Opinion ID: 776527
Heading Depth: 2
Heading Rank: 1

Heading: The Scope of FELA

Text: 30 FELA, which is a broad remedial statute whose objective is to provide a federal remedy for railroad workers who suffer personal injuries as a result of the negligence of their employer, and which is to be liberal[ly] constr[ued] to achieve that objective, Atchison, Topeka & Santa Fe Ry. Co. v. Buell, 480 U.S. 557, 561-62, 107 S.Ct. 1410, 94 L.Ed.2d 563 (1987) (internal quotation marks omitted), provides, in part, that 31 [e]very common carrier by railroad while engaging in [interstate or foreign] commerce ... shall be liable in damages to any person suffering injury while he is employed by such carrier in such commerce... for such injury or death resulting in whole or in part from the negligence of any of the officers, agents, or employees of such carrier, or by reason of any defect or insufficiency, due to its negligence, in its cars, engines, appliances, machinery, track, roadbed, works, boats, wharves, or other equipment. 32 45 U.S.C. § 51. As amended in 1939, this provision covers 33 [a]ny employee of a carrier, any part of whose duties as such employee shall be the furtherance of interstate or foreign commerce; or shall, in any way directly or closely and substantially, affect such commerce. 34 Id. The test for coverage under the amendment is not whether the employee is engaged in transportation, but rather whether what he does in any way furthers or substantially affects transportation. Reed v. Pennsylvania R. Co., 351 U.S. 502, 505, 76 S.Ct. 958, 100 L.Ed. 1366 (1956). Nor are the benefits of the Act limited to those exposed to the special hazards of the railroad industry. Id. at 505-06, 76 S.Ct. 958; see id. at 503, 506, 76 S.Ct. 958 (clerical employee in charge of filing maintenance-related tracings of railroad's cars, engines, and tracks, inter alia, injured when a cracked window pane in her office blew in, was covered by FELA). 35 FELA defines the term common carrier to include the receiver or receivers or other persons or corporations charged with the duty of the management and operation of the business of a common carrier. Id. § 57. The term is not otherwise defined, and most of the pertinent cases construing the applicability of FELA, or of analogous federal statutes, to a given employer have been concerned with whether the employer was a carrier, or a common carrier, or a railroad. 36 In Wells Fargo v. Taylor, 254 U.S. 175, 41 S.Ct. 93, 65 L.Ed. 205 (1920), the Supreme Court considered whether Wells Fargo, an express shipping company that had purchased carriage on an unaffiliated railroad, was itself a common carrier by railroad within the meaning of FELA. The Court concluded that it was not, because Wells Fargo was not the operator of the railroad: 37 In our opinion the words common carrier by railroad, as used in the act, mean one who operates a railroad as a means of carrying for the public, — that is to say, a railroad company acting as a common carrier. This view not only is in accord with the ordinary acceptation of the words, but is enforced by the mention of cars, engines, track, roadbed, and other property pertaining to a going railroad.... 38 Id. at 187-88, 41 S.Ct. 93. In Edwards v. Pacific Fruit Express Co., 390 U.S. 538, 88 S.Ct. 1239, 20 L.Ed.2d 112 (1968), the defendant sued under FELA was a refrigerator car company that owned, maintained, and repaired refrigerator cars that it leased to railroads for transport of perishable products in interstate commerce; it also owned switching tracks to facilitate its repair of such cars. The Court concluded that the company was not covered by FELA, noting that there exist a number of activities and facilities which, while used in conjunction with railroads and closely related to railroading, are yet not railroading itself. Id. at 540, 88 S.Ct. 1239; cf. Robinson v. Baltimore & Ohio R. Co., 237 U.S. 84, 35 S.Ct. 491, 59 L.Ed. 849 (1915) (porter employed by Pullman Company, which paid his salary and controlled his work on a railroad car that was owned by Pullman but was hauled by an independent railroad was not an employee of the railroad). 39 In Southern Pacific Terminal Co. v. ICC, 219 U.S. 498, 31 S.Ct. 279, 55 L.Ed. 310 (1911), the Court considered whether the granting of preferential treatment to a customer by Southern Pacific Terminal Co. (SP Terminal), an operator of wharfage facilities, was within the jurisdiction of the Interstate Commerce Commission (ICC) under the Interstate Commerce Act, c. 104, 24 Stat. 379 (1887) (codified, as amended, in various sections of 49 U.S.C.), which prohibited, inter alia, undue customer preferences by railroad[s]. SP Terminal was chartered to construct and maintain wharves and docks for the accommodation of vessels, not to operate a railroad. However, the statute defined the term railroad to include all bridges and ferries used or operated in connection with any railroad, Southern Pacific Terminal, 219 U.S. at 523, 31 S.Ct. 279 (internal quotation marks omitted). Moreover, SP Terminal was 99% owned by the Southern Pacific Company, which also owned 99% of several separately and individually incorporated railways; and SP Terminal owned the only track facilities available for movement of railroad cars between ships and the tracks of one of the railroads. The Supreme Court, noting that SP Terminal's property created a unity of the railroad's lines and the terminal facilities, id. at 522, 31 S.Ct. 279, and was necessary in the transportation or delivery of the interstate and foreign freight transported by the lines of the Southern Pacific system, id. at 523, 31 S.Ct. 279 (internal quotation marks omitted), concluded that SP Terminal's operations were within the jurisdiction of the ICC, despite the fact that SP Terminal itself owned no cars, no locomotives, no stock in any of the railroads, and issued no bills of lading. The Court found that one 40 important fact is the control of the properties by the Southern Pacific Company through stock ownership. There is a separation of the companies if we regard only their charters; there is a union of them if we regard their control and operation through the Southern Pacific Company. This control and operation are the important facts to shippers. It is of no consequence that by mere charter declaration the terminal company is a wharfage company, or the Southern Pacific a holding company. Verbal declarations cannot alter the facts. The control and operation of the Southern Pacific Company of the railroads and the terminal company have united them into a system of which all are necessary parts, the terminal company as well as the railroad companies.... the terminal company was organized to furnish terminal facilities for the system at the port of Galveston; and ... shipments on the railroad lines from and to points in different states of the Union pass and repass over the docks of the terminal company. It forms a link in this chain of transportation. It is necessary to complete the avenue through which move shipments over these lines owned by a single corporation. 41 Id. at 521-22, 31 S.Ct. 279 (internal quotation marks omitted). The Court stated that 42 a corporation such as this terminal company, which has competing lines, should not be permitted to defeat the jurisdiction of th[e] Commission by showing that it is not in fact owned by any railroad company.... The terminal company is part and parcel of the system engaged in the transportation of commerce, and to the extent that such commerce is interstate the Commission has jurisdiction to supervise and control it within statutory limits. To hold otherwise would in effect permit carriers generally, though the organization of separate corporations, to exempt all of their terminals from [the ICC's] regulating authority. 43 Id. at 522, 31 S.Ct. 279 (internal quotation marks omitted). The Court rejected the defendants' contentions that the parent company and each of the subsidiaries must be viewed independently of one another merely because they were separately incorporated: 44 The record does not present a case of stock ownership merely or of a holding company which was content to hold. It presents a case, as we have already said, of one actively managing and uniting the railroads and the terminal company into an organized system. And it is with the system that the law must deal, not with its elements. Such elements may, indeed, be regarded from some standpoints as legal entities; may have, in a sense, separate corporate operation; but they are directed by the same paramount and combining power and made single by it. In all transactions it is treated as single. In the ordinance of the city of Galveston, in the act of 1899, of the legislature of the state, and in public circulars and in the lease of [the favored customer], it is the system which is dealt with, and not its separate links. And, we have seen, the terminal facilities which the Terminal Company was authorized to maintain were for the system, not for the corporate elements considered separately. 45 Id. at 523-24, 31 S.Ct. 279. 46 In United States v. Union Stock Yard & Transit Co., 226 U.S. 286, 33 S.Ct. 83, 57 L.Ed. 226 (1912), an action to enjoin various violations of the Interstate Commerce Act, the Court considered whether the Union Stock Yard & Transit Company of Chicago (Stock Yard Company), organized to maintain a stockyard, was a railroad within the meaning of that statute. Stock Yard Company, more than 90% of whose stock was owned by a holding company, Chicago Junction Railways & Union Stock Yards Company, was authorized to operate normal stockyard facilities for loading, unloading, and caring for freight. It was also authorized to own and operate a railroad system, moving rail cars to and from trunk lines for transportation to and from points outside of the state. At some point, Stock Yard Company leased the latter aspect of the business to an entity that eventually became known as Chicago Junction Railway Company (Junction Company), nearly all of whose stock was owned by the same holding company that owned Stock Yard Company. Junction Company thereafter performed the railroad services and paid Stock Yard Company two-thirds of the profits received by the Junction Company for performing the service in connection with the railroad transportation. Id. at 303, 33 S.Ct. 83. That joint service [then took] the place of the single service formerly rendered by the Stock Yard Company. Id. In view of this continuity of operation, the manner of compensation and the performance of services in connection with interstate transportation by railroads, id., the Supreme Court concluded that the two companies, 47 because of the character of the service rendered by them, their joint operation and division of profits and their common ownership by a holding company, are to be deemed a railroad within the terms of the act of Congress to regulate commerce, and the services which they perform are included in the definition of transportation as defined in that act.... [T]he Stock Yard Company did not exempt itself from the operation of the law by leasing its railroad and equipment to the Junction Company, for it still receives two-thirds of the profits of that company and both companies are under a common stock ownership with its consequent control, 48 id. at 306, 33 S.Ct. 83. 49 In United States v. Brooklyn Eastern District Terminal, 249 U.S. 296, 39 S.Ct. 283, 63 L.Ed. 613 (1919), the Court considered whether the Brooklyn Eastern District Terminal (Terminal or Brooklyn Terminal), chartered not as a railroad but as a navigation corporation, was a railroad within the meaning of the Hours of Service Act, 45 U.S.C. § 61 et seq., repealed by Pub. L. No. 103-272, § 7(b), 108 Stat. 1379 (1994), which prohibited any common carrier operating a railroad in interstate commerce from requiring or permitting an employee to remain on duty for more than 16 consecutive hours. In connection with its business of transporting merchandise on boats in New York harbor and adjacent waters, Brooklyn Terminal, under individual contracts with 10 interstate railroads and several steamship companies, operated a freight station at which it received freight for transport to its Brooklyn docks. The Court stated that the precise question before it was 50 whether the fact that the Terminal conducts these operations, not as an integral part of a single railroad system but wholly as an agent for one or several, exempts the railroad companies, because they are not the employer and exempts the Terminal, because it is not a common carrier. 51 249 U.S. at 305, 39 S.Ct. 283. The Court concluded that although Brooklyn Terminal did not hold itself out as a common carrier, did not itself own the railroad cars that traveled over its tracks, and had tracks that covered only a short route, it must be considered a common carrier by railroad given that the services it rendered were public in nature and of a kind ordinarily rendered by a common carrier: 52 In no respect ... d[id] the service actually performed by the Terminal for or in respect to shippers differ from that performed by the railroad companies at their other stations. True, the service is performed by the Terminal under contracts with the railroad companies as agent for them and not on its own account. But a common carrier does not cease to be such merely because the services which it renders to the public are performed as agent for another. 53 Id. at 306-07, 39 S.Ct. 283. 54 In United States v. State of California, 297 U.S. 175, 56 S.Ct. 421, 80 L.Ed. 567 (1936), the Court considered whether the State of California, in the operation of its State Belt Railroad to serve some 175 industrial plants, was a common carrier within the meaning of the Safety Appliance Act, 45 U.S.C. § 1 et seq., repealed by Pub. L. No. 103-272, § 7(b), 108 Stat. 1379 (1994), which prohibited such companies from using rail cars with defective coupling equipment. Though the State maintained that it was not a common carrier because it, inter alia, maintained no freight station and issued no bills of lading, the Court concluded that 55 [a]ll the essential elements of interstate rail transportation are present in the service rendered by the State Belt Railroad. They are the receipt and transportation, for the public, for hire, of cars moving in interstate commerce.... Its service, involving as it does the transportation of all carload freight moving in interstate commerce between the industries concerned and all railroad and steamship lines reaching the port, is of the same character, though wider in scope, as that held to be common carriage by rail in interstate commerce in the Brooklyn Terminal and the Union Stockyards cases. They abundantly support the conclusion that such is the service rendered by the state in the present case.... 56 297 U.S. at 182-83, 56 S.Ct. 421. 57 The matter of intra-corporate-family responsibility, discussed in Southern Pacific Terminal, 219 U.S. 498, 31 S.Ct. 279, 55 L.Ed. 310, and Union Stock Yard & Transit, 226 U.S. 286, 33 S.Ct. 83, 57 L.Ed. 226, was revisited in United States v. Bestfoods, 524 U.S. 51, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998), in which the United States brought suit under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. § 9601 et seq., against a parent corporation for the costs of cleaning up industrial waste generated at a chemical plant owned by its subsidiary. CERCLA imposes liability on any person who at the time of disposal of any hazardous substance owned or operated any facility. 42 U.S.C. § 9607(a)(2). The question before the Supreme Court in Bestfoods was whether a parent corporation that actively participated in, and exercised control over, the operations of a subsidiary may, without more, be held liable as an operator of a polluting facility owned or operated by the subsidiary. 524 U.S. at 55, 118 S.Ct. 1876 (emphasis added). The Court answered that precise question in the negative, noting that although the parent and subsidiary had many of the same officers and directors, courts generally presume that the directors are wearing their `subsidiary hats' and not their `parent hats' when acting for the subsidiary, id. at 69, 118 S.Ct. 1876 (other internal quotation marks omitted). Thus, liability under a statute that does not itself pierce the corporate veil may not be imposed on a parent corporation for the acts of its subsidiary corporation based solely on the parent's 100% ownership of the subsidiary and active participation in or control of the subsidiary's board of directors. See id. at 68, 118 S.Ct. 1876. The Court pointed out, however, that a corporate parent that actively participated in, and exercised control over, the operations of the facility itself may be held directly liable in its own right as an operator of the facility. Id. at 55, 118 S.Ct. 1876. [A] parent can be held directly liable when the parent operates the facility in the stead of its subsidiary or alongside the subsidiary in some sort of a joint venture. Id. at 71, 118 S.Ct. 1876. 58 Several of these cases were synthesized in Lone Star Steel Co. v. McGee, 380 F.2d 640, 646-48 (5th Cir.), cert. denied, 389 U.S. 977, 88 S.Ct. 480, 19 L.Ed.2d 471 (1967), in which the Fifth Circuit considered whether Lone Star, a steel company, was a common carrier by railroad within the meaning of FELA and the Safety Appliance Act. Lone Star did not dispute that it was a carrier by rail; it had a rail line within its plant area and handled incoming shipments for other companies that had facilities on its property. But it contended that it was not a common carrier, given that it made no direct charge by way of tariffs and received no direct freight revenues for any of its rail services. However, Lone Star was virtually the sole stockholder of T & N, a railroad company that concededly was a common carrier. T & N, in addition to charging for its own services, charged for the rail services performed by Lone Star; and in a recent 10-year period, T & N had paid Lone Star $2 million in dividends. 59 After reviewing the circumstances and analyses in cases such as State of California, 297 U.S. 175, 56 S.Ct. 421, 80 L.Ed. 567, Brooklyn Eastern District Terminal, 249 U.S. 296, 39 S.Ct. 283, 63 L.Ed. 613, Union Stock Yard & Transit, 226 U.S. 286, 33 S.Ct. 83, 57 L.Ed. 226, and Southern Pacific Terminal, 219 U.S. 498, 31 S.Ct. 279, 55 L.Ed. 310, the Lone Star court found four considerations to be 60 of prime importance in determining whether a particular entity is a common carrier. First — actual performance of rail service, second — the service being performed is part of the total rail service contracted for by a member of the public, third — the entity is performing as part of a system of interstate rail transportation by virtue of common ownership between itself and a railroad or by a contractual relationship with a railroad, and hence such entity is deemed to be holding itself out to the public, and fourth — remuneration for the services performed is received in some manner, such as a fixed charge from a railroad or by a percent of the profits from a railroad. 61 380 F.2d at 647. Applying those criteria to the circumstances before it, the court concluded that Lone Star was a common carrier: 62 Unquestionably, Lone Star performs rail services and such services are a part of the total rail transportation contracted for and required by the industries located on its plant site. While it does not perform these services under contract with T & N, it certainly is an integral part of the T & N system of interstate rail transportation. And finally, even though it does not receive money in the form of direct transportation charges from T & N or from the industries serviced, it is for all practical purposes the sole owner of T & N. It is closely allied with T & N, their operations are interwoven, and therefore it receives in the form of dividends a part of the rate charged the industries by T & N. It has been suggested that we cannot ignore the legal individuality of Lone Star and T & N and therefore, we are precluded from attaching any significance to the fact that Lone Star is essentially the sole stockholder of T & N and consequently receives dividends therefrom. It is contended that stock ownership does not make the two companies one. While we agree with this proposition, we do not think it is controlling because the record does not present a case of mere stock ownership. Instead the record reflects that the operations of the two are highly integrated and mutually dependent. Id. at 647-48. The court concluded that 63 [i]n light of the rail services Lone Star has performed, the fact that such services are actually rendered in fulfillment of T & N's obligations as a carrier, and giving consideration to the facts disclosed in the record revealing the close connection between the two companies and their mutual dependence on each other, ... both Lone Star and T & N are operating, jointly, a railroad system which constitutes each of them a common carrier. 64 Id. at 648-49. 65 In sum, the above cases reveal that companies that have no corporate affiliation or agency relationship with a railroad and merely supply the railroad with equipment such as refrigeration cars, or merely use the railroads to provide services such as courier deliveries for third persons, are not carriers within the meaning of FELA. See, e.g., Edwards v. Pacific Fruit Express Co., 390 U.S. at 540, 88 S.Ct. 1239; Wells Fargo v. Taylor, 254 U.S. at 187-88, 41 S.Ct. 93. On the other hand, companies in nonrailroad businesses that have rail lines and provide rail carriage ancillary to those businesses are common carriers by rail when they constitute necessary links to railroads that are common carriers. See, e.g., State of California, 297 U.S. at 182-83, 56 S.Ct. 421; Brooklyn Eastern District Terminal, 249 U.S. at 305-07, 39 S.Ct. 283; Lone Star Steel Co. v. McGee, 380 F.2d at 647-49. Further, a company that has neither its own rolling stock nor corporate stock in railroad companies may be considered a railroad if it is part of an integrated corporate family that includes common carriers by railroad and if it constitutes a necessary link to those carriers. See, e.g., Southern Pacific Terminal, 219 U.S. at 521-24, 31 S.Ct. 279; see also Union Stock Yard & Transit, 226 U.S. at 303-06, 33 S.Ct. 83. Even the fact that a company conducts [such] operations, not as an integral part of a single railroad system but wholly as an agent for one or several, does not exempt it from the status of common carrier. Brooklyn Eastern District Terminal, 249 U.S. at 305, 39 S.Ct. 283. And while corporate ownership of a subsidiary and overlapping offices and directorates are not, without more, sufficient to impose liability on the parent for conduct of the subsidiary under a statute that does not itself pierce the corporate veil, the parent may nonetheless be liable for operations of the subsidiary in which the parent itself, wearing its parenting hat, participates. See, e.g., Bestfoods, 524 U.S. at 55, 68-71, 118 S.Ct. 1876. 66 Bearing in mind the above principles and MTA's acknowledgement that LIRR is an interstate common carrier by railroad, and focusing on FELA's definition of common carrier, which include[s]... corporations charged with the duty of the management and operation of the business of a common carrier, 45 U.S.C. § 57, we turn to the question of whether MTA is within the scope of FELA as a manager or operator of LIRR's business.