Norfolk and Western Railway Company v. American Train Dispatchers Association/Dissent Stevens

Justice STEVENS, with whom Justice MARSHALL joins, dissenting.

The statutory exemption that the Court construes today had its source in § 407 of the Transportation Act of 1920 (1920 Act). 41 Stat. 482. Its wording was slightly changed in 1940, 54 Stat. 908-909, and again in 1978, 92 Stat. 1434. There is, however, no claim that either of those amendments modified the coverage of the exemption in any way. It is therefore appropriate to begin with a consideration of the purpose and the text of the 1920 Act.

Before the First World War, the railroad industry had been the prime target of antitrust enforcement. In 1920, however, Congress adopted a new national transportation policy that expressly favored the consolidation of railroads. The policy of consolidation embodied in the 1920 Act wouldobviously have been frustrated by the federal antitrust laws had Congress not chosen to exempt explicitly all approved mergers from these laws. Section 407 of that Act provided, in part:

"The carriers affected by any order made under the     foregoing provisions of this section . . . shall be, and they      are hereby, relieved from the operation of the 'antitrust      laws,' . . . and of all other restraints or prohibitions by      law, State or Federal, in so far as may be necessary to      enable them to do anything authorized or required by any      order made under and pursuant to the foregoing provisions of      this section." 41 Stat. 482.

Both the background and the text of § 407 make it absolutely clear that its primary focus was on federal antitrust laws. Sensibly, however, Congress wrote that section using language broad enough to cover any other federal or state law that might otherwise forbid the consummation of any approved merger or prevent the immediate operation of its properties under a new corporate owner. Not a word in the statute, or in its legislative history, contains any hint that the approval of a merger by the Interstate Commerce Commission (ICC) would impair the obligations of valid and otherwise enforceable private contracts.

Given the present plight of our Nation's railroads, it may be wise policy to give the ICC a power akin to, albeit greater than, that of a bankruptcy court to approve a trustee's rejection of a debtor's executory private contracts. Through nothing short of a tour de force, however, can one find any such power in 49 U.S.C. § 11341, or in either of its predecessors. Obviously, consolidated carriers would find it useful to have the ability to disavow disadvantageous long-term leases on obsolete car repair facilities, employment contracts with high salaried executives whose services are no longer needed, as well as collective-bargaining agreements that provide costly job security to a shrinking work force. If Congress had intended to give the ICC such broad ranging power to impair contracts, it would have done so in language much clearer than anything that can be found in the present Act.

The Court's contrary conclusion rests on its reading of the "plain meaning" of the present statutory text and our decision in Schwabacher v. United States, 334 U.S. 182, 68 S.Ct. 958, 92 L.Ed. 1305 (1948). Neither of these reasons is sufficient. Moreover, the Court's reading is inconsistent with other unambiguous provisions in the statute.

* With or without the ejusdem generis canon, I believe that the normal reader would assume that the text of § 11341 encompasses the antitrust laws, as well as other federal or state laws, that would otherwise prohibit rail carriers from consummating approved mergers, and nothing more. See ante, at 128. That text contains no suggestion that whenever a criminal law, tort law, or any regulatory measure impedes the efficient operation of a new merged carrier, the carrier can avoid such a restriction by virtue of the ICC approval of that merger. Nor does the text of § 11341 contain any suggestion that such an approval would impair the obligation of private contracts. Rather, as both an application of the ejusdem generis canon and an examination of the legislative history show, the purpose of the exemption was to relieve the carriers "from the operation of the antitrust and other restrictive or prohibitory laws." H.R.Conf.Rep. No. 650, 66th Cong., 2d Sess., 64 (1920) (emphasis added).

The Court speculates that the reason the 1920 Congress explicitly referred to the antitrust laws was simply to avoid the force of the rule that repeals of the antitrust laws by implication are not favored, citing ''United States v. Philadelphia Nat. Bank,'' 374 U.S. 321, 350, 83 S.Ct. 1715, 1734, 10 L.Ed.2d 915 (1963). In that case, however, the rule was announced in the context of the industry's argument that federal regulatory approval of a transaction exempted the transaction from the antitrust laws even though the regulatory statute was entirely silent on the subject of exemption. Ibid. The authority cited in the Phila- delphia decision to support this rule sheds no light on the question whether a statute creating a broad exemption for mergers would naturally be read to include all statutes that otherwise would have prohibited the consummation of a merger of large rail carriers.

Of greater importance, however, is the Court's rather remarkable assumption that an exemption "from 'all other law' " should be read to encompass the restraints created by private contract. Ante, at 129-130. Even if the text of the present Act could bear that reading, it is flatly inconsistent with the text of the 1920 Act, which relieved the participating carriers "from the operation of the 'antitrust laws' . . . and of all other restraints, limitations, and prohibitions of law, Federal and State. . . ." 41 Stat. 482. Moreover, given the respect that our legal system has always paid to the enforceability of private contracts-a respect that is evidenced by express language in the Constitution itself -there should be a powerful presumption against finding an implied authority to impair contracts in a statute that was enacted to alleviate a legitimate concern about the antitrust laws. Had Congress intended to convey the message the Court finds in § 11341, it surely would have said expressly that the exemption was from all restraints imposed by law or by private contract. II

In my opinion, the Court's reliance on the decision in Schwabacher v. United States, 334 U.S. 182, 68 S.Ct. 958, 92 L.Ed. 1305 (1948), is misplaced. In that case, the owners of two percent of the outstanding preferred stock of the Pere Marquette Railway brought suit in the United States District Court to set aside an ICC order approving a merger between that corporation and the Chesapeake and Ohio Railway Corporation. In approving the merger, the ICC had found that the market value of plaintiffs' preferred shares ranged, at different times, from $87 to $99 per share, and that the stock that they received in exchange pursuant to the merger agreement would have realized about $90 and $111 on the same dates. Thus, the terms of the merger, as applied to the plaintiffs' class, were just and reasonable. Plaintiffs contended, however, that the exchange value of their shares amounted to $172.50 per share because the merger was a "liquidation" as a matter of Michigan law, and the Pere Marquette Charter provided that in the event of liquidation or dissolution, the preferred shareholders were entitled to receive full payment of par value plus all accrued unpaid dividends.

The ICC order approving the merger did not resolve the Michigan law question. The ICC considered the issue too insignificant to affect the validity of the entire transaction, and left the matter for resolution by negotiation or later litigation. On appeal from the District Court's judgment sustaining the ICC order, this Court held that the ICC's finding that the exchange value was just and reasonable foreclosed any other claim that the dissenting shareholders might assert concerning the value of their shares. Whatever Michigan law might provide for the preferred shareholders in the event of a winding-up or liquidation could not determine the just and reasonable value of shares in the continuing enterprise. The essence of the Court's holding is set forth in this passage:

"Since the federal law clearly contemplates merger as a     step in continuing the enterprise, it follows that what      Michigan law might give these dissenters on a windingup or      liquidation is irrelevant, except insofar as it may be      reflected in current values for which they are entitled to an      equivalent.  It would be inconsistent to allow state law to      apply a liquidation basis to what federal law designates as a      basis for continued public service. . ..

.   .    .    ..

"We therefore hold that no rights alleged to have been     granted to dissenting stockholders by state law provision      concerning liquidation survive the merger agreement approved      by the requisite number of stockholders and approved by the      Commission as just and reasonable.  Any such rights are, as a      matter of federal law, accorded recognition in the obligation      of the Commission not to approve any plan which is not just      and reasonable." Id., 334 U.S., at 200-201, 68 S.Ct., at     968.

It is true that the effect of the Schwabacher decision was to extinguish whatever contractual rights the dissenting shareholders possessed as a matter of Michigan law. But the Court did require the ICC, on remand, to consider whatever value the Michigan law claims might have in connection with its final conclusion that the merger plan was "just and reasonable." A fair reading of the entire opinion makes it clear that the holding was based more on the ICC's "complete control of the capital structure to result from a merger," id., at 195, 68 S.Ct., at 965, than on the exemption at issue in this case. Schwabacher cannot fairly be read as authorizing carriers to renounce private contracts that limit the benefits achievable through the merger. III

There is tension between the Court's interpretation of the exemption that is now codified in 49 U.S.C. § 11341(a) and the labor-protection conditions set forth in 49 U.S.C. § 11347. The latter section requires an ICC order approving a railroad merger to impose conditions that are "no less protective" of the employees than those established pursuant to the Rail Passenger Service Act, 84 Stat. 1337, as amended, 45 U.S.C. § 565. One of the conditions established by the Secretary of Labor under the latter Act was essentially the same as § 2 of the New York Dock conditions described by the Court, ante, at 120-121. As the Court notes, that condition provides that the benefits protected " 'under applicable laws and/or existing collective bargaining agreements . . . shall be preserved unless changed by future collective bargaining agreements.' " Ibid. (citation omitted). This provision unambiguously indicates that Congress intended and expected that collective-bargaining agreements would survive any ICC approved merger.

As I noted in my separate opinion in ICC v. Locomotive Engineers, 482 U.S. 270, 298, 107 S.Ct. 2360, 2376, 96 L.Ed.2d 222 (1987), the statutory immunity provision in § 11341 is self-executing and becomes effective at the time of the ICC approval. "The breadth of the exemption is defined by the scope of the approved transaction, and no explicit announcement of exemption is required to make the statute applicable." Ibid. (footnote omitted). In neither of the cases before the Court today did the ICC approval of the merger purport to modify or terminate any collective-bargaining agreement. The ICC approval orders were entered in 1980 and 1982 and contained no mention of either of the proposed transfers of personnel that are now at issue and about which the union was first notified several years after the ICC orders were entered.

I cannot subscribe to a late-blooming interpretation of a 71-year-old immunity statute that gives the Commission a roving power-exercisable years after a merger has been approved and consummated-to impair the obligations of private contracts that may "prevent the efficiencies of consolidation from being achieved." Ante, at 133. The Court's decision may represent a "better" policy choice than the one Congress actually made in 1920, cf. West Virginia University Hospitals, Inc. v. Casey, 499 U.S. 83, 100-101, 111 S.Ct. 1138, 1148, --- L.Ed.2d, (1991) but it is neither an accurate reading of the command that Congress issued in 1920, nor is it a just disposition of claims based on valid private contracts.

I respectfully dissent.