George Kraus and Antonio Aleman v. Santa Fe Southern Pacific Corporation, and the Atchison, Topeka and Santa Fe Railway

INTRODUCTION

This is an appeal from a damage action that arose from the plaintiffs’ employment termination by their employer, the Southern Pacific Transportation Company (Southern Pacific). The case arises in the historical context of a proposed merger, never consummated, between the Southern Pacific Railroad and the Atcheson, Topeka and Santa Fe Railway (Santa Fe). Plaintiffs won a substantial jury award of both compensatory and punitive damages on two independent theories, one under state law and the other under federal law.

The state law theory was asserted against both the Santa Fe Railway and the holding company formed in contemplation of the merger, Santa Fe Southern Pacific Corporation (SFSP). That claim was brought under Oregon state law of tortious interference with economic relationships. Plaintiffs’ factual contention, which the jury accepted, was that Santa Fe had induced the plaintiffs’ employer to terminate plaintiffs in order to avoid possible post-merger liabilities which might have been imposed by the Interstate Commerce Commission (ICC).

Plaintiffs’ other and more novel theory was a federal claim, asserted only against the Santa Fe Railway. That claim was that…