Texas court sides with Union Pacific over 1872 jobs pact with town

Union Pacific sued the city of Palestine, Texas, in 2019 to nullify a 152-year-old contract to keep a certain number of jobs in the town indefinitely. (Photo: Jim Allen/FreightWaves)

A Texas appeals court recently declared an 1872 jobs agreement between Palestine, Texas, and Union Pacific to be unenforceable.

The ruling moves Union Pacific (NYSE: UNP) a step closer to its goal of closing a rail car shop in the east Texas town of 18,000.

The 12th Court of Appeals in Tyler, Texas, issued the ruling on Feb. 22, finding that the agreement requiring Union Pacific to maintain a set number of jobs in Palestine — a pact that was signed in 1872 and updated in 1954 — places restraints on Union Pacific regarding interstate commerce, which is not permitted under federal law.

“It is ordered … by this court that the judgment be reversed and judgment rendered granting Union Pacific’s motion for summary judgment and motion to vacate the 1955 Judgment and July 2021 injunction,” according to the decision from the 12th Court of Appeals.

Union Pacific has made several legal attempts to modify or end the agreement over the years. In 1955, a Texas court ruled the railway giant was required to maintain jobs in Palestine. Union Pacific sued Palestine in 2019, again attempting to nullify the contract to keep 65 jobs in the town indefinitely.

Union Pacific is based in Omaha, Nebraska. The company has more than 33,000 employees across the country. In 2023, Union Pacific had revenue of $24.1 billion, a 3% year-over-year decline compared to 2022.

Palestine is roughly equidistant from Dallas, Houston and Shreveport, Louisiana.

Harris Lohmeyer, a retired Union Pacific employee who has led fundraising efforts to continue the court case, told the Palestine-Herald Press that lawyers for Anderson County would request a rehearing and possibly a review by the state Supreme Court.

“Under the Texas Civil Practices and Remedies Code, this opinion and judgment are automatically stayed, pending further appeals. This means that the required employment positions at Palestine will remain in place until all appeals are completed,” Lohmeyer told the newspaper. “This is a David versus Goliath scenario. Twice before, we lost all the way until the last rulings, where we came out on top. All we can hope for is the best outcome for the employees.”

The 152-year-old agreement between Union Pacific and Palestine dates back to the days when the city was at the crossroads of several railroad companies that promised to keep jobs there indefinitely, according to Union Pacific.

“The Palestine Car Shop is one of only two car shops on the Union Pacific Railroad that perform heavy modifications and repairs to freight cars,” the company said on its website. “The Palestine workforce of more than 100 employees has earned a reputation for safely and efficiently delivering quality work to their customers.”

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