BCD 1996-25

Rail Investments, Inc..

Decision on Reconsideration

Issued March 7, 1996

No G-215 Available
Notice No. 96-26

B.C.n. NO. 96-25

EMPLOYER STATUS DETERMINATION ON RECONSIDERATION

RAIL INVESTMENTS, INC.

This is the decision of the Railroad Retirement Board regarding the

request for reconsideration of the Board's decision holding Rail

Investments, Inc., to be an employer under the Railroad Retirement 

and Railroad Unemployment Insurance Acts. In a decision dated 

February 9, 1995, the Board held that Rail Investments is an

employer by reason of its being under common control with a carrier 

and its performing services in connection with rail transportation.

In its request for reconsideration, Rail Investments argues that it

is not under "common control." Rail Investments is a corporation

owned entirely by Mr. Wade W. Larkin. Mr. John C. Larkin and Ms.

Avis K. Larkin serve as officers and directors of Rail Investments.

The Escanaba & Lake Superior Railroad Company is a corporation

owned by Mr. Wade W. Larkin, Mr. John C. Larkin, and Ms. Avis K.

Larkin. It is controlled by a voting trust agreement of which Mr.

Wade W. Larkin and Mr. John C. Larkin each control 49 percent and

Ms. Avis K. Larkin controls 2 percent.

Section 202.4 of the Board's regulations provides that:

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

and business of such a company or person.

Section 202.5 of the Board's regulations provides that:

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.

Rail Investments contends that according to the decision in Union 

Pacific Corporation v. United States. 5 F. 3d 523 (Fed. Cir. 1993),

there is no common control in this case. The Board does not agree

with Rail Investments' reading of that case. Union Pacific held

that a parent company was not under common control with its

subsidiary. It did not hold that companies could not be under 

common control by reason of common ownership or management. In the

instant case Rail Investments and the Escanaba and Lake Superior 

Railroad Company are not parent and subsidiary but have common

ownership and management in that the same three persons have the

right to control the management and operations of both companies.

Mr. Wade Larkin owns Rail Investments and Mr. John C. Larkin and

Ms. Avis K. Larkin are officers and directors of that company, and

BA # 9009
-2-

RAIL INVESTMENTS, INC.

those three persons own the Escanaba and Lake Superior Railroad

Company and control it through a voting trust agreement. The

evidence establishes that both Rail Investments and the Escanaba 

and Lake Superior Railroad are under control of the same persons 

within the meaning of sections 202.4 and 202.5 of the Board's 

regulations. Accordingly, it is determined that Rail Investments 

is under common control with a covered rail carrier employer, the

Escanaba and Lake Superior Railroad Company.

Rail Investments does not challenge the Board's finding in its

February 9, 1995, decision that Rail Investments performs a service

in connection with rail transportation. A majority of the Board 

agrees with the earlier decision that Rail Investments does provide 

a service in connection with rail transportation.

The previous decision of the Board is affirmed on reconsideration.