Supreme Court Rules in Railroad Arbitration Case

(CN) - The U.S. Supreme Court on Tuesday upheld a 7th Circuit decision vacating the National Railroad Adjustment Board's dismissal of five worker complaints. The justices said the arbitration panel erred by trying to define its own jurisdiction.

In an effort to prevent stagnant railroad strikes, Congress passed the Railway Labor Act, which requires railroad workers and their employers to arbitrate minor disputes. But first, the parties must attempt to settle their claims through "conferencing," which can be as informal as a telephone call.

If the parties can't reach an agreement, they refer the dispute to the adjustment board for arbitration before panels of two labor representatives, two industry representatives and a neutral tie-breaker.

In the underlying dispute, Union Pacific Railroad Co. charged five employees with disciplinary violations, prompting the workers' union, the Brotherhood of Locomotive Engineers and Trainmen, to file grievances against the railroad.

The parties tried to settle at least two of the complaints, but the negotiations didn't satisfy the union. It referred the disputes for arbitration and lost, primarily because it failed to offer proof of conferencing.

Though the union provided phone logs, handwritten notes and other correspondence, the panel said the union should have submitted the evidence before an industry representative objected.

The union argued that the railroad had forfeited the issue by not raising the objection itself.

The arbitration board dismissed the employees' complaints, explaining that the "evidentiary record" is closed once a party initiates arbitration. The two union representatives dissented, claiming dismissal demonstrated "the kind of gamesmanship that breeds contempt for the minor dispute process."

The union asked a federal judge in Illinois to review the board's orders, but the judge sided with the board. The 7th Circuit reversed, saying the case "boils down to a single question: is written documentation of the conference ... a necessary prerequisite to arbitration before the (board)?" Finding no such requirement, the appeals court said the board's proceedings violated due process.

The Supreme Court upheld the 7th Circuit's opinion, but on statutory rather than constitutional grounds. Arbitration panels can't define their own jurisdiction, Justice Ruth Bader Ginsburg explained.

"By refusing to adjudicate cases on the false premise that it lacked power to hear them, the [board] panel failed 'to conform, or confine itself' to the jurisdiction Congress gave it," Ginsburg wrote for the unanimous court.

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