# BNSF Railway Company v. Michael D. Loos/Opinion of Justice Gorsuch

SUPREME COURT OF THE UNITED STATES
No. 17–1042
BNSF RAILWAY COMPANY, PETITIONER v. MICHAEL D. LOOS ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT [March 4, 2019]
Justice Gorsuch, with whom Justice Thomas joins, dissenting.
BNSF Railway’s negligence caused one of its employees a serious injury. After a trial, a court ordered the company to pay damages. But instead of sending the full amount to the employee, BNSF asserted that it had to divert a portion to the Internal Revenue Service. Why? BNSF said the money represented taxable “compensation” for “services rendered as an employee.” 26 U. S. C. §3231(e)(1). Today, the Court agrees with the company. Respectfully, I do not. When an employee suffers a physical injury due to his employer’s negligence and has to sue in court to recover damages, it seems more natural to me to describe the final judgment as compensation for his injury than for services (never) rendered.
The Court does not lay out the facts of the case, but they are relevant to my analysis and straightforward enough. Years ago, Michael Loos was working for BNSF in a train yard when he fell into a hidden drainage grate and injured his knee. He missed work for many months, and upon his return he had a series of absences, many of which he attributed to knee-injury flareups. When the company moved to fire him for allegedly violating its attendance policies, Mr. Loos sued. Among other things, Mr. Loos sought damages for BNSF’s negligence in maintaining the ​train yard. He brought his claim under the Federal Employers’ Liability Act (FELA), an analogue to traditional state-law tort suits that makes an interstate railroad “liable in damages to any person suffering injury while he is employed” by the railroad “for such injury… resulting in whole or in part from the [railroad’s] negligence.” 45 U. S. C. §51. Ultimately, and again much like in any other tort suit, the jury awarded damages in three categories: $85,000 in pain and suffering, $11,212.78 in medical expenses, and $30,000 in lost wages–the final category representing the amount Mr. Loos was unable to earn because of the injury BNSF’s negligence caused.
Then a strange thing happened. BNSF argued that the lost wages portion of Mr. Loos’s judgment represented “compensation” to him “for services rendered as an employee” and was thus taxable income under the Railroad Retirement Tax Act (RRTA). 26 U. S. C. §3201 et seq. In much the same way the Social Security Act taxes other citizens’ incomes to fund their retirement benefits, the RRTA taxes railroad employees’ earnings to pay for their public pensions. And BNSF took the view that, because Mr. Loos owed the IRS taxes on the lost wages portion of his judgment, it had to withhold an appropriate sum and redirect it to the government. The company took this position even though it meant BNSF would owe corresponding excise taxes. See 26 U. S. C. §3221. It took this position, too, even though no one has identified for us a single case where the IRS has sought to collect RRTA taxes on a FELA judgment in the 80 years the two statutes have coexisted. The company even persisted in its view after, first, the district court and, then, the Eighth Circuit ruled that Mr. Loos’s award wasn’t subject to RRTA taxes. Even after all that, BNSF went to the trouble of seeking review in this Court to win the right to pay the IRS.
What’s the reason for BNSF’s tireless campaign? Is the ​company really moved by a selfless desire to protect a federal program from “a long-term risk of insolvency”? See ante, at 5, n. 2. Several amici offer a more prosaic possibility. Under the rule BNSF seeks and wins today, RRTA taxes will be due on (but only on) the portion of a FELA settlement or judgment designated as lost wages. Taxes will not attach to other amounts attributed to, say, pain and suffering or medical costs. At trial, of course, a plaintiff ’s damages are what they are, and often juries will attribute a significant portion of damages to lost wages. But with the help of the asymmetric tax treatment they secure today, railroads like BSNF can now sweeten their settlement offers while offering less money. Forgo trial and accept a lower settlement, they will tell injured workers, and in return we will designate a small fraction (maybe even none) of the payments as taxable lost wages. In this way, the Court’s decision today may do precisely nothing to increase the government’s tax collections or protect the solvency of any federal program. Instead, it may only mean that employees will pay a tax for going to trial–and railroads will succeed in buying cheaper settlements in the future at the bargain basement price of a few thousand dollars in excise taxes in one case today. See Brief for American Association for Justice as Amicus Curiae 34–36; Brief for SMART et al. as Amici Curiae 5–7.
Whatever the reason for BNSF’s gambit, the problems with it start for me at the first step of the statutory interpretation analysis–with the text of the law itself. The RRTA taxes an employee’s “compensation,” which it defines as “money remuneration… for services rendered as an employee to one or more employers.” 26 U. S. C. §3231(e)(1). A “service” refers to “duty or labor… by one person… bound to submit his will to the direction and control of [another].” Black’s Law Dictionary 1607 (3d ed. 1933). And “remuneration” means “a quid pro quo,” “recompense” or “reward” for such services. Id., at 1528. So ​the words “remuneration for services rendered” naturally cover things like an employee’s salary or hourly wage. Nor do they stop there, as the Court correctly notes. Rather, and contrary to the court of appeals’ view, those words also fairly encompass benefits like sick or disability pay. After all, an employer offers those benefits to attract and keep employees working on its behalf. In that way, these benefits form part of the “quid pro quo” (compensation) the employer pays to secure the “duty or labor” (services) the employee renders. Cf. United States v. Quality Stores, Inc., 572 U. S. 141, 146 (2014).
But damages for negligence are different. No one would describe a dangerous fall or the wrenching of a knee as a “service rendered” to the party who negligently caused the accident. BNSF hardly directed Mr. Loos to fall or offered to pay him for doing so. In fact, BNSF didn’t even pay Mr. Loos voluntarily; he had to wrest a judgment from the railroad at the end of a legal battle. So Mr. Loos’s FELA judgment seems to me, as it did to every judge in the proceedings below, unconnected to any service Mr. Loos rendered to BNSF. Instead of being “compensation” for “services rendered as an employee,” it seems more natural to say that the negligence damages BNSF paid are “compensation” to Mr. Loos for his injury. That’s exactly how we usually understand tort damages–as “compensation” for an “injury” caused by “the unlawful act or omission or negligence of another.” Black’s Law Dictionary 314 (2d ed. 1910). And that’s exactly how FELA describes the damages it provides–stating that it renders a railroad “liable” not for services rendered but for any “injury” caused by the defendant’s “negligence.” 45 U. S. C. §51; see also New York Central R. Co. v. Winfield, 244 U. S. 147, 164 (1917) (Brandeis, J., dissenting) (FELA liability is “a penalty for wrong doing,” a “remedy” that “mak[es] the wrongdoer indemnify him whom he has wronged”).
Of course, BNSF isn’t without a reply. Time and again ​it highlights the fact that the district court measured the lost wages portion of Mr. Loos’s award by reference to that he could have earned but for his injury. But if BNSF’s negligence had injured a passenger on a train instead of an employee in a train yard, a jury could have measured the passenger’s tort damages in exactly the same way, taking account of the wages she could have earned from her own employer but for the railroad’s negligence. Vicksburg & Meridian R. Co. v. Putnam, 118 U. S. 545, 554 (1886). In those circumstances, I doubt any of us would say the passenger’s damages award represented compensation for “services rendered” to her employer rather than compensation for her injury. And I don’t see why we would reach a different result here simply because the victim of BNSF’s negligence happened to be one of its own workers. Of course, as the Court points out, ante, at 11, n. 5, FELA suits may be brought only by railroad employees against their employers. But in cases like ours a FELA suit simply serves in the interstate railroad industry as a federalized substitute for a traditional state negligence tort claim of the sort that could be brought by anyone the railroad injured, employee or not. Inescapably, “the basis of liability under [FELA] is and remains negligence.” Wilkerson v. McCarthy, 336 U. S. 53, 69 (1949) (Douglas, J., concurring).
Looking beyond the statute’s text to its history only compounds BNSF’s problems. To be clear, the statutory history I have in mind here isn’t the sort of unenacted legislative history that often is neither truly legislative (having failed to survive bicameralism and presentment) nor truly historical (consisting of advocacy aimed at winning in future litigation what couldn’t be won in past statutes). Instead, I mean here the record of enacted changes Congress made to the relevant statutory text over time, the sort of textual evidence everyone agrees can sometimes shed light on meaning. See United States v. ​Wong Kim Ark, 169 U. S. 649, 653–654 (1898).
The RRTA’s statutory history is long and instructive. Beginning in 1937, the statute defined taxable “compensation” to include remuneration “for services rendered,” but with the further instruction that this included compensation “for time lost.” Carriers Taxing Act of 1937, §1(e), 50 Stat. 436. Courts applying the RRTA’s sister statute, the Railroad Retirement Act (RRA), understood this language to capture settlement payments for personal injury claims that would not otherwise qualify as “remuneration… for services rendered.” See, e. g., Jacques v. Railroad Retirement Bd., 736 F. 2d 34, 39–40 (CA2 1984); Grant v. Railroad Retirement Bd., 173 F. 2d 385, 386–387 (CA10 1949). Congress itself seemed to agree, explaining in 1946 that remuneration for “time lost” includes payments made “with respect to an… absence on account of personal injury.” §3(f), 60 Stat. 725. But then Congress reversed field. In 1975, it removed payments “for time lost” from the RRTA’s definition of “compensation.” §204, 89 Stat. 466. And in 1983, Congress overwrote the last remaining reference to payments “for time lost” in a nearby section. §225, 97 Stat. 424–426. To my mind, Congress’s decision to remove the only language that could have fairly captured the damages here cannot be easily ignored.
Yet BNSF would have us do exactly that. On its account, the RRTA’s discussions about compensation for time lost and personal injuries only ever served to illustrate what has qualified all along as remuneration for “services rendered.” So, on its view, when Congress first added and then removed language about time lost and personal injuries, it quite literally wasted its time because none of its additions and subtractions altered the statute’s meaning. Put another way, BNSF asks us to read back into the law words (time lost, personal injury) that Congress deliberately removed on the assumption they were never really needed in the first place. As I see it, that is ​less “ ‘a construction of a statute [than] an enlargement of it by the court, so that what was omitted, [BNSF] presum[es] by inadvertence, may be included within its scope. To supply omissions [like that] transcends the judicial function.’ ” West Virginia Univ. Hospitals, Inc. v. Casey, 499 U. S. 83, 101 (1991) (quoting Iselin v. United States, 270 U. S. 245, 251 (1926) (Brandeis, J.)).
Looking beyond the text and history of this statute to compare it with others confirms the conclusion. Where the RRTA directs the taxation of railroad employee income to fund retirement benefits, the RRA controls the calculation of those benefits. And, unlike the RRTA, that statute continues to include “pay for time lost” in the definition of “compensation” it uses to calculate benefits. 45 U. S. C. §231(h)(1). Normally, when Congress chooses to exclude terms in one statute while introducing or retaining them in another closely related law, we give effect to rather than pass a blind eye over the difference. Nor is there any question that Congress knows exactly how to tax a favorable tort judgment when it wants. See, e. g., 26 U. S. C. §104(a)(2) (punitive damages are not deductible). Its failure to offer any comparably clear command here should, once more, tell us something.
With so much in the statute’s text, history, and surroundings now pointing for Mr. Loos, BNSF is left to lean heavily on case law. The company says we must rule its way primarily because of Social Security Bd. v. Nierotko, 327 U. S. 358 (1946). But I do not see anything in that case dictating a victory for BNSF. Nierotko concerned a different statute, a different legal claim, and a different factual context. There, the plaintiff brought a wrongful termination claim before the National Labor Relations Board, claiming that his employer fired him in retaliation for union activity. The NLRB ordered the employee reinstated to his former job and paid as if he had never left. Under those circumstances, this Court held that for ​purposes of calculating the plaintiff’s Social Security Act benefits, his “wages” should include his backpay award, allocated to the period when he would have been working but for the employer’s misconduct. Since then, however, the Court has suggested that at least one of Nierotko’s holdings was likely motivated more by a policy concern with protecting the employee’s full retirement to Social Security benefits than by a careful reading of the Social Security Act. See United States v. Cleveland Indians Baseball Co., 532 U. S. 200, 212–213 (2001); id., at 220–221 (Scalia, J., concurring in judgment). Besides, in this case we’re simply not faced with a wrongful termination claim, an award of backpay, or the interpretation of the Social Security Act–let alone reason to worry that ruling for Mr. Loos would inequitably shortchange an employee. So whatever light Nierotko might continue to shed on the question it faced, and whatever superficial similarities one might point to here, that decision simply doesn’t dictate an answer to the question whether a tort victim’s damages for a physical injury qualify as “compensation for services rendered” under the RRTA.
By this point BNSF is left with only one argument, which it treats as no more than a last resort: Chevron deference. In the past, the briefs and oral argument in this case likely would have centered on whether we should defer to the IRS’s administrative interpretation of the RRTA. After all, the IRS (at least today) agrees with BNSF’s interpretation that “compensation… for services rendered” includes damages for personal injuries. And the Chevron doctrine, if it retains any force, would seem to allow BNSF to parlay any statutory ambiguity into a colorable argument for judicial deference to the IRS’s view, regardless of the Court’s best independent understanding of the law. See Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984). Of course, any Chevron analysis here would be complicated by the ​government’s change of heart. For if Nierotko is as relevant as BNSF contends, then it must also be relevant that, back when Nierotko was decided, the IRS took the view that the term “wages” in the Social Security Act did not include backpay awards for wrongful termination. See 327 U. S., at 366–367. And if “wages” don’t include backpay awards for wrongful terminations, it’s hard to see how “compensation… for services rendered” might include damages for an act of negligence. Still, even with the complications that follow from executive agencies’ penchant for changing their views about the law’s meaning almost as often as they change administrations, a plea for deference surely would have enjoyed pride of place in BNSF’s submission not long ago.
But nothing like that happened here. BNSF devoted scarcely any of its briefing to Chevron. At oral argument, BNSF’s lawyer didn’t even mention the case until the final seconds–and even then “hate[d] to cite” it. Tr. of Oral Arg. 58. No doubt, BNSF proceeded this way well aware of the mounting criticism of Chevron deference. See, e. g., Pereira v. Sessions, 585 U. S. ___, ___–___ (2018) (Kennedy, J., concurring). And no doubt, too, this is all to the good. Instead of throwing up our hands and letting an interested party––the federal government’s executive branch, no less–dictate an inferior interpretation of the law that may be more the product of politics than a scrupulous reading of the statute, the Court today buckles down to its job of saying what the law is in light of its text, its context, and our precedent. Though I may disagree with the result the Court reaches, my colleagues rightly afford the parties before us an independent judicial interpretation of the law. They deserve no less.