Opinion ID: 776527
Heading Depth: 2
Heading Rank: 2

Heading: MTA's Participation in LIRR's Business

Text: 67 The Public Authorities Law imposes on MTA the responsibility for 68 the continuance, further development and improvement of commuter transportation and other services related thereto within the metropolitan commuter transportation district, including but not limited to such transportation by railroad. 69 N.Y. Pub. Auth. L. § 1264(1) (emphasis added). To that end, MTA is given special powers, including the power to acquire... any transportation facility, id. § 1266(1); to operate, maintain, renovate, improve ... or repair such a facility, id. § 1266(2); to levy and collect ... fares... and other fees, id. § 1266(3); and to establish schedules, standards of operation, and public safety rules and regulations as necessary for use and operation of any transportation facility, id. § 1266(4). MTA is authorized to cause any one or more of its powers ... to be exercised or performed by[] one or more wholly owned subsidiary corporations, id. § 1266(5); it may transfer to or from such a subsidiary any moneys, real property, or other property, id.; and it may apply for government grants to meet capital or operating expenses for such a subsidiary. id. § 1266(6). The [A]uthority may lease railroad cars for use in its passenger service.... Id. § 1266(7). 70 For the rail, bus, subway, bridge, tunnel, marine, and air operations within the metropolitan commuter transportation district, MTA is to develop and implement a unified mass transportation policy. Id. § 1264(1). In accordance with its legislative mandate, MTA encompasses, as subsidiaries or as components for which MTA is financially accountable, many transportation agencies, including Metro-North, the New York City Transit Authority, the Staten Island Rapid Transit Operating Authority, the Metropolitan Suburban Bus Authority, and the Triborough Bridge and Tunnel Authority. ( See MTA 1997 Annual Report, Notes to Combined Financial Statements, at 63.) MTA provides centralized services to these agencies, in the areas discussed below with respect to LIRR. 71 In 1966, MTA acquired LIRR as a subsidiary. The board of directors of MTA is also the board of directors of LIRR, see id. § 1266(5), and the MTA chairman determines who will be president of LIRR. MTA is not, however, simply a holding company or a stockholder content to manage LIRR through overlapping formal corporate governance. Rather, the record reveals that MTA, using nonoverlapping personnel employed at its own headquarters (MTAHQ), participates directly and extensively in, inter alia, the financial side of LIRR's operations. MTA's 1997 Annual Report, for example, states that Metropolitan Transportation Authority Headquarters (`MTAHQ') provides support in budget, cash management, finance, legal, real estate, treasury, risk management, and other areas, to ... [t]he Long Island Rail Road Company (`LIRR').... (MTA 1997 Annual Report, Letter of Deputy Executive Director and Chief Financial Officer, at 50.) MTA's Director of Labor Relations and head of human resources, Gary J. Dellaverson, described in his deposition several aspects of MTA's participation in the financial side of LIRR's operations. For example, MTA is involved in advertising and marketing for LIRR (Deposition of Gary J. Dellaverson (Dellaverson Dep.), at 41, 64), and handles revenues generated by the placement of advertisements on LIRR property ( id. at 41). MTA also participates directly in LIRR's budgeting, providing supervision with respect to cash management. As cash management suggests, this means managing cash flow of the entity. ( Id. at 33.) Thus, MTA headquarters' budgeting function for Long Island Railroad would and does both establish expenditure targets, make revenue projections and in conjunction with the Railroad, prepare annual budgets and periodic revisions. ( Id. at 30). In sum, MTA approves the Long Island Railroad's budget. ( Id. at 31; see also id. at 32 (I would say that [MTAHQ employees] probably assist in virtually every budgeting function and lead in the area that I described.).) 72 Further, MTA itself raises funds to subsidize LIRR operations. LIRR revenues generally do not rise to the level of its expenses. LIRR does not, however, borrow money or issue debt in its own name. ( See Dellaverson Dep. at 35.) Rather, to subsidize LIRR operations, debt is issued by MTA, which pledges LIRR property as collateral. For example, 73 MTA ... Commuter Facilities Revenue Bonds ... are obligations payable solely from, and secured by, a pledge of the gross operating revenues and the physical assets of LIRR and [Metro-North] for Commuter Facilities Revenue Bonds.... In accordance with the bond resolutions, sufficient funds to meet the maximum annual debt service requirements are held in reserve accounts maintained by the trustee as security for payment of the bonds. The remaining revenues after debt service are available to meet the operating needs of the agencies. 74 (MTA 1993 Annual Report at 71.) Thus, the moneys raised for LIRR through the issuance of debt are administered by MTA; and MTA determines when portions of those funds will be made available to LIRR ( see Dellaverson Dep. at 34). In sum, Dellaverson testified, it is fair to say that MTA looks at LIRR's income from passenger fares and vendor fees, determines the extent of the operational shortfall, and provides LIRR with the difference by way of subsidy. ( See id. at 33-34.) Since LIRR is not a self-sustaining enterprise ( id. ), LIRR could not remain in the commuter railroad business in the absence of subsidies such as those provided by MTA. 75 In addition, [c]ertain common functions between the operating agencies are provided by [MTA] headquarters. ( Id. at 35.) These include legal matters with respect to LIRR real estate ( id. ); and some of those transactions on their face reveal the intertwining of MTA in the business of LIRR. For example, MTA's 1997 Annual Report described one $300,000-odd real estate transaction, in pertinent part, as follows: 76 On March 31, 1997, MTAHQ entered into a lease/leaseback transaction with a third party whereby MTAHQ leased LIRR's Hillside maintenance facility.... The facility was subsequently subleased back to MTAHQ as a capital lease, and sub-subleased by MTAHQ to LIRR. The facility is included in LIRR's financial statements.... 77 (MTA 1997 Annual Report at 80.) 78 Further, MTA is directly involved in LIRR's negotiations with labor unions. Dellaverson, employed at MTAHQ, is director of labor relations for MTA, has responsibility for labor policy at the corporate level, and is the chief labor negotiator for the Authority. (Dellaverson Dep. at 6). [A]s part of [his] duties as director of labor relations for MTA ( id. at 14), Dellaverson normally had discussions with labor leaders with respect to anticipated collective bargaining agreements of LIRR ( see id. at 15). He personally participated in negotiating, or at least was consulted and gave advice on, the majority of the major labor contracts entered into by LIRR. ( See id. at 15-16.) 79 MTA's integral role in the business side of LIRR operations is amply reflected in MTA's own public statements. The MTA Annual Report for 1993, for example, described what MTA referred to as its Fare Deal: 80 Fare Deal is a vision of public transportation's possibilities — a business strategy that will change the relationship between the MTA and its customers in order to increase ridership and pay for improvement in our facilities and rolling stock. 81 (MTA 1993 Annual Report, Letter of MTA Chairman and Chief Executive Officer; see Webster's New International Dictionary 2163 (2d ed. 1957) (defining rolling stock as [t]he locomotives, motorcars, passenger cars (or coaches), freight cars ..., and all other wheeled vehicles, etc., running or capable of running on the tracks or rails.).) The 1993 report stated that 82 [t]he MTA delivered on Fare Deal throughout 1993. We found out what our customers wanted and gave it to them whenever and wherever we could 83 We revised policies. A previous-month's commuter rail ticket can now be used on the first workday of the next month, showing regular customers we trust them and value their business.... 84 .... And we gave suburban rail customers more vans and small buses to take them from their homes to the station. 85 (MTA 1993 Annual Report, Letter of MTA Chairman and Chief Executive Officer.) The report also described, inter alia, MTA capital projects for the improvement of LIRR facilities: Fare Deal Means Infrastructure 86 .... In the transportation business, there is no standing still when it comes to maintaining infrastructure — you either move forward or slide backward. 87 .... 88 Capital projects on the railroads included four completions in the LIRR's huge, multiyear project to rebuild its portion of Penn Station as a customer-friendly facility: a ticket-holders' waiting room, central corridor, vaulted concourse ceiling, and LIRR Police office. 89 (MTA 1993 Annual Report at 11.) Again referring to these refurbishments, MTA stated Fare Deal Is Infrastructure 90 One of Fare Deal's pillars is dedicated to maintaining infrastructure, and 1993 saw work on several major LIRR projects[, including] a new and more visible LIRR Police office. 91 . . . . . 92 Building of another sort took place at our freight operation, which became a success story in 1993. The LIRR has been making tremendous efforts to move freight around the island.... As a result, freight contributed a significant positive cash flow for the first time in decades. 93 Fare Deal's focus on customers was basic to everything the LIRR did in 1993 — whether it involved infrastructure, safety, freight, mechanical reliability, on-time performance, or inter-modal travel. Finding ways to satisfy all kinds of customer needs was the reason for the success of the MTA Long Island Rail Road during the year. 94 ( Id. at 22.) MTA stated that [t]he Fare Deal promise of seamless travel moved closer to realization on Long Island. ( Id. at 23.) In October 1998, MTA published an ingenious map entitled MTA Railroads, which placed the railroads on the backside of a subway map with [points of] intermodal transfer [e.g., from subway to train] ... being highlighted. (Dellaverson Dep. at 62-63.) 95 Finally, in addition to its hands-on participation in the budgeting, capital raising, marketing, advertising, real estate, risk management, and labor relations aspects of LIRR operations — and of particular relevance to the present case — MTA participates in LIRR's operations by providing security personnel for LIRR station parking lots. Although MTA argued in the district court that MTA police officers are not engaged in the actual performance of rail service by LIRR (MTA's Memorandum of Law in Support of Motion for Reconsideration at 9), there can be no question that the work of the MTAPD Auto Crime Unit at LIRR parking lots, to which Greene was assigned, is in furtherance of LIRR's railroad business within the meaning of FELA, 45 U.S.C. § 51. Commuters who drive to LIRR stations require safe places in which to leave their cars, and the presence of such police officers is meant to provide both security and reassurance: 96 [A]ll the MTA police forces were targeting their customers' fears: the LIRR Police successfully thwarted car theft in railroad parking lots.... 97 (MTA 1994 Annual Report at 8). 98 Further, it is clear that prior to the consolidation, the LIRR police officers were covered by FELA. ( See Dellaverson Dep. at 83.) Indeed, Dellaverson testified that one of the benefits that MTA perceived it would receive as a result of the consolidation of the security forces as employees of MTAHQ was having the workers out from under the FELA system. ( Id. at 84; see also Supplemental Affidavit of Gary J. Dellaverson dated June 1, 2000, ¶ 2 (denying that removal of the LIRR police force from the coverage of FELA was the purpose of the consolidation, though it was well understood to be one of the many results).) 99 And with respect to MTA's consolidated police force, as with respect to other financial, personnel, and asset-management matters such as those described above, the record reveals an intermingling of MTA and LIRR functions. Although employed by MTA, the officers use LIRR vehicles. And while the salaries of MTA policemen who were formerly LIRR employees are funded by MTA, [t]he physical creation of the check itself is done by the Long Island Railroad Treasury Department for the employees up to the rank of captain. (Dellaverson Dep. at 101.) 100 In sum, MTA's relationship to LIRR is not limited to its status as stockholder of a subsidiary. While LIRR's own employees are responsible for running the trains and collecting the fares, there is more to the management and operation of the business, 45 U.S.C. § 51, of a railroad than operation of the transportation facilities themselves. MTA, as described above, is directly and integrally involved in essential business aspects of LIRR operations, as well as in providing police services that are directly in furtherance as LIRR's business as a railroad. MTA has not called to our attention any case, and we are aware of none, in which a company so integrally involved in the essential business aspects of the railroad's operations, and was the employer of the person injured in the course of employment that was designed to advance the railroad's business, was ruled not an employer within the meaning of FELA.