PALESTINE, Texas — Union Pacific has filed suit to overturn a contract dating to 1872 that guarantees a certain number of jobs in Palestine, an east Texas community of 18,136 located 110 miles southwest of Dallas.
The Palestine Herald-Press reports the suit, filed on Nov. 27, contends the contract should have been invalidated by a number of prior events, including the creation of the Surface Transportation Board as a federal regulatory agency and the 1997 merger of the Missouri Pacific Railroad into the UP.
Palestine Mayor Steve Presley indicated a desire to fight the suit. “The city council will decide the best course of action, once we have a chance to discuss the lawsuit,” Presley told the newspaper. “Personally, I will do everything within my power to keep all jobs possible here in Palestine.”
At risk are more than 60 jobs paying an average of $65,000 per year. The current version of the contract requires the railroad to retain 0.52% of its national workforce of more than 36,000 in Palestine. But Union Pacific recently eliminated 30 of almost 100 local positions, the newspaper reports, after contesting how the contract defined “local jobs.”
Spokeswoman Rachel Espinoza told the paper the contract limits the railroad’s flexibility with its freight car repair shop and “keeps us from implementing modern railroad practices.”
The Associated Press reports the agreement dates to two predecessor railroads, the International Railroad and Houston & Great Northern, which promised to keep operations in Palestine forever. Those railroads merged in 1873 and eventually became part of the Missouri Pacific.
Ref week ago Anna Harding: “Don’t read too much into this. This is all bluster, posturing and opening salvos and pretty normal stuff.”
Ref 5 days ago John Pinckney: “In this case, I’m sure if the attorneys for U.P. meet with the attorney for the town, an “amicable settlement” will be reached. From what I saw in a decade of political activity, every politician has their price. Yes, some are “Neiman-Marcus” while few are “Dollar Tree”…
Ref 5 days ago Todd Liebman: two real good comments
Ref last week Chris Thompson: Best of all, “ I’ll bet UP has over the years dug up ancient contracts or laws that they use to get what they want. “…….. and “A contract no matter how old should be honored.”
My observation, “contracts can be “”bought””, college coaches do it all the time.
I will leave, BUT, ya gotta give me much moola to cancel our previous contract………
1. Standby: we shall see if Palestine fairs well as some coaches do.
2. I left a comment about a mayor of a city dealing w/UP, it was posted and then removed. Just wondering what I said wrong?
Wow, what a sweet deal for Palestine! Can you imagine the possibilities for every city and town traversed by a railroad? Why, the industry could hire one or two million more people and reduce unemployment everywhere. Yeah, that’s the ticket!
There needs to be a time limit on any contract like that, especially if it was drawn up more as a way to get support from a community that perhaps wasn’t wholly in favor of the railroad in the first place. It had to have been a promise made as part of a negotiation. They couldn’t have been serious about tying the railroad’s hands 150 years later. What if the town had made a similar deal with an industry that went out of business, say a wagon wheel maker? Would it’s heirs be required to pay an arbitrary number of people a high salary in perpetuity?
From a business standpoint, that provision is just insane and hopefully the courts will agree.
In probably every marriage, there’s always a crazy relative that your spouse-to-be didn’t tell you about on their side until after you’ve said “Je veux, avec l’assistance de Dieu” in front of God, the preacher, the family (with the father of the bride holding a 12-gauge, just-in-case of the groom having cold feet), assorted friends, and crashers.
As a now-retired businessman, I get the feeling that someone at U.P. didn’t do their “due diligence” before the merger was “consummated”. (And, it’s called that often with good reason!)
In this case, I’m sure if the attorneys for U.P. meet with the attorney for the town, an “amicable settlement” will be reached. From what I saw in a decade of political activity, every politician has their price. Yes, some are “Neiman-Marcus” while few are “Dollar Tree”…
The city has a city attorney that works for a set salary whether he’s working on this or something else. In the law, frequently the biggest firms fall to the little guy. It’s the beauty of our legal system. A case that will cost UP hundreds of thousands can cost the city a fraction of that. The city is not without recourse.
It’s a contract, and contracts don’t contain escape clauses that allow a party to get out just because they believe they can run their business more profitably another way. That would invalidate all contracts on a unilateral whim. As a lawyer, I can tell you that all contracts have consideration in order to be lawful contracts. That means Palestine gave these railroads something of value. The article doesn’t tell us what that is. Those predecessor lines and UP have had the benefit of that bargain for a long time. Now, UP wants to walk away. Not so fast if I’m the judge.
“Uncle Pete” has deep pockets – they will drag this thing out until the city gives up and stop fighting the suit. As much as I hate to say this, I just don’t see where the city will persevere in this suit. If UP wants to eliminate jobs, they will find a way to do it.
While there’s no doubt it was a short-sighted contract for MoPac to enter, the facts listed here make this different than some of the precedent cases mentioned below. The contract specifically addressed jobs, as opposed to providing land under the assumption it would be used for a certain purpose.
I don’t see how either of UP’s arguments make sense. It’s well established that mergers do not invalidate contracts. Nor should the creation of a new regulatory body, if that were the case virtually no contract would be enforceable.
As others mentioned i’m sure it’ll be settled. I don’t think the city will want to be “anti business.”
Could it be argued that the replacement of steam with diesels was an unanticipated event? And further the replacement of horse and wagon on dirt roads, with 40 ton rubber tyres diesel engines trucks on publicly maintained paved roads was also unanticipated?
This wouldn’t even be an issue with competent industries which grow in a healthy economy.
Palestine, Texas is SOUTHEAST of Dallas.
Funny, given UP and other railroads propensity to enforce contract terms, even when they were violated due to railroad actions.
Where’s our resident lawyer on this? ????????
Can’t say I blame them for wanting to keep jobs in the area.
Changing technology and demographics and mergers do not void contracts.
Buy lawyers do . . . and UP has them . . .
Palestine, Texas is actually southeast of Dallas. The city is 151 railway miles due north from Houston.
Changing technology and demographics along with multiple mergers to become part of Union Pacific should void the contract made between the City of Palestine and the original predecessor railway.
Palestine is the junction where the former Missouri Pacific mainline from St Louis divides for Houston and San Antonio (and beyond to Laredo). Missouri Pacific’s original streamlined Texas Eagle combined and separated here for Houston and San Antonio.
As most railroads have gone bankrupt at one time or another most contracts from back then would be mooted
Let’s look at it with the shoe on the other foot. I’ll bet UP has over the years dug up ancient contracts or laws that they use to get what they want. The fact is a contract was signed and it looks like there was no sunset clause. When UP and SP/MP merged the good bad and ugly came with it. This was the good for the town and the bad for UP. They make millions in profits every year. And as such should not be allowed to walk away without fulfilling their contractual obligation as long as they are financially able to do so. A contract no matter how old should be honored.
On one level, this is amusing, Can anyone think of another industry that get embroiled in court over a contract signed 147 years ago? Looking forward to the time of my great, great, great, etc., etc. grandchildren, there are numerous 999 year leases that will be expiring. Very important to keep lawyers employed.
The City of Palestine, Texas may go to court if they wish. The City of Palestine may spend a lot of money for nothing like the City of Burlington, Iowa did.
“The railroad, in a counterclaim, alleged the city breached a 1985 agreement, which BNSF contended superseded the 1858 contract. The 1985 pact stipulates the railroad could use the property indefinitely, as long as it was for railroad purposes, but states nothing about BNSF having to maintain its principal shops in the city.
The city wanted Wolle to order BNSF to pay a single $1.34 million lump sum rent payment to Burlington, but Wolle found the city’s claim was “without merit” and ruled to dismiss the suit.”
https://www.thehawkeye.com/article/20121031/NEWS/310319846
Andrew,I don’t think that UP ever stated that they would no longer provide service to Palestine and in all probability there will always be some railroad jobs there due to Palestine’s location on the UP. What they are opposing are antiquated rules that impede their ability to run their business in the most profitable way possible. There are many railroad jobs that are no longer necessary and like any business,they should be able to decide what jobs are no longer needed. I don’t believe that any “local trucking” firm would ever sign an agreement like the one that UP is now opposing.
Change to local trucking if UP leaves.
Be careful what you wish for. The city is in over their heads – they’d be wise to accept a reasonable settlement, but they’ll wind up with a hefty lawyer’s bill and nothing to show for it other than UP’s resolve to never drop a dollar in the town again.
Don’t read too much into this. This is all bluster, posturing and opening salvos and pretty normal stuff. Unless someone one either side is really heisenberg there will be a negotiated settlement.
The above comments are genetic in nature and do not form the basis for an attorney/client relationship. They do not constitute legal advice. I am not your attorney. Marge is the head vampire.
One issue.. Are there any provisions in the contract that include mergers and future acquisitions of the International RR, and Houston and Great Northern? We’ll see in court if the International RR and H&GN had foresight provisions in their contract with the city of Palestine, TX..
Falls City, Neb., and Parsons, Kan., also took legal action–unsuccessfully–to enforce similar provisions. In Falls City’s case it was land given to the Missouri Pacific in early 1900s to establish a division headquarters there, moved out in the 1960s.