Railroad Concrete Crosstie Corp. v. Railroad Retirement Bd., 82-5672

• Decision Date: 18 July 1983
• Docket Number: No. 82-5672,82-5672
• Parties: RAILROAD CONCRETE CROSSTIE CORPORATION, Petitioner, v. RAILROAD RETIREMENT BOARD, Respondent.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1404

709 F.2d 1404

RAILROAD CONCRETE CROSSTIE CORPORATION, Petitioner, v. RAILROAD RETIREMENT BOARD, Respondent.

No. 82-5672.

United States Court of Appeals,

Eleventh Circuit.

July 18, 1983.

Neill & Mullenholz, John Mullenholz, Washington, D.C., for petitioner.

Dale G. Zimmerman, Gen. Counsel, Thomas W. Sadler, Bur. of Law, R.R Retirement Bd., Chicago, Ill., for respondent.

Petition for Review of an Order of The Railroad Retirement Board.

Before JOHNSON and ANDERSON, Circuit Judges, and COLEMAN ^*, Senior Circuit Judge.

JOHNSON, Circuit Judge:

Railroad Concrete Crosstie Corporation ["Railroad Concrete"] appeals from a determination made by the Railroad Retirement Board ["the Board"] that it is an employer under the Railroad Retirement Act of 1974, 45 U.S.C.A. Sec. 231 et seq. ¹ , and the Railroad Unemployment Insurance Act, 45 U.S.C.A. Sec. 351 et seq. ["RRA" and "RUIA" or "the Acts"]. On direct appeal to this Court under 45 U.S.C.A. Secs. 231g and 355(f), ² we affirm.

The General Counsel of the Board issued a determination, General Counsel opinion L79-76, that Railroad Concrete was an employer under the Acts. The determination applied retroactively to Railroad Concrete's date of incorporation, September 30, 1971. General Counsel reaffirmed its decision, General Counsel opinion L79-184, and an appeal to the Board followed. The Board summarily affirmed the General Counsel's decision, with one member dissenting.

I. The Relationship of Railroad Concrete and Florida East Coast Railway Company

The facts in this case were stipulated. Railroad Concrete is a wholly owned subsidiary of the Florida East Coast Railway Company ["Florida East Coast"]. Florida East Coast is a class I railroad engaged in the transportation of freight by rail. In 1964 Florida East Coast decided to install concrete ties on its tracks. It began purchasing the ties from American Concrete Crosstie Corporation ["American Concrete"]. Later, it also entered into a contract to purchase ties from Maule Industries. Eventually, American Concrete leased property from Florida East Coast and built a manufacturing plant on the leased property which was adjacent to Florida East Coast's mainline track south of Jacksonville, Florida.

On September 30, 1971, Florida East Coast formed Railroad Concrete. Railroad Concrete purchased American Concrete's plant and machinery at the Jacksonville site. Railroad Concrete leases the property upon which the plant is situated from Florida East Coast. Railroad Concrete hired some of the personnel who had been employed by American Concrete. The manager of Railroad Concrete's manufacturing plant is the only employee of Florida East Coast who was hired by Railroad Concrete. He was retained as a Florida East Coast employee in order to maintain his seniority with the railroad.

All equipment used by Railroad Concrete is owned by it except one three quarter ton pick-up truck. Equipment is maintained by outside contractors with the exception of trucks which are maintained by Florida East Coast Highway Dispatch Company, another subsidiary of Florida East Coast. The charges for maintenance are billed to Railroad Concrete. All materials used in the manufacturing process are paid for by Railroad Concrete. However, Railroad Concrete can use the Florida East Coast stores whenever necessary; it is billed for the items it purchases. In addition, Florida East Coast welds the steel frames used in Railroad Concrete's manufacturing process and sells them to Railroad Concrete. Both accounting and personnel records are maintained for Railroad Concrete by the Florida East Coast accounting department; Railroad Concrete pays for these services. Insurance claims are also handled for Railroad Concrete by a Florida East Coast clerk. Railroad Concrete's employees do not generally perform work for Florida East Coast but do perform activities on an occasional emergency basis.

Since its inception, Railroad Concrete has principally manufactured concrete crossties. It conducts all of its operations at the Jacksonville plant. Although Railroad Concrete sells some of its ties to third parties, approximately 90% of its output is sold to Florida East Coast. The price of the ties includes a profit for Railroad Concrete.

II. Review of the Board's Decision

The standard of review in this circuit is that the Board must be affirmed "if its finding of fact is supported by substantial evidence and its decision is not based on an error of law." Kurka v. United States Railroad Retirement Board, 615 F.2d 246, 249-50 (5th Cir.1980). Railroad Concrete contends that a remand is necessary in this case because the Board failed to make specific findings in its opinion. ³ The Board summarily affirmed the General Counsel's decision, by holding that "Railroad Concrete Crosstie Corporation is an employer within the meaning of the two acts." The General Counsel's decision, in turn, relied on the statutory section in each Act defining "employer," the regulation interpreting a crucial phrase in the employer definition, and a case interpreting the employer definition under the Acts, Southern Development Company v. Railroad Retirement Board, 243 F.2d 351 (8th Cir.1957). Although in our view a better practice is "that an agency sufficiently explain the basis for its decision and articulate the standards and rationale used...." McHenry v. Bond, 668 F.2d 1185, 1192 (11th Cir.1982), we conclude that a remand is unnecessary in this case because the facts were stipulated and the General Counsel stated the reasons for its ruling in its two opinions. One of the chief reasons for requiring reasoned explanations of agency decisions is to inform the aggrieved party of the reasons for the agency action to assist him in determining whether, and on what grounds, to seek judicial review. In this case the filing of the twenty-five page dissent by one member of the Board partially serves that function and further militates against a finding of prejudice to Railroad Concrete.

III. The Plain Meaning of the Statute

In determining the meaning of a statute, a court looks first to its language. Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 314, 62 L.Ed.2d 199 (1979). The definitions of "employer" under the RRA, 45 U.S.C.A. Sec. 231(a)(1), and the RUIA, 45 U.S.C.A. Sec. 351(a), are substantially similar. An employer is defined, in pertinent part, as:

(i) any express company, sleeping car company, and carrier by railroad, subject to part I of the Interstate Commerce Act [49 U.S.C.A. Sec. 1 et seq.];

(ii) any company which is directly or indirectly owned or controlled by, or under common control with, one or more employers as defined in paragraph (i) of this subdivision, and which operates any equipment or facility or performs any service (except trucking service, casual service, and the casual operation of equipment or facilities) in connection with the transportation of passengers or property by railroad, or the receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, or handling of property transported by railroad;

45 U.S.C.A. Sec. 231(a)(1). Railroad Concrete is not a carrier by railroad and so is not an employer under 45 U.S.C.A. Sec. 231(a)(1)(i). However, Railroad Concrete has conceded that it is controlled by Florida East Coast, a carrier, and therefore meets the first prerequisite of 45 U.S.C.A. Sec. 231(a)(1)(ii). Railroad Concrete, nevertheless, contends that it is not an employer under the Acts because it does not "perform any service ... in connection with the transportation of passengers or property by railroad." The phrase "service or operation in connection with railroad transportation" is defined in 20 C.F.R. Sec. 202.7:

The service rendered or the operation of equipment or facilities by persons or companies owned or controlled by or under common control with a carrier is in connection with the transportation of passengers or property by railroad, or the receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, or handling of property transported by railroad, if such service or operation is reasonably directly related, functionally or economically, to the performance of obligations which a company or person or companies or persons have undertaken as a common carrier by railroad, or to the receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, or handling of property transported by railroad.

(Emphasis added.)

Railroad Concrete argues that the manufacture of crossties cannot be construed as a "service." Although Webster defines "service" as "useful labor that does not produce a tangible commodity," and a concrete crosstie is a tangible commodity, it is the provision of the crossties by Railroad Concrete to Florida East Coast which constitutes the "service." It is undisputed that the vast majority of Railroad Concrete's output is sold to Florida East Coast. The provision of a steady, dependable supply of an essential item is a service. Indeed, if the provision of crossties was not a much needed service, it is difficult to understand why Florida East Coast would have gone to the trouble and expense of acquiring a subsidiary to provide crossties and why Florida East Coast assists the operations of Railroad Concrete in numerous ways.

The conclusion that the provision of crossties by Railroad Concrete to Florida East Coast constitutes a "service ... in connection with the transportation of passengers or property by railroad" is also premised on the essential nature of the product to the functioning of the railroad. The only other product that is as integral to the operation of a railroad is the rolling stock itself. Railroad Concrete's provision of concrete crossties is clearly related both "functionally [and] economically," 20 C.F.R. Sec. 202.7, to Florida East Coast's obligations as a carrier. Although the decision of the Board could be affirmed simply by considering the...