When city council members meet Monday night to discuss how to respond to efforts by Union Pacific Railroad to scrap its contract with the city, they should stay cool and avoid the “L” word. The railroad's departure would eliminate more than 60 local jobs now guaranteed by the 150-year-old contract.
However council members feel about the loss of jobs or Union Pacific, the city can't afford another bungled lawsuit.
Last March, the city lost a lawsuit filed by Lone Star Equipment and was ordered to pay the contractor a judgment of $500,000 for breach of contract. Legal fees cost the city another $100,000. Mayor Steve Presley said he had understood the case to be a “slam-dunk” for the city.
Over the past three years, Palestine also has wasted $300,000 in legal fees by pursuing an ill-advised lawsuit against local businessman Jerry “Lawnmower Man” Laza.
UP, which reported $1.4 billion in first-quarter income, has an endless supply of paper to burn on legal fees. In contrast, Palestine, with 19,000 residents, has reported a general fund reserve of only $2 million.
Union Pacific has already defeated several municipalities in similar lawsuits, largely due to the unmatched authority of the federal Surface Transportation Board. Regulating rail commerce, the STB gives railroads wide latitude to abandon unprofitable locales.
UP officials argue that they are, under the so-called Unified Plan 2020, streamlining operations in the public interest. The contract with Palestine, UP said, constricts the efficient operations of a federally regulated railroad.
To be sure, the city should hire a competent attorney and legal expert on the STB to advise council members on fighting Union Pacific in court. Such an attorney also could help the city develop an alternative exit strategy.
But it's a safe bet council members will be told legal action against Union Pacific is a reckless gamble. Nor should the city wait for that opinion before starting to negotiate a deal with Union Pacific.
Council members should attempt to secure a buyout covering one year of full salary for every laid-off local UP employee. That would give workers time to find another job, retrain for a career change, or slide into early retirement.
In addition, Union Pacific should offer a job elsewhere to those few Palestine families who want to continue working for Union Pacific. UP is building a $550-million facility in Robertson County, 75 miles southwest of Palestine.
The loss of Union Pacific jobs will cost the local economy $5 million a year, underscoring the city's need for living-wage jobs in a more diversified economy, as well as a better-trained workforce. For better or worse, the railroad is no longer part of the plan.
City leaders need to avoid a train wreck. That means cutting their losses, getting the best deal for workers, and laying tracks for a prosperous future without Union Pacific.