A record for litigation

Revealed on the Surface Transportation Board website recently was an appeal of a arbitration decision related to a decades old railroad merger.

In the late 60s, a group of Cleveland Union Terminal employees were furloughed and sought compensation under employee protective agreements as a result of the New York Central-Pennsylvania Railroad merger. The merged railroad, Penn Central, denied their claim, indicating that the layoffs were a result of economic conditions (i.e. the decline of passenger traffic that would eventually lead to the creation of Amtrak)

Although the Penn Central went bankrupt in the 70s, leading to the creation of Conrail, the claim was not discharged in the bankruptcy proceeding and was eventually sent to arbitration.

In the most recent decision, a three-panel board voted 2-1 in favor of the plaintiffs, granting additional damages for, in essence, 40 years of interest. The defendants are appealing to the STB, stating that one of the arbitrator was heavily biased.

I have to wonder: who’s going to pay the award if the appeal fails. The railroad was folded into Conrail, and Conrail itself was eventually divided up between Norfolk Southern and CSX. The corporation that held the railroad continued to own the non-rail assets and survived, eventually being purchased by American Financial Group… making AFG a third possible source of financing