¶ 65.)
On October 4, 2010, BSR mailed a letter to Zamperini demanding her recusal from
Board 594 and ordering that she declare the “draft” interpretation of Award No. 1 as having
no force or effect. (Id. ¶ 85.) BSR repeated these demands in subsequent letters dated
August 16, 2011 and November 9, 2011. (Id. ¶ 86.) Zamperini did not resign from Board
594. (Id. ¶ 87.)
On November 3, 2011, UTU resubmitted its request that Board 594 issue a
clarification of Award No. 1. (Id. ¶ 92.) Zamperini and Quinn rendered an Interpretation of
Award No. 1 on November 21, 2011, finding that BSR’s UTU-represented employees were
entitled to future payments of COLA. (Id. ¶ 94.) BSR received a copy of the interpretation
on November 28, 2011. (Id.) The interpretation was not signed by Cassidy.
C.

This Litigation

UTU commenced this litigation on December 7, 2011 seeking to enforce the
Interpretation of Award No. 1. (See doc. 1.) BSR filed a Counterclaim, (doc. 6), against
UTU and Zamperini requesting, in part, that the Arbitration Agreement be declared invalid
and unenforceable as of September 2010 based on the ex parte communications between
Zamperini and UTU representatives, which compromised Zamperini’s neutrality. BSR
claims that the Arbitration Agreement is invalid and unenforceable on grounds of frustration

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of purpose (Counts Two and Three), impracticability (Count Four), breach of contract (Count
Five), breach of the covenant of good faith and fair dealing (Count Six), and the deprivation
of BSR’s statutory right to a full and fair hearing (Count Seven). (Id. ¶¶ 107-53.) UTU
seeks to have these claims dismissed. (Doc. 18.)
III. DISCUSSION
Congress enacted the Railway Labor Act “to promote stability in labor-management
relations by providing a comprehensive framework for resolving labor disputes.” Hawaiian
Airlines, Inc. v. Norris, 512 U.S. 246, 252 (1994) (citing Atchison, Topeka & Santa Fe Ry.
Co. v. Buell, 480 U.S. 557, 562 (1987)); see also 45 U.S.C. § 151a; Bhd. of Ry. & S. S.
Clerks, Freight Handlers, Express & Station Employees. v. Ass’n for Benefit of Non-Contract
Employees, 380 U.S. 650, 658 (1965) (“The major objective of the Railway Labor Act . . .
was the avoidance of industrial strife, by conference between the authorized representatives
of employer and employee.” (quotations omitted)). “[N]ational policy favors the final
settlement of labor disputes outside of the judicial process.” Ballew v. Cont’l Airlines, Inc.,
668 F.3d 777, 783 (5th Cir. 2012) (citing Air Line Pilots Ass’n, Int’l v. E. Air Lines, Inc., 632
F.2d 1321, 1323 (5th Cir. 1980)).
To effectuate these purposes, the RLA establishes comprehesinve remedial procedures
for resolving two classes of controversies arising between carriers and collective bargaining
agents - “minor” disputes and “major” disputes. See Hawaiian Airlines, 512 U.S. at 252; 45
U.S.C. § 151a. Minor disputes, which arise “out of grievances or out of the interpretation

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or application of agreements covering rates of pay, rules, or working conditions,” 45 U.S.C.
§ 151a, are “subject to compulsory and binding arbitration before the National Railroad
Adjustment Board, . . . or before an adjustment board established by the employer and the
unions representing the employees.” Consol. Rail Corp. v. Ry. Labor Executives’ Ass’n, 491
U.S. 299, 303 (1989) (citing 45 U.S.C. § 153 Second). Major disputes are those involving
“the formation or change of collective bargaining agreements covering rates of pay, rules,
or working conditions.” Atchison, 480 U.S. at 563 (internal quotations and citation omitted).
Unlike minor disputes, major disputes are not subject to compulsory arbitration. See 45
U.S.C. §§ 155, 157. The United States Supreme Court summarized the RLA’s detailed
procedural framework for resolving major disputes:
A party desiring to effect a change of rates of pay, rules, or working conditions
must give advance written notice. [45 U.S.C. § 156]. The parties must confer,
[45 U.S.C. § 152 Second], and if conference fails to resolve the dispute, either
or both may invoke the services of the National Mediation Board, which may
also proffer its services sua sponte if it finds a labor emergency to exist. [45
U.S.C. § 155 First]. If mediation fails, the Board must endeavor to induce the
parties to submit the controversy to binding arbitration, which can take place,
however, only if both consent. [45 U.S.C. §§ 155 First, 157].
Bhd. of R.R. Trainmen v. Jacksonville Terminal Co., 394 U.S. 369, 378 (1969). Thus,
assuming a major dispute cannot be resolved through negotiation or mediation, the parties
are free to submit to binding arbitration under Section 7 of the RLA. See 45 U.S.C. §§ 155
First, 157 Second. Alternatively, the parties can refuse Section 7 arbitration without penalty
and attempt to resolve their differences through self-help. Elgin, J. & E. Ry. Co. v. Burley,
325 U.S. 711, 725 (1945) (recognizing that the compulsory procedures for resolving major
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disputes “go only to insure that those procedures are exhausted before resort can be had to
self-help. No authority is empowered to decide the dispute and no such power is intended,
unless the parties themselves agree to arbitration.”); see 45 U.S.C. § 157 Second. If the
parties voluntarily elect to arbitrate a major dispute under Section 7, the RLA requires that
the parties enter into an arbitration agreement in accordance with the statutory mandates of
Section 8. See 45 U.S.C. § 158.
Judicial review of an arbitration award rendered pursuant to the RLA is exceedingly
narrow. See 45 U.S.C. § 159. Section 9, the section governing the method and scope of
judicial review of Section 7 arbitration awards, provides that “[a]n award acknowledged and
filed as herein provided shall be conclusive on the parties as to the merits and facts of the
controversy submitted to arbitration, . . . unless, within ten days after the filing of the award,
a petition to impeach the award, on the grounds hereinafter set forth, [is filed] . . . .” 45
U.S.C. § 159 Second. District courts may only entertain petitions to impeach on three limited
grounds:
(a) . . . the award plainly does not conform to the substantive requirements laid
down by this chapter for such awards, or that the proceedings were not
substantially in conformity with this chapter;
(b) . . . the award does not conform, nor confine itself, to the stipulations of the
agreement to arbitrate; or
(c) . . . a member of the board of arbitration rendering the award was guilty of
fraud or corruption; or that a party to the arbitration practiced fraud or
corruption which fraud or corruption affected the result of the arbitration.

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45 U.S.C. § 159 Third. Interpretations of awards are subject to judicial review on the same
grounds. See 45 U.S.C. § 158(m). Section 9 also instructs courts to construe arbitration
awards liberally, “with a view to favoring [their] validity.” Id. In light of this statutory
language, it is of little surprise that judicial review under the RLA has been coined as
“among the narrowest known in the law.” Union Pac. R.R. Co. v. Sheehan, 439 U.S. 89, 91
(1978) (using this language to describe the similar impeachment grounds under Section 3 of
the RLA, 45 U.S.C. § 153); Dalfort Aerospace, Inc. v. Airline Div. of Int’l Bhd. of Teamsters,
No. 301CV006-X, 2001 WL 640790, *2 (N.D. Tex. June 7, 2001).
BSR and UTU agreed to arbitrate their dispute regarding previously paid COLA under
the provisions of Section 7. (Doc. 6 ¶¶ 41-42.) The Arbitration Agreement, which created
Board 594, complied with the statutory mandates of Section 8. (See doc. 6-1.) Accordingly,
the statutory framework explained above is applicable here.
UTU moves to dismiss Counts Two through Seven of BSR’s Counterclaim pursuant
to Fed. R. Civ. P. 12(b)(6), arguing that such claims are impermissible collateral attacks on
Board 594’s Interpretation of Award No. 1. (See generally doc. 18.) UTU contends that the
“mandatory, exclusive and comprehensive method” for reviewing Section 7 arbitration
awards is Section 9, and that Counts Two through Seven are thinly-veiled attempts to
circumvent Section 9’s impeachment standard. (Id. at 10.) UTU maintains that Counts Two
through Seven are barred and subsumed by Section 9, and, therefore, should be dismissed for
failure to state a claim upon which relief can be granted.

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BSR insists that Counts Two through Seven are not disguised attempts to vacate
Board 594’s Interpretation of Award No. 1. BSR argues that “[a]rbitration pursuant to
[Section 7] is strictly voluntary and wholly dependent on the existence of a valid agreement
to arbitrate,” and because a Section 7 arbitration agreement is a contract, “it is subject to
challenge, and potentially to a finding that the agreement is invalid and unenforceable under
generally applicable contract principles, just like any other contract.” (Doc. 27 at 25-26.)
BSR maintains that Section 9 does not dispense with the preliminary question of whether a
valid arbitration agreement exists, and, therefore, challenges to the underlying agreement to
arbitrate are permissible and not precluded by the RLA.
A.

Counts Two through Six - Common Law Contract Defenses

The court agrees with BSR to the extent that Section 7 arbitration is predicated upon
the existence of a binding agreement to arbitrate. “The RLA does not dispense of the
preliminary question of [substantive] arbitrability.” In re Cont’l Airlines, Inc., 484 F.3d 173,
183 (3d Cir. 2007); see E. Air Lines, Inc. v. Air Line Pilots Ass’n, Int’l, 861 F.2d 1546 (11th
Cir. 1988) (deciding whether a collective bargaining agreement was enforceable before
deciding whether the parties were subject to compulsory arbitration under Section 3 of the
RLA). Whether a valid arbitration agreement exists is a question of substantive arbitrability,
and questions of substantive arbitrability must be resolved by the courts. In re Cont’l
Airlines, Inc., 484 F.3d at 182 (citing AT & T Techs., Inc. v. Commc’ns Workers of Am., 475

12

U.S. 643, 648 (1986)). The question whether a valid arbitration agreement exists generally
hinges on whether the agreement is valid and enforceable under contract principles.
BSR challenges the validity and enforceability of an arbitration agreement created
pursuant to Section 8 of the RLA – a contract that is a creature of statute. In Counts Two
through Six, BSR claims that the Arbitration Agreement became invalid and unenforceable
prior to Board 594’s Interpretation of Award No. 1 under common law contract principles
when Zamperini and UTU representatives engaged in ex parte communications. (See doc.
6 ¶¶ 107-43.) The court disagrees. The court concludes that once parties agree to arbitrate
a major dispute under the provisions of Section 7 by entering into an arbitration agreement
in compliance with the statutory requirements of Section 8, the parties are barred from
subsequently invalidating that agreement based on common law contract principles.
As noted above, major disputes initially undergo a prolonged series of negotiation and
mediation under the supervision of the National Mediation Board (“NMB”). If the parties
are unable to successfully resolve their dispute through these mechanisms, the NMB must
attempt to induce the parties to resolve their dispute through arbitration under the provisions
of Section 7. 45 U.S.C. § 155 First (b). The parties are not required to accept the NMB’s
proffer of arbitration, and the RLA imposes no penalty for refusing Section 7 arbitration. 45
U.S.C. § 157 Second. If the parties accept the NMB’s proffer, however, the parties must
enter into an arbitration agreement in accordance with the statutory mandates of Section 8.
See 45 U.S.C. § 158. Section 8 provides, in pertinent part:

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The agreement to arbitrate-(a) Shall be in writing;
(b) Shall stipulate that the arbitration is had under the provisions of [the RLA];
....
(d) Shall be signed by the duly accredited representatives of the carrier or
carriers and the employees, parties respectively to the agreement to arbitrate,
and shall be acknowledged by said parties before a notary public, the clerk of
a district court or court of appeals of the United States, or before a member of
the Mediation Board, and, when so acknowledged, shall be filed in the office
of the Mediation Board;
(e) Shall state specifically the questions to be submitted to the said board for
decision; and that, in its award or awards, the said board shall confine itself
strictly to decisions as to the questions so specifically submitted to it;
....
(g) Shall stipulate that the signatures of a majority of said board of arbitration
affixed to their award shall be competent to constitute a valid and binding
award;
....
(m) Shall provide that any difference arising as to the meaning, or the
application of the provisions, of an award made by a board of arbitration shall
be referred back for a ruling to the same board[.]
Id. (emphasis added). Section 8 further provides, “The said agreement to arbitrate, when
properly signed and acknowledged as herein provided, shall not be revoked by a party to
such agreement: Provided, however, That such agreement to arbitrate may at any time be
revoked and canceled by the written agreement of both parties.” Id. (emphasis added).

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When considering the mandatory requirements of Section 8, the court concludes that
Congress intended for Section 7 arbitration agreements to be valid, irrevocable, and
enforceable, and immune from attacks based on common law contract principles once formed
in conformity with Section 8. The most compelling statutory language supporting the court’s
conclusion is that Section 7 arbitration agreements “shall not be revoked by [either] party”
once properly signed and acknowledged. 45 U.S.C. § 158. Congress’s use of the term
“revoked” is significant for two reasons. First, although Black’s Law Dictionary does not
define the term “revoke,” it defines “revocation” as “[a]n annulment, cancellation, or
reversal.” BLACK’S LAW DICTIONARY 1435 (9th ed. 2009). Thus, the term “revoke” means
to annul, cancel, or reverse. Applying this definition to Section 8, the court finds that
Congress manifested an intent for Section 7 arbitration agreements to be binding and immune
from unilateral nullification or invalidation once properly signed and acknowledged by the
parties. Second, Congress’s use of the term “revoke” in Section 8 carries particular
significance when compared to commercial arbitration agreements under the Federal
Arbitration Act (“FAA”), 9 U.S.C. § 1, et seq. Congress explicitly provided that arbitration
agreements covered by the FAA are “valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2
(emphasis added). Compare 9 U.S.C. § 2 with 45 U.S.C. § 158. See AT&T Mobility LLC
v. Concepcion, ___ U.S___, 131 S. Ct. 1740, 1748 (2011) (noting that the FAA “preserves
generally applicable contract defenses”). Thus, arbitration agreements covered by the FAA

15

are subject to unilateral invalidation and nonenforcement when the agreements are revocable
at law or in equity. The fact that the FAA provides an avenue for invalidating arbitration
agreements and the RLA does not indicates that Congress intended for Section 7 arbitration
agreements to be valid and enforceable upon compliance with Section 8.
A further comparison between the RLA and FAA indicates that Congress
contemplated that compliance with Section 8 would ensure the validity and enforceability of
Section 7 arbitration agreements. Arbitration agreements under the FAA are the product of
private negotiations between the parties. Unlike Section 8 of the RLA, the FAA provides no
procedure for entering into arbitration agreements covered by its provisions; nor does the
FAA set forth the exact terms to be included in its arbitration agreements. Without any
statutory oversight, Congress clearly foresaw circumstances where arbitration agreements
under the FAA would be invalid and unenforceable as evidenced by explicitly making those
agreements “valid, irrevocable, and enforceable, save upon such grounds as exist at law or
in equity for the revocation of any contract.” 9 U.S.C. § 2 (emphasis added). The RLA
contains no language explicitly making Section 7 arbitration agreements “valid” and
“enforceable,” and Congress likely found such language unnecessary because compliance
with Section 8’s requirements would resolve any concerns regarding

validity or

enforceability of the agreements.4

4

It is difficult to conceive of a circumstance where an arbitration agreement in
compliance with Section 8 would be invalid based on contract principles. This is especially true
when the parties to Section 7 arbitration are carriers and collective bargaining agents, both
sophisticated parties well-versed in labor law. See 45 U.S.C. § 157 Second.
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Voluntary arbitration under Section 7 is the RLA’s last procedural safeguard before
parties resort to self-help. These agreements are designed to prevent disruptions to interstate
commerce. Binding parties to Section 7 arbitration after they voluntarily agree to do so
pursuant to Section 8’s statutory commands best effectuates this scheme. To hold otherwise
allows parties to circumvent their duty to arbitrate under properly signed and acknowledged
Section 7 arbitration agreements and engage in the very conduct the RLA was designed to
prevent.
The court’s holding does not undermine the axiomatic rule of law that “arbitration is
a matter of contract and a party cannot be required to submit to arbitration any dispute which
he has not agreed so to submit.” United Steelworkers of Am. v. Warrior & Gulf Nav. Co.,
363 U.S. 574, 582 (1960). Indeed, parties cannot be compelled to Section 7 arbitration
absent an arbitration agreement in compliance with Section 8. What the court holds is that,
once properly signed and acknowledged according to the RLA’s statutory mandates, parties
cannot subsequently invalidate a Section 7 arbitration agreement based on common law
contract principles.
Here, there is no dispute BSR and UTU properly signed and acknowledged the
Arbitration Agreement in conformity with Section 8. Accordingly, BSR is precluded from
unilaterally invalidating the Arbitration Agreement based on common law contract
principles. Therefore, UTU’s Motion to Dismiss Counts Two through Six is due to be
granted, and Counts Two through Six will be dismissed.

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Counts Seven - Denial of BSR’s Right to a Full and Fair Hearing
Count Seven requests that the Arbitration Agreement be declared invalid and
unenforceable because UTU’s ex parte communications with Zamperini constituted an RLA
violation by depriving BSR of its statutory right to a full and fair hearing. (Doc. 6 ¶¶ 144153.); see 45 U.S.C. § 157 Third (b). BSR claims that UTU “was obligated by the RLA not
to undertake actions that would deprive BSR of its right to a full and fair hearing of its case
before Board 594,” and violated this obligation when it engaged in ex parte communications
with Zamperini.
The same analysis applicable to Counts Two through Six is applicable here. BSR and
UTU properly signed and acknowledged the Arbitration Agreement, which means its cannot
be unilaterally invalidated by either party. And, even assuming BSR could invalidate the
Arbitration Agreement, Section 7 imposes an obligation on the parties to provide “a full and
fair hearing.” Section 7 places that obligation upon the arbitration board – “[t]he board of
arbitration shall . . . make all necessary rules for conducting its hearings: Provided, however,
That the board of arbitration shall be bound to give the parties to the controversy a full and
fair hearing.” 45 U.S.C. § 157 Third (b) (emphasis added). Accordingly, BSR cannot
invalidate the Arbitration Agreement based on UTU’s alleged breach of duty under Section
7 because no such duty existed.5

5

Of course, parties to Section 7 arbitration should not engage in misconduct that may
jeopardize the fairness of the arbitration proceedings. If one party’s misconduct ultimately
deprives another party of its right to a full and fair hearing or amounts to “fraud or corruption,”
any award rendered in its favor may be subject to impeachment under the enumerated grounds set
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IV. CONCLUSION
For the foregoing reasons, UTU’s Motion to Dismiss, (doc. 18), is due to be granted.
An Order in accordance with this Memorandum Opinion will be entered contemporaneously
herewith.
DONE, this 28th day of September, 2012.

SHARON LOVELACE BLACKBURN
CHIEF UNITED STATES DISTRICT JUDGE

forth in Section 9. See 45 U.S.C. § 159.
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