Chicago’s Regional Transportation Authority and Union Pacific Have No Contract

Chicago’s Regional Transportation Authority operates, among other things, Merta, a regional transit system with eleven lines radiating from Chicago, including three lines of track owned by the Union Pacific Railroad Company (Union Pacific).  Metra owns the trains, but Union Pacific provides tracks and work force and handles tickets sales.  Revenue goes to Metra, which pays Union Pacific a fee for its services. 

Perhaps because that fee was not high enough, Union Pacific informed Metra that it wanted out.  Metra replied that only the Surface Transportation Board could relieve Union Pacific of its duty to provide services, but because of a legislative change from 1995, the Board no longer had any authority to do so.  As Mr. Burns explained:

Unsurprisingly, Union Pacific sees things differently.  It is prohibited from discontinuing lines, but it has no plans to do so.  It will continue to run freight on its lines.  And it is not a common carrier with respect to regional transport; Metra is.  The District Court granted a declaratory judgment in favor of Union Pacific.  

In Union Pacific Railroad Company v. Regional Transportation Authority, the Seventh Circuit, per Judge Easterbrook, affirmed.  Even if Union Pacific is a common carrier, in our post-1995 deregulatory world, no federal law prevents it from terminating its relationship with Merta.  

Of course, the parties could be bound by contract.  Judge Easterbrook (right) points out that federal law does not pre-empt the parties from engaging in private legislation governed by state law.  But Merta failed to make any contractual claims in the suit, and the trial court did not abuse its discretion in refusing to allow Merta to tardily amend its pleadings to allege contractual counterclaims.  Doing so would have been futile, as Judge Easterbrook entertainingly explains.  

The parties last contract dates from 2010.  It was extended at various times, most recently in 2017.  Merta points to a provision that provides that services can only be reduced or terminated in compliance with all applicable statutes and regulations.  That’s all well and good, but as already discussed, there are no relevant statutes or regulations.  Better still, the language limits the ability of Merta, not Union Pacific to terminate service. 

Merta’s reliance on language from older, superseded contracts is of no avail.  The opinion’s final paragraph is Judge Easterbrook at his decisive best: “Union Pacific is not bound by any contractual promise to keep providing rail services to Metra for the indefinite future. The parties’ contracts have start and end dates, which both sides can enforce.”  And now, as Judge Easterbrook notes, their legal positions having been firmly established, the parties can return to the negotiating table.