United States Court of Appeals For the Seventh Circuit No. 13876 SEPTEMBER TERM, 1962 SEPTEMBER SESSION, 1962 BROTHERHOOD OF LOCOMOTIVE V. THE BALTIMORE & OHIO RAILROAD Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. November 28, 1962 Before SCHNACKENBERG, CASTLE and SWYGERT, Circuit Judges. SCHNACKENBERG, Circuit Judge. A complaint was filed in the District Court by plaintiffs, Brotherhood of Locomotive Engineers, Brotherhood of Locomotive Firemen and Enginemen, Order of Railway Conductors and Brakemen, Brotherhood of Railroad Trainmen, and Switchmen's Union of North America, unincorporated labor organizations. It designated as defendants, The Baltimore & Ohio Railroad Company and fifteen other named railroad companies, described as representatives of a class of railroads. that is so numerous (more than 200) as to make it impracticable to bring them all before the court. The complaint sought a judgment declaring unlawful a July 17, 1962 Promulgation of Revision in Work Rules issued by defendants, with respect to defendants' operating employees represented by plaintiffs in collective bargaining duly authorized under the Railway Labor Act, 45 U.S.C.A. § 151, et seq. Each of the members of the class represented by defendants is a carrier as defined in § 1 of the Act.1 On August 6, 1962 at the conclusion of arguments on a motion of the Carriers to dismiss the complaint, they were permitted by the court and without objection from the Organizations, to withdraw their July 17, 1962 promulgation of rules changes. The Carriers then by letter issued a promulgation of rules changes dated August 6, 1962, which stated that the changes proposed by the Carriers in their notices served under § 6 of the Railway Labor Act (45 U.S.C.A. § 156) on November 2, 1959 would become effective August 16, 1962. The Organizations thereupon amended their complaint to seek similar relief against the later promulgation. On August 8, 1962, the court, after hearing arguments upon the Carriers' motion to dismiss, entered an order dismissing the amended complaint for failure to state a claim upon which relief could be granted and also denying a motion for a preliminary injunction based thereon. The Organizations appealed from that order and moved for an injunction pending appeal, under 28 U.S.C.A. Rule 62 (c). This injunction was granted on August 10, 1962. In our case No. 13855 we heard arguments on a motion of the Carriers to dissolve and vacate that injunction and on August 15, 1962 we denied the motion. We have this day disposed of that case. In case No. 13876 there was evidence tending to prove the facts which we now summarize.2 1 Plaintiffs are sometimes hereinafter referred to as the Organizations and defendants will at times be referred to as the Carriers. 2 The Organizations in a reply brief submit that, on this appeal, we should not consider certain factual matters appearing from evidence in the record, because they are irrelevant on this appeal. They do concede, however, that they do not question that we may consider such material if we choose. The criticism is directed at facts proved by the Carriers before the district court in connection with the Organizations' motion for injunction pending appeal hereinbefore referred to, supra. We do not deem it our duty to close our eyes to relevant facts actually appearing before us in the record. The mere occasion for their proof does not render them irrelevant. We hold that this evidence was relevant, not only on the question of the issuance of an injunction pending appeal. but also on the merits of the case stated in the complaint as amended. Both phases of the case involved the same general subject matter and the identical parties. Cf. United States v. Nudelman, 7 Cir., 104 F. 2d 549, 552; and also Wilson v. Calculagraph Co., 1 Cir., 153 Fed. 961, 962. This view is in harmony with the liberal provisions of Rule 12 (b) (6) and (c) of the Federal Rules of Civil Procedure, 28 U. S. C. A. Rule 12. By letter dated February 10, 1959, President Loomis of the Association of American Railroads invited the Organizations to join with the Carriers in seeking the creation of a presidential commission to investigate and make a report on rules about which the Carriers complained, and, more particularly, the impact of the existing rules on the public welfare. This proposal was rejected by the Organizations on June 4, 1959 in a letter to President Loomis. At the same time they addressed a letter to the Secretary of Labor of the United States, in which it was stated: "In the event that an effort is made by Mr. Loomis or the railroad representatives to induce President Eisenhower to appoint a board or commission to investigate what they term 'featherbedding of railroad employees', we hope that you will see fit to suggest to the President that such a board or commission should not be appointed; but that if any investigation is to be made, it should be made along the lines of the Report of Emergency Board No. 109 and take into consideration all phases of the industry, including managerial and financial practices, instead of singling out the operating employees exclusively."" Testimony at the trial supports the factual allegations in a letter by Mr. Loomis to the President of the United States, under date of August 17, 1959, from which we quote: "1. For more than 20 years, efforts have been made to negotiate changes in the light of the great technological improvements in the industry, but such efforts have produced no substantial or meaningful relief. "2. Continued existence of these rules imperils employment in the industry. In the last decade, an average of 1,000 jobs a week has been lost, and an even greater loss is inevitable if the rules are not modernized in keeping with mid-Century operating practice and competitive reality. "3. Need for a broad study of the wage and rules structure by a special Presidential Commission has been noted by numerous Presidential Emergency Boards, including Board No. 109, which you appointed in 1955. This Board stated clearly: "There is imperative need in this industry and specifically in the 3 The term "featherbedding” did not appear in Mr. Loomis' letter. operating classifications for a thoroughgoing review and modernization of the internal wage structures. Indeed, such a review and rationalization is long overdue.' That Board was immediately concerned with the question of wage differentials between classes of employees but its recommendation constitutes a clear recognition that a broad study of the operating wage and rules structure such as is now sought calls for the appointment of a special Presidential Commission. "5. The Interstate Commerce Commision, in its landmark report of May 18, 1959, on the railroad passenger deficit problem, called for a public review and revision of working rules for railroad employees. "6. A study now, in an atmosphere of calmness, can achieve far more effective results than fact-finding by the Presidential Emergency Board provided for by law if the issue threatens a transportation tie-up. As the current three-year moratorium on work-rule changes expires on October 31, 1959, it seems to us most urgent that action be taken in advance of possible crisis and while there is still time for rational decisions in the national interest. "7. Finally, and perhaps most important, drawing up sound new work standards for the railroad industry has become so complex and challenging that the machinery provided for settling ordinary disputes apyears hopelessly inadequate to cope with this task. Only a new, broader-based and determined approach has real hope of coming up with workable and fair solutions. "For all these primary reasons, Mr. President, railroad management appeals to you to appoint a commission clothed with the objectivity and prestige of your office to examine this problem from the standpoint of the public's interest, and to recommend steps to bring these rules into line with modern conditions to the benefit of all parties concerned." On August 24, 1959, the Organizations wrote to the President opposing his appointment of a Commission and urging a policy of non-government intervention. The President, by letter dated September 9, 1959, refused to appoint a commission. On November 2, 1959, the Carriers served on the repre sentatives of the Organizations, pursuant to the provisions of Section 6 of the Railway Labor Act, notices of intended changes in agreements affecting rates of pay, rules and working conditions, which proposed changes are now before this court. These proposed changes in existing agreements contemplate the following: 1. The elimination of existing rules and agreements requiring the use of firemen on other than steam locomotives when used in yard and freight service. 2. The revision of rules governing the basis of pay and the assignments of railroad operating employees used in through freight and straightaway passenger service. 3. The elimination of rules requiring the use of a stipulated number of trainmen in road train crews and a stipulated number of brakemen (helpers) in yard ground crews. 4. The elimination of rules requiring the use of operating employees on motor cars and self-propelled work machines used in inspection, construction, repair and inaintenance work, and 5. Various miscellaneous and minor other changes which are not material in these proceedings. The evidence in the record is to the effect that certain rules contained in existing agreements between the Carriers and their operating employees, during the year 1961, cost the railroad industry $592,062,000 in wage costs for unneeded employees occupying redundant positions, pay for time not worked, compensation that was not commensurate with the value of the services rendered, and the cost of owning and maintaining equipment and facilities that would not be required apart from the restrictions placed upon the efficiency and economy of operations by such rules. Following service of the Carriers' notices, the proposals therein contained were the subject of conferences on individual railroads, but no agreements were reached. On June 9, 1960, the Carriers requested concerted national handling of their proposals by national bargaining committees designated by the Carriers and the Organizations. Meetings of such national bargaining committees were begun on July 6, 1960, and extended through October 17, 1960. During such national conferences the Organizations contended that the ordinary processes of the Railway Labor Act were not suited to handling the Carriers' pro |