B.C.D. 01-17 FEB 0 2 2001

EMPLOYER STATUS DETERMINATION

LeGere Investors, Inc.

This is the determination of the Railroad Retirement Board concerning the status of

LeGere Investors, Inc., as an employer under the Railroad Retirement Act (45

U.S.C. § 231 et seq.) and the Railroad Unemployment Insurance Act (45 U.S.C.

§ 351 et seq.).

Information regarding LeGere was provided by Chris W. Damiano, President of

LeGere, or was contained in documents submitted by Thomas Planera II, counsel

for LeGere, including affidavits by Mr. Damiano and by Raquel Swan, Executive

Vice President and Assistant Secretary of Illinois & Midland Railroad, Inc. (I&M),

and Vice President of LeGere. On February 8, 1996, Stamford Capital purchased

all of the stock of Pawnee Railroad, the parent company of the Chicago & Illinois

Midland Railway Company, an employer under the Acts (B.A. No. 1306) and of

Pawnee Transportation Company. According to Mr. Damiano, Pawnee

Transportation Company entered into a coal conveyor operating and maintenance

agreement with Commonwealth Edison Company pursuant to which Pawnee agreed

to operate a conveyor system owned by Commonwealth Edison. Pawnee and

Commonwealth Edison also entered into a coal transfer contract pursuant to which

Pawnee agreed to operate a coal unloading facility. Also, on February 8, 1996,

Stamford sold substantially all of the railroad operating assets of the Chicago &

Illinois Midland to I&M, an employer under the Acts (BA No. 2366).

On July 31, 1997, Stamford sold the assets of Pawnee to LeGere and transferred its

interest in the above contracts to LeGere. LeGere subcontracted with I&M to

continue to provide management services for the operation of the facilities. LeGere

reports that it has three permanent employees and hires temporary employees as

needed for the unloading functions. Under the contract between LeGere and I&M,

I&M is responsible for all capital improvements needed and for maintaining

specified liability insurance coverage. I&M receives a monthly fee based on the

quantity of coal unloaded. LeGere leases locomotives from I&M, as well as the land

where the facility is located and track which provides access to the facility.

LeGere employees move rail cars containing coal and slag to the unloading facility

and transload location, where they unload them. According to

Mr. Damiano, LeGere employees are not supervised by I&M employees. LeGere

unloads coal for Kincaid Generation, LLC1, and slag for Reed Mineral. LeGere and

'Commonwealth Edison was acquired by Kincaid Generation, LLC, so that the coal unloading service

is now provided to Kincaid and the slag unloading function for Reed Mineral
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LeGere Investors, Inc.

I&M have one officer and no directors in common and no common ownership

interest.

Section 1(a)(1) of the Railroad Retirement Act (45 U.S.C. § 231(a)(1)), insofar as

relevant here, defines a covered employer as:

(i) any carrier by railroad subject to the jurisdiction of the Surface

Transportation Board under Part A of subtitle IV of title 49, United States

Code;

(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 * * *.

Sections l(a) and l(b) of the Railroad Unemployment Insurance Act (45 U.S.C.

§§ 351(a) and (b)) contain substantially similar definitions, as does section 3231 of

the Railroad Retirement Tax Act (26 U.S.C. § 3231).

LeGere clearly is not a carrier by rail. Further, a majority of the Board, Labor

Member dissenting in a separate opinion, find that the available evidence indicates

that it is not under common ownership with any rail carrier nor is it controlled by

officers or directors who control a railroad. Therefore, a majority of the Board find

that LeGere is not a covered employer under the Acts.

This conclusion leaves open, however, the question of whether the persons who

perform work for LeGere should be considered to be employees of I&M rather than

of LeGere. Section 1(b) of the Railroad Retirement Act and section 1(d) of the

Railroad Unemployment Insurance Act both define a covered employee as an

individual in the service of an employer for compensation. Section 1(d)(1) of the

RRA further defines an individual as "in the service of an employer" when:

(i)(A) he is subject to the continuing authority of the employer to supervise

and direct the manner of rendition of his service, or (B) he is rendering

professional or technical services and is integrated into the staff of the

employer, or (C) he is rendering, on the property used in the employer's

operations, personal services the rendition of which is integrated into the

employer's operations; and

(ii) he renders such service for compensation * * *.
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LeGere Investors, Inc.

Section l(e) of the RUIA contains a definition of service substantially identical to

the above, as do sections 3231(b) and 3231(d) of the RRTA (26 U.S.C. §§ 3231 

(b) and (d)).

The focus of the test under paragraph (A) is whether the individual performing the

service is subject to the control of the service-recipient not only with respect to the

outcome of his work but also with respect to the way he or she performs such work. 

A majority of the Board finds that the evidence submitted shows that the unloading

services provided by LeGere are performed under the direction of LeGere’s

permanent employees; accordingly, a majority of the Board finds that the control

test in paragraph (A) is not met.

In regard to paragraphs (B) and (C), a majority of the Board finds that LeGere

employees are not integrated into I&M’s operations, are not providing services to

the I&M, and are not rendering technical, professional, or personal services.

Accordingly, a majority of the Board finds that the LeGere employees are not

employees of I&M.

CherryvT. Thomas

V. M. Speakman, Jr. (Dissenting,

separate opinion attached)

Jerome F. Kever
DISSENT OF

V. M. SPEAKMAN, JR.

ON EMPLOYER STATUS DETERMINATION

LEGERE INVESTORS, INC.

It is my position that LeGere Investors, Inc., and Illinois & Midland Railroad, Inc.,

(I&M) are under common control. The Executive Vice President and Assistant Secretary 

of I&M is also the Vice President of LeGere. I&M provides certain administrative,

management and oversight services including hiring full-time LeGere employees. Moreover, as part of its commercial arrangement with LeGere, I&M purchases certain 

parts and materials used by LeGere in its operations and passes on the volume discount it

obtains. Locomotives that LeGere uses to move cars within the facility are leased from

I&M pursuant to a written contract, from which it pays I&M only $10 per hour, a

seemingly token amount.

The work that LeGere performs, unloading services after I&M has completed delivery of

the coal trains, clearly enhances I&M’s business and this facility is LeGere’s only 

business operation. Furthermore, I&M and LeGere show a common interest in that both 

entities petitioned the Railroad Retirement Board for a coverage determination.

The United States Supreme Court, early in the Board’s history, agreed with the Board,

that loading and unloading are services in connection with railroad transportation,

Railroad Retirement Board v. Duquesne Warehouse. Co. Unloading services are services 

that could be performed by the carrier and charged for under the line haul tariffs. If it is

such a service, it is a transportation service within the meaning ofthe Acts.

It is difficult to determine where the operations ofI&M leave off, and LeGere’s begin. I

would argue that LeGere employees are in fact covered since they are performing service 

for the railroad, on I&M’s property. Absent that I would find that LeGere and I&M are

under common control and that LeGere is performing service in connection with

transportation of property by railroad.

V. M. Speakman, Jr.

Date