Norfolk S. Ry. Co. v. Williams, 2160823
| Decision Date | 15 June 2018 |
| Docket Number | 2160823 |
| Citation | 287 So.3d 336 |
| Parties | NORFOLK SOUTHERN RAILWAY COMPANY v. Nashanta L. WILLIAMS |
| Court | Alabama Court of Civil Appeals |
Steve A. Tucker and John M. Graham of Cabaniss, Johnston, Gardner, Dumas & O'Neal LLP, Birmingham, for appellant.
Michael D. Blalock of Blalock & Blalock, P.C., Birmingham, for appellee.
David A. Hubbert, acting asst. atty. gen., and Francesca Ugolini and Marion E.M. Erickson, attys., Tax Division, Department of Justice, for amicus curiae United States Department of Justice, Tax Division, in support of the appellant.
Norfolk Southern Railway Company ("Norfolk Southern") appeals from a judgment ("the Rule 60(b)(5) judgment") of the Jefferson Circuit Court ("the trial court") insofar as that judgment denied a Rule 60(b)(5), Ala. R. Civ. P., motion ("the Rule 60(b)(5) motion") seeking a determination as to the amount it needed to pay to satisfy a judgment in favor of Nashanta L. Williams ("the underlying judgment") in an action Williams had brought against Norfolk Southern pursuant to the Federal Employers Liability Act ("FELA"), 45 U.S.C. § 51 et seq.1 In pertinent part, the Rule 60(b)(5) judgment ruled that the so-called "personal-injury exclusion" contained in 26 U.S.C. § 104(a)(2)2 ("the personal-injury exclusion") excluded the damages awarded to Williams in her FELA action from taxation under the Railroad Retirement Tax Act ("the RRTA"), 26 U.S.C. § 3201 et seq., which imposes employment taxes on the compensation of railroad employees, and that, therefore, Norfolk Southern was not entitled to deduct RRTA employment taxes from the amount necessary to satisfy the underlying judgment. Because we conclude that the trial court erred in ruling that the damages awarded to Williams in the underlying judgment were not subject to the employment taxes imposed by the RRTA, we reverse and remand.
In April 2014, Williams, an employee of Norfolk Southern, brought a FELA action against Norfolk Southern, alleging that she had been injured on the job, that Norfolk Southern was liable for her injuries pursuant to FELA, and that she was entitled to damages for, among other things, past and future lost wages. The action was tried before a jury, and Williams introduced evidence in support of her claims for past and future lost wages as well as her other claims for damages. The trial court subsequently charged the jury regarding Williams's claims for past and future lost wages as well as her other claims for damages. In March 2017, the jury returned a general verdict finding in favor of Williams and awarding her damages in the amount of $360,488. Being a general verdict, the verdict did not indicate how much, if any, of the $360,488 the jury had awarded for past and future lost wages. However, Williams concedes that the $360,488 included an unspecified amount of damages for lost wages. The trial court entered the underlying judgment on the jury's verdict. Neither party appealed from the underlying judgment.
In April 2017, Norfolk Southern tendered to the clerk of the trial court a sum to satisfy the underlying judgment; that sum reflected a deduction of $19,188.37, which Norfolk Southern contended it was required by the RRTA to withhold as Williams's share of the employment taxes imposed by that act on the $360,488 awarded to her in the underlying judgment. Norfolk Southern further contended that, because it was required by the RRTA to withhold that $19,188.37 and to pay it to the Internal Revenue Service ("the IRS"), it was entitled to deduct $19,188.37 from the amount necessary to satisfy the underlying judgment. The clerk of the trial court refused to accept the sum tendered by Norfolk Southern because it was less than $360,488. Norfolk Southern then filed the Rule 60(b)(5) motion in which it alleged, among other things, that, because the $360,488 awarded to Williams included an unspecified amount of damages for lost wages, the RRTA required Norfolk Southern to withhold from the amount paid to satisfy the underlying judgment $19,188.37, which represented Williams's share of the employment taxes imposed by the RRTA on the $360,488 awarded to her, and to pay that $19,188.37 to the IRS. Norfolk Southern further alleged that, because the RRTA required it to withhold that amount and to pay it to the IRS, Norfolk Southern was entitled to deduct $19,188.37 from the amount necessary to satisfy the underlying judgment. Opposing the Rule 60(b)(5) motion insofar as it asserted that the $360,488 awarded to her was subject to taxation under the RRTA, Williams asserted that, although an unspecified amount of the $360,488 was for lost wages, none of the $360,488 was subject to taxation under the RRTA because, Williams said, the damages awarded her for lost wages as well as the rest of the $360,488 had been awarded to her on account of her personal injuries and, therefore, the entire $360,488 was excluded from taxation under the RRTA by the personal-injury exclusion.
The trial court held a hearing regarding the Rule 60(b)(5) motion and, thereafter, entered the Rule 60(b)(5) judgment. In pertinent part, that judgment stated: "As to the issue concerning whether the [RRTA] and/or the [IRS] ... requires that RRTA withholdings are to be deducted from [Williams's] general verdict, the court finds it does not based upon the personal injury exclusion." Norfolk Southern timely appealed from the Rule 60(b)(5) judgment to our supreme court, which transferred the appeal to this court, pursuant to § 12–2–7(6), Ala. Code 1975.
Norfolk Southern asserts that the RRTA imposes employment taxes on "compensation" received by railroad employees; that, although the definition of "compensation" in the RRTA does not specifically include pay received for time lost or damages awarded for lost wages in a personal-injury action, the RRTA is in pari materia with the Railroad Retirement Act ("the RRA"), 45 U.S.C. § 231 et seq., because the moneys collected pursuant to the RRTA fund the benefits available to railroad employees pursuant to the RRA; that the definition of "compensation" in the RRA does specifically include pay for time lost and provides that a railroad employee shall be deemed to receive pay for time lost when he or she receives payment for a period of absence from the active service of the employer on account of personal injury; that, because the RRTA and RRA are in pari materia, the definition of "compensation" in the RRTA must be interpreted consistently with the definition of "compensation" in the RRA; and that, therefore, the damages for lost wages awarded to Williams in the underlying judgment constitute "compensation" taxable under the RRTA. Norfolk Southern further asserts that applicable Treasury Regulations and statements of policy by the Railroad Retirement Board ("the RRB") support interpreting the definition of "compensation" under the RRTA as including damages awarded for lost wages in a personal-injury action. In addition, Norfolk Southern asserts that, under the RRA, if a payment is made by a railroad employer with respect to a personal injury suffered by a railroad employee and that payment includes pay for time lost, the total payment must be treated as being for time lost unless specifically apportioned to types of damages other than time lost and, therefore, must be treated as "compensation" under the RRA. Norfolk Southern asserts that, because the RRTA and the RRA are in pari materia, the treatment of such a payment under the RRTA should be consistent with its treatment under the RRA and that, therefore, because the general verdict in favor of Williams awarded her an unspecified amount of damages for lost wages and did not apportion any of the $360,488 awarded to her to types of damages other than lost wages, the entire $360,488 awarded to Williams should be treated as "compensation" under the RRTA and taxed under that act. Norfolk Southern further contends that the personal-injury exclusion does not apply to employment taxes imposed by the RRTA. Finally, Norfolk Southern asserts that, because the entire $360,488 should be treated as "compensation" under the RRTA, it must withhold $19,188.37 of that amount as Williams's share of the RRTA taxes on the $360,488 and pay that $19,188.37 to the IRS and that, therefore, it is entitled to deduct $19,188.37 from the amount necessary to satisfy the underlying judgment. The United States has filed an amicus curiae brief in which, in substance, it makes the same arguments as Norfolk Southern.
Williams asserts that the personal-injury exclusion does indeed apply to employment taxes imposed by the RRTA and that, therefore, none of the $360,488 awarded to her is subject to taxation under the RRTA because, she says, the entire $360,488, including the unspecified amount of damages for lost wages, was awarded to her "on account of personal physical injuries," 26 U.S.C. § 104(a)(2). In the alternative, although she did not make this argument in the trial court, Williams argues on appeal that the damages awarded to her for lost wages are not taxable "compensation" under the RRTA because, she says, unlike the RRA, the RRTA does not specifically define "compensation" as including payments for time lost.
Ordinarily, the threshold issues presented by this appeal would be whether Alabama law or federal law determines whether the general verdict returned by the jury should be treated as including damages for lost wages and, after resolving that issue, whether the controlling law provides that the general verdict should be treated as including those damages.3 However, neither party raised those issues in the trial court, and neither party has raised them on appeal. Rather, both parties' arguments in the trial court and on appeal presuppose that the general verdict in favor of Williams did indeed include an unspecified amount of damages for lost wages, and Williams expressly argues on...
To continue reading
Request your trial