BCD 1996-20

Escanaba Services, Inc..

Decision on Reconsideration

Issued February 8, 1996

No G-215 Available
Notice No. 96-21

R.C.D. 96-20

EMPLOYER STATUS DETERMINATION

Escanaba Services, Inc.

Decision on Reconsideration

This is the determination of the Railroad Retirement Board on

reconsideration of the status of Escanaba Services, Inc. (ESI) as

an employer under the Railroad Retirement Act (45 U.S.C. §231 et

sea.) (RRA) and the Railroad Unemployment Insurance Act (45 U.S.C. 

§351 et seq.) (RUIA). In a decision issued on August 8, 1994, a

majority of the Board, Mr. Kever dissenting, found that ESI was 

under common control with a rail carrier employer and provides

service in connection with railroad transportation. Accordingly,

a majority of the Board held ESI to be a covered employer under the

Acts from October 16, 1984.

In a letter dated July 27, 1995, ESI requested reconsideration of

the Board's determination, arguing that it is not under common

control with a rail carrier employer and therefore is not a covered

employer under the Acts. In its request for reconsideration, ESI

stated that the Escanaba & Lake Superior Railroad Company (BA No.

2606) (E&LS) is a corporation owned by John C. Larkin, Wade W.

Larkin, and Avis K. Larkin and controlled by a Voting Trust

Agreement dated December 15, 1983. The Voting Trust Agreement

provides that control of the E&LS is apportioned as follows:

Wade W. Larkin 49%

John C. Larkin 49%

Avis K. Larkin 2%

The Agreement provides that it will last for 20 years or until Wade

W. Larkin's death or until John Larkin acquires all shares of stock

from Wade Larkin, whichever occurs first. The Agreement prohibits

the assignment of shares to anyone other than Wade, Avis, or John

Larkin, except upon the death of a shareholder or with the written

agreement of Wade, John, and Avis Larkin. The Agreement further

provides that no assignment of shares shall alter the voting

percentage set out in the Agreement (and at the beginning of this 

determination).

Information previously furnished by ESI indicates that these same 

three individuals serve as the officers and the only directors of

ESI. ESI's Articles of Incorporation, dated October 12, 1984, list

the three as the original Board of Directors and sets out the same 

street address for both Wade Larkin and Avis Larkin (1132 Birkdale

Court, Naperville, Illinois) . A letter dated February 16, 1994,

responding to the agency's inquiry about ESI, lists that same 

address as the address of the corporation and states that the same 

three individuals continue to serve as ESI's directors. Wade W.

Larkin is ESI's Chairman of the Board, John C. Larkin is its

President, and Avis K. Larkin is Secretary/Treasurer. Wade W.

Larkin is also ESI's Chief Executive Officer.

BA # 9625
2

The Pocket List of Railroad Officials for the Third Quarter of 1995 

states (on page C-73) that Wade, John, and Avis Larkin hold the

same positions as officers of E&LS (i.e. . Chairman, President, and

Secretary/Treasurer, respectively) that they hold in ESI.

ESI argues in its request for reconsideration that it is not under

common control with E&LS, pointing out that Wade W. Larkin owns

100% of ESI and controls 49% of E&LS by reason of the Voting Trust

Agreement. The other owners of E&LS, John C. Larkin and Avis K.

Larkin, own no shares of ESI. ESI does not challenge the Board's

finding that it provides service in connection with railroad

transportation.

Section 1 of the RRA defines the term "employer" to include:

(i) any express company, sleeping car company, and

carrier by railroad, subject to subchapter I of chapter

105 of title 49;

(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. §231(a)(1)(i) and (ii)).

Section 1 of the RUIA contains essentially the same definition.

The Board has defined "common control" in its regulations as

follows:

A company or person is under common control with a

carrier, whenever the control (as the term is used in

§202.4) of such company or person is in the same person,

persons, or company as that by which such carrier is

controlled. [20 CFR 202.5].

Section 202.4 of the Board's regulations defines the term "control"

to mean:

A company or person is controlled by one or more

carriers, whenever there exists in one or more such

carriers the right or power by any means, method or

circumstance, irrespective of stock ownership to direct, 

either directly or indirectly, the policies and business

of such a company or person and in any case in which a

carrier is in fact exercising direction of the policies
3

and business of such a company or person. [20 CFR

202.4.]

ESI argues in its request for reconsideration that it is not under

common control with E&LS because one person, Wade W. Larkin, owns 

100% of ESI, but only controls 49% of E&LS and because the other

two owners of E&LS own no shares of ESI. This argument ignores the

fact that the control of both companies is held by a small group of

three people who apparently are members of the same family. In

fact, two of those individuals have the same address, which is also

the corporate address of ESI. More important, the same three

individuals serve as the officers of both companies and serve as

directors of ESI. Section 202.4 expressly states that control is

not determined by stock ownership, but rather by the existence of

the right or power "by any means, method or circumstance" to direct

the policies and business of the company. The evidence in this 

case clearly demonstrates that a small group of three people

together own and control both ESI and the Escanaba & Lake Superior

Railroad Company. The decision in Union Pacific Corporation v.

United States. 5 F.2d 523 (Fed. Cir. 1993), cited by ESI in its

request for reconsideration, involved the employer status of a

holding company and does not apply to this case.

A majority of the Board therefore finds that ESI is under common

control with the Escanaba & Lake Superior Railroad Company. Since

ESI did not challenge the Board's finding in B.C.D. 94-67 that it

provides service in connection with railroad transportation, the

Board finds that ESI falls within the definition of "employer" set

out in section 1(a)(1)(ii) of the RRA and section 1(a) of the RUIA

effective October 16, 1984, the date on which it was incorporated.

The decision in B.C.D. 94-67 is affirmed.

Glen L. Bower

V. M.^Speakman, Jri^'

y/erome F. Kever (Dissenting)