B.C.D. 03-62

EMPLOYER STATUS DETERMINATION JUL 1 7 2003

Logistics Management Systems, Inc.

This is the determination of the Railroad Retirement Board concerning

the status of Logistics Management Systems, Inc., as an employer

under the Railroad Retirement Act (45 U.S.C. § 231 et sea.) and the

Railroad Unemployment Insurance Act (45 U.S.C. § 351 et sea.).

Information regarding Logistics was provided by Thomas W. Flacke, 

formerly Vice President of Logistics and now Debtor-in Possession.

According to Mr. Flacke, Logistics was incorporated and began doing 

business in May 1989. Logistics was placed into bankruptcy on May

15, 2002. On January 9, 2003, all of Logistics' assets were sold to a

third party. In October 2002, it had 23 employees. As a result of the

bankruptcy, it has no employees, assets, or operations.

Logistics was owned by Bangor & Aroostook Railroad Company, an

employer under the Acts (B.A. No. 1101), now in bankruptcy. Logistics

provided switching service at Skyway Industrial Park, Presque Isle,

Maine. Mr. Flacke states that Logistics was a public warehousing

company with 50 percent of its business being done with its affiliated

carrier. Mr. Flacke stated that 80% of Logistics' time was spent on 

warehousing and that 76% of its revenue came from warehousing. In

addition to warehousing, it unloaded trucks and railcars; transported

products to their destination; and was a Surface Transportation Board

certificated motor carrier1. Logistics did transloading of lumber,

starch, chemicals, etc. It provided single source billing for its

customers covering its services and the rail or truck freight bill. It

owned a warehouse in Bangor, Maine, three operating over-the-load

tractors, furniture, computers, various company cars and trucks,

forklifts, and packaging equipment. It leased a locomotive at a

nominal cost.

1 Although Logistics was a certificated motor carrier, the vast majority ofits business consisted ofits

warehousing operations. In view of those operations, together with the switching service Logistics provided, 

we note thatthe trucking exception does not apply to Logistics.

BA#4115
The Bangor & Aroostook brought traffic to Skyway Industrial Park and

Logistics was paid $100.00 per freight car, $50.00 per log car, and

$25.00 for each intermodal trailer. Logistics paid for the entire move

which included trucking, storage, handling, and rail transport. Its

customers then paid on a per move basis.

Section 1 (a)(l) 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 1 (a) and 1 (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).

Section 202.7 of the Board's regulations provides that service is in

connection with railroad transportation:

* * * 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,
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refrigeration or icing, storage, or handling of property

transported by railroad. (20 CFR 202.7).

Section 202.11 of the Board's regulations provides that:

The employer status of any company or person shall

terminate whenever such company or person loses

any of the characteristics essential to the existence

of an employer status. 20CFR202.il.

Initially, it should be noted that Logistics had a switching operation.

Accordingly, it was a carrier-employer under the Acts. In addition, Mr.

Flacke characterized Logistics as a public warehousing company,

which provided warehousing to its controlling rail carrier. See Railroad

Retirement Board v. Duauesne Warehouse Co.. 149 F.2d 507 (D.C.Cir.

1945), o!M 326 U.S. 446, 90 L.Ed. 192, 66 S.Ct. 238 (1946), where the

Court of Appeals for the District of Columbia Circuit held that a

warehouse corporation owned by a railroad and engaged in loading

and unloading railroad cars and other handling of property

transported by railroad, and in other activities which enabled the

railroad to perform its rail transportation more successfully, was

performing "services in connection with" the transportation of property

by railroad and therefore an employer under the Railroad 

Unemployment Insurance Act.

Accordingly, it is determined that Logistics was an employer within the

meaning of both section 1 (a) (1) (i) and 1 (a) (1) (ii) of the Railroad 

Retirement Act (45 U.S.C. § 231 (a)(1)(i) and (ii)) and the

corresponding provisions of the Railroad Unemployment Insurance

Act as of May 1, 1989, the first date of the month in which it
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commenced operations. We find further, however, that Logistics

ceased to be an employer effective January 9, 2003, the date as of

which it sold all of its assets and terminated operations, thereby losing

the characteristics essential to its employer status.

Michael S. Schwartz

V. M. Speakman, Jr.

'Jerome F. Kever