Union Pacific

The federal court has ordered Union Pacific and the city of Palestine to enter into mediation.

Federal courts have ordered Union Pacific and the City of Palestine to find a mediator by April to negotiate a compromise between the two sides. Such an agreement could avert a lengthy and costly trial over UP's suit to scrap its 150-year-old contract with the city and county and remove 65 local employees.

Under the court order, both parties have until August to find middle ground. They then have until January – 28 days before a potential trial – to settle the matter.

State and federal courts require litigants to enter into mediation. “We'll follow the rules of the court and mediate, but we still intend to win,” Palestine Mayor Steve Presley told the Herald-Press. “Mediation is not giving up – it's just something the court requires.”

Union Pacific's case against Palestine and Anderson County is still scheduled to be heard in federal court next February – if a compromise is not reached before then.

At issue, if mediation talks fail, is whether federal or district court should decide the case. Attorney James Allison, of Allison, Bass & Magee, the Austin law firm representing the city and county, wants the trial moved out of federal court.

UP lawyers want the case to remain in federal court because, they argue, federal law pre-empts a 1954 contract that validates the railroad's current agreement with the city and county. Attorneys for the city argue UP has no legal standing to contest the 1954 agreement.

Union Pacific maintains it is based in Nebraska, thereby requiring federal court to hear the case. Palestine claims the company also has a home base in Houston, in which case district court would preside.

In November, Union Pacific filed suit in federal court to scrap its contract with the city.

The contract stipulates that Union Pacific will retain a facility and certain number of employees in Palestine – currently set at 65.

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