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Surface Transportation Board Backs Railroad’s Denial of Service during Labor Dispute

  • October 13, 2015

The Surface Transportation Board (STB) has denied a petition by a Texas metal producer that, if approved, would have forced the Union Pacific Railroad Co. (UP) to restore rail service at the producer’s plant in the midst of an employee lockout. The STB is an economic and adjudicatory body affiliated with the U.S. Department of Transportation and set up by Congress, in part, to resolve railroad rate and service disputes.

Stating that the demand for UP’s rail service “is not a reasonable request under the present circumstances,” the three-member Board unanimously concluded last month that UP’s denial did not violate its common carrier rail service obligation to the metal producer.

“UP has shown that it evaluated the potential effects of providing service, acted with due diligence to provide service, and proposed to mitigate its inability to serve,” said STB.

Four hundred fifty members of the United Steelworkers union were locked out on October 11, 2014 in a contract dispute. On November 6, 2014, UP suspended shipments to a production facility. Between the two dates, UP provided twice weekly service to permit alternative planning. Yet, the dispute continued.

Since the service suspension, the company had to use trucks, which are more expensive and less reliable than rail, the company said. Moreover, its facility was not designed to handle regular trucking of lime shipments. The company also asserted that it had made at least five offers of assistance to UP to ensure uninterrupted service, all of which UP rejected.
 
UP countered that it had warned that rail service using union-represented employees would not be practical if pickets were set up at the plant, because UP’s union employees have consistently refused to cross picket lines over concern for their personal safety. UP would not require its employees to work under conditions they believed unsafe, the railroad added. The rail firm also contended that requiring its union employees to cross picket lines would undermine relations with its own workers.

STB said that the presence of a picket line alone does not justify denial of service. Rather, based on past legal precedent, a host of factors must be considered. In reaching its decision, STB relied upon three criteria: (1) the potential impact on UP employee relations and service, (2) the nature of the dispute, and (3) UP’s efforts at due diligence, including exploring alternate transportation options.

©2015 Jackson Lewis P.C. This Update is provided for informational purposes only. It is not intended as legal advice nor does it create an attorney/client relationship between Jackson Lewis and any readers or recipients. Readers should consult counsel of their own choosing to discuss how these matters relate to their individual circumstances. Reproduction in whole or in part is prohibited without the express written consent of Jackson Lewis.

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