141 F3d 1179 Tu v. Santa Fe Pacific Corporation

141 F.3d 1179

Sieu Mei TU, Petitioner,
v.
Surface Transportation Board, Respondent,
SANTA FE PACIFIC CORPORATION, Respondent-Intervenor.

No. 97-70144.
Finance Docket No. 30400 (Sub-No. 21).

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 13, 1998.
Decided Mar. 11, 1998.

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

Petition for Review of an Order of The Surface Transportation Board.

Before SCHROEDER, FARRIS and TASHIMA, Circuit Judges.

1

MEMORANDUM*

2

Sieu Mei Tu seeks review of a decision by the Surface Transportation Board (STB or Board) declining to exercise its discretionary authority pursuant to 49 U.S.C. §§ 11344(c) (current § 11324(c)) and 11347 (current § 11326) to impose labor protective conditions for employees of a railroad company.1 The Board found that Santa Fe Southern Pacific Corporation (SFSP), a holding company, did not unlawfully control the railroad company, Southern Pacific Transportation Company (Southern Pacific), and held that Tu was not entitled to labor protective conditions because she had been laid off for legitimate business reasons. Tu appeals the Board's decision, as well as an Administrative Law Judge (ALJ) discovery order limiting Tu's discovery to documents relating to her employer, Pacific Fruit Express (PFE), a now-defunct subsidiary of Southern Pacific. We have jurisdiction pursuant to 28 U.S.C. §§ 2321 and 2342, and we affirm.

I. STANDARD OF REVIEW

3

Decisions of administrative agencies are set aside only if "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). "Review under the arbitrary and capricious standard is narrow, and the reviewing court may not substitute its judgment for that of the agency." Gumport v. AT & T Techs., Inc. (In re Transcon Lines), 89 F.3d 559, 563 (9th Cir.1996) (reviewing decision of ICC). The Board's factual findings are to be upheld if supported by substantial evidence. Id . at 564.

II. DISCUSSION2

A. ALJ Discovery Order

4

After unsuccessfully bringing suit for being furloughed from her employment with PFE, Tu joined STB proceedings being held to allow SPT employees as a class the opportunity to demonstrate that they were adversely affected by SFSP exercising control over Southern Pacific during a proposed merger with the Atchison, Topeka & Santa Fe Railway Company (Santa Fe). In the proceedings, the ALJ limited Tu's discovery from Southern Pacific to documents related to PFE.

5

Our review of the discovery order is extremely limited because "[t]he extent of discovery to which a party to an administrative proceeding is entitled is primarily determined by the particular agency." Pacific Gas and Elec. Co. v. FERC, 746 F.2d 1383, 1387 (9th Cir.1984). Administrative agencies thus "need not observe all the rules and formalities applicable to courtroom proceedings." Id. at 1387-88; see also Trailways Lines, Inc. v. ICC, 766 F.2d 1537, 1546 (D.C.Cir.1985) ("the conduct and extent of discovery in agency proceedings is a matter entrusted to the expert agency in the first instance").

6

The ALJ properly limited Tu's discovery to documents related to PFE because Tu's claim related to her furlough from her employment with PFE. Any document that would be relevant to her claim must by necessity relate to PFE somehow.

7

Tu asserts that she, not the railroads, should have been allowed to review the documents to determine which ones related to PFE. Tu apparently is making the unusual request that she should be permitted to look through the railroads' documents and choose which documents should be produced. It is up to the producing party to sort through and select documents in response to a discovery request. See 8A Charles Alan Wright et al., Federal Practice and Procedure § 2213 (2d ed.1994). The ALJ therefore properly ordered the railroads to produce the relevant documents, rather than allowing Tu to look through their files.

B. STB Decision

8

Tu argues that the Board decision should be set aside for three reasons: (1) The STB used an erroneous evidentiary standard; (2) The STB should have given preclusive effect to Kraus v. Santa Fe S. Pac. Corp., 878 F.2d 1193 (9th Cir.1989); and (3) The STB should not have allowed Southern Pacific to rely on a decline in business as a reason for laying off Tu.

1. Evidentiary Standard Used by STB

9

Tu contends that the STB improperly required her to show specific evidence of adverse effect resulting from SFSP actions that may have affected Southern Pacific's operations. Instead, Tu asserts that the Board should have required her only to show a "willingness on Southern Pacific's part to find ways to comply with the cost cutting desires of" SFSP. Id. at 1199.

10

The Board's continuing jurisdiction over the imposition of labor protective conditions was based solely on the existence of the voting trust established during the pending merger application. Thus, in order to impose conditions, the Board had to find that SFSP controlled Southern Pacific in violation of the voting trust's requirements. The Board's standard requiring specific evidence of adverse effect resulting from SFSP's alleged control of Southern Pacific, therefore, is not an abuse of discretion.

11

In addition, the standard proposed by Tu is inappropriate because it is based on this court's affirmation of a jury verdict against the railroad companies on a state law claim of tortious interference with contract. See id. As discussed below, the state law claim does not require a finding that SFSP controlled Southern Pacific. See id. The evidence sufficient to satisfy the state law claim therefore is not necessarily sufficient to find a violation of the voting trust. Thus, the evidentiary standard urged by Tu is inappropriate to this action.

2. Preclusive Effect of Kraus

12

Tu argues that the holding of Kraus collaterally estops the railroads from relitigating the issue of whether SFSP unlawfully controlled Southern Pacific. Tu relies on the conclusion in Kraus that a reasonable jury could find that Santa Fe and SFSP interfered in Southern Pacific's employment relationships in order to avoid the possible imposition of labor protective conditions. See id. Tu is incorrect, however, that collateral estoppel should apply.

13

In Kraus, two former employees of Southern Pacific had filed federal and state law claims against Santa Fe and SFSP after losing their jobs in the wake of the disapproved Santa Fe-Southern Pacific merger. The federal claim alleged that Santa Fe exerted unlawful control over Southern Pacific during the pending merger proceedings in violation of 49 U.S.C. § 11343(a). The other claim was brought under state law for tortious interference with economic relationships, alleging that Santa Fe and SFSP induced Southern Pacific to terminate the plaintiffs in order to avoid possible post-merger liabilities. We held that the district court lacked jurisdiction over the federal claim because the ICC, not the courts, had exclusive authority over mergers and acquisition of control of railroads. See id. at 1198. However, we upheld the jury verdict against the defendants on the state law claim, specifically stating that a violation of the federal merger provisions was not an essential element of the state law claim. See id. at 1199-1200 (the "defendants need not have 'controlled' Southern Pacific; they need only have wrongfully interfered with plaintiffs' economic relationships."). A finding that SFSP controlled Southern Pacific therefore was not necessary to uphold the jury verdict on the state law claim. Because collateral estoppel "precludes relitigation of issues actually litigated and necessary to the outcome of the first action," the doctrine does not apply. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n. 5, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979) (emphasis added).

3. Decline in Business

14

The STB concluded that the unions3 and Tu failed to establish that SFSP exerted unlawful control over Southern Pacific so as to affect Southern Pacific's labor policy. Southern Pacific put forth evidence that its decision to reabsorb PFE's operations was made for "independent business reasons" before merger communications with Santa Fe. See STB Decision at 18-19. The Board thus concluded that Tu's furlough was unrelated to the merger, meaning she was not entitled to employee protective conditions.

15

Tu contends that Southern Pacific was contractually bound not to lay her off due to a decline in business, citing Southern Pacific's collective bargaining agreement with the union. Unfortunately for Tu, this argument was rejected in the mandatory arbitration required by the collective bargaining agreement, and by this court in Tu's first lawsuit, see Tu v. Southern Pac. Transp. Co., Nos. 89-16186, 89-16292, 1992 WL 122666 at * 10 (9th Cir. Jun.1, 1992).

16

In Tu's first suit, the district court dismissed her wrongful termination claims for lack of jurisdiction, finding that these claims were subject to final and binding arbitration by the National Railroad Adjustment Board. See id. at * 1-* 2. We found that Tu's argument regarding the decline in business "essentially restate[d]" Tu's wrongful termination claim because it would require us to again interpret the collective bargaining agreement, something which had already been done in the mandatory arbitration. Id. at * 10. Because Tu had not appealed the dismissal of the claims, and especially because the claims were subject to mandatory arbitration, we upheld the district court's grant of summary judgment to Southern Pacific and PFE. See id. at * 10-* 11.

17

In applying res judicata or collateral estoppel to an arbitration decision, we examine the record to determine whether "a rational factfinder could have reached a conclusion based upon an issue other than that which the defendant seeks to foreclose." Clark v. Bear Stearns & Co., 966 F.2d 1318, 1321 (9th Cir.1992). The arbitrator found that PFE did not violate the collective bargaining agreement when it laid off Tu and other employees, relying in part on PFE's "significant evidence with respect to its decline in business." Arbitration Opinion and Award at 6-8 (finding that PFE did not violate agreement with union). PFE's reliance on a decline in business as a reason for the layoffs was necessary to the arbitrator's decision. Tu's argument, therefore, has already been rejected both in the mandatory arbitration interpreting the collective bargaining agreement and by this court and cannot be relitigated here.

18

Further, the decision of the STB, as an administrative agency, is entitled to a high degree of deference and is to be set aside only if arbitrary, capricious, or an abuse of discretion. See In re Transcon Lines, 89 F.3d at 563. The decision was thorough and well-reasoned, and rationally based on an examination of the evidence produced by the parties. Tu has presented no evidence and raised no new arguments to show that the decision was an abuse of discretion.

19

Petition for review DENIED.

*

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit, except as provided by Ninth Cir. R. 36-3

1

The ICC Termination Act of 1995, Pub.L. No. 104-88, (ICCTA) abolished the Interstate Commerce Commission (ICC) and established the STB in its place, effective January 1, 1996. However, the ICCTA's saving provision, § 204(b)(1), provided that proceedings pending before the ICC on the ICCTA's effective date were to be decided under the former law. Citations therefore are to the former sections of the statute

2

The long history and complicated facts of this case are known to the parties and are not repeated here, except as necessary to understand this disposition

3

The STB proceedings Tu joined were originally between, on one side, the union to which Tu belonged and another union, and, on the other, Southern Pacific and SFSP