Court Opinion

ID: 4343883
Source: CourtListenerOpinion
Date Created: 2018-11-21 19:00:47.706867+00
Date Added: 2024-06-11T14:21:42.630992
License: Public Domain

Case: 17-12961   Date Filed: 11/21/2018   Page: 1 of 14

                                                                   [PUBLISH]

          IN THE UNITED STATES COURT OF APPEALS

                  FOR THE ELEVENTH CIRCUIT
                    ________________________

                           No. 17-12961
                     ________________________

               D.C. Docket No. 3:15-cv-00427-BJD-JRK

CSX CORPORATION,
ATLANTIC LAND AND IMPROVEMENT COMPANY,
CARROLLTON RAILROAD,
CHESSIE COMPUTER SERVICES, INC.,
CSX INTERMODAL TERMINALS, INC.,
CSX RAIL PAYROLL SERVICES, INC.,
CSX REAL PROPERTY, INC.,
CSX TRANSPORTATION, INC.,
CSX TRANSPORTATION TERMINALS,
CYBERNETICS & SERVICES, INC.,
FRUIT GROWERS DISPATCH, INC.,
FRUIT GROWERS EXPRESS COMPANY,
TOTAL DISTRIBUTION SERVICES, INC.,
TRANSFLO TERMINAL SERVICES, INC.,

                                                      Plaintiffs - Appellants,

                               versus

UNITED STATES OF AMERICA,

                                                       Defendant - Appellee.
               Case: 17-12961       Date Filed: 11/21/2018       Page: 2 of 14

                              ________________________

                      Appeal from the United States District Court
                          for the Middle District of Florida
                            ________________________

                                   (November 21, 2018)

Before WILSON, and JORDAN, Circuit Judges, and MOORE, * District Judge.

PER CURIAM:

       This case concerns whether the Railroad Retirement Tax Act (RRTA)

imposes a tax on (1) a railroad’s stock transfers to its employees and (2) a

railroad’s provision of relocation benefits to its employees. CSX Corporation

(CSX) maintains that neither is taxable and, accordingly, seeks a refund of federal

employment taxes paid in 2009 under the RRTA. On cross-motions for summary

judgment, the district court held that both the stock options and the relocation

benefits were taxable compensation under the RRTA. In light of intervening

Supreme Court precedent and our plain reading of the RRTA, we reverse and

remand with instructions to enter judgment in favor of CSX.

                                              I.

       Railroads and their employees are not a part of the Social Security system

and do not participate in the Federal Insurance Contributions Act (FICA) taxes that

fund Social Security. Instead, Congress has enacted a separate statutory scheme—

*
 Honorable William T. Moore Jr., United States District Judge for the Southern District of
Georgia, sitting by designation.
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the Railroad Retirement Act—to provide federal pensions and benefits to railroad

workers. These pensions are funded through taxes imposed by the RRTA.

      At issue in this case is whether the railroad’s stock options and relocation

benefits were properly taxed as compensation. The RRTA defines “compensation”

as “any form of money remuneration paid to an individual for services rendered as

an employee to one or more employers.” 26 U.S.C. § 3231(e)(1). Compensation

specifically does not include:

             an amount paid specifically—either as an advance, as
             reimbursement or allowance—for traveling or other bona
             fide and necessary expenses incurred or reasonably
             expected to be incurred in the business of the employer
             provided any such payment is identified by the employer
             either by a separate payment or by specifically indicating
             the separate amounts where both wages and expense
             reimbursement or allowance are combined in a single
             payment . . . .

Id. § 3231(e)(1)(iii).

                                         II.

      The district court’s interpretation of the RRTA is a question of law we

review de novo. See United States v. Garrett, 3 F.3d 390, 390 (11th Cir. 1993).

We need only briefly address the issue of stock compensation. The parties agree—

and so do we—that the Supreme Court’s decision in Wisconsin Cent. Ltd. v. United

States, 138 S. Ct. 2067 (2018), is dispositive. Under Wisconsin Central, the phrase

“money remuneration” in the RRTA refers only to currency or a medium of

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exchange. Id. Stock options are not a form of “money remuneration” under the

RRTA, and therefore are not taxable compensation. Id.

      Wisconsin Central, as well as our plain reading of the statute, guides our

resolution of the second issue—whether relocation benefits are taxable

compensation under the RRTA. Wisconsin Central instructs us to interpret the

meaning of “compensation” in the RRTA narrowly. As the Supreme Court

explained, the RRTA arises out of a particular time in history when railroads

“compensated employees not just with money but also with food, lodging, railroad

tickets, and the like.” Id. at 2070. Congress did not choose to tax these in-kind

benefits, even though such benefits are taxed elsewhere in the tax code. Reading

the RRTA and FICA side-by-side is illustrative; the former taxes only “money

remuneration,” while FICA taxes “all remuneration,” including benefits “paid in

any medium other than cash.” Id. at 2071.

      The issue of whether relocation benefits are taxable compensation can be

broken into two sub-issues. The first is whether relocation benefits and moving

expenses are forms of money remuneration and therefore compensation under the

RRTA. While Wisconsin Central suggests the answer to this question is no, it is

not clear that CSX preserved this issue on appeal. We therefore decline to hold

whether relocation benefits—or any other in-kind benefit with the exception of

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stock options—can be considered a form of money remuneration under the RRTA

and focus our attention on the second issue.

      The second issue is, notwithstanding the meaning of money remuneration,

whether relocation benefits and moving expenses are excluded from compensation

under the business expense provision of 26 U.S.C. § 3231(e)(1)(iii). That

provision excludes from compensation “an amount paid specifically—either as an

advance, as reimbursement or allowance—for traveling or other bona fide and

necessary expenses incurred or reasonably expected to be incurred in the business

of the employer . . . ,” and which are substantiated in accordance with the statutory

requirements. Id.

      The government urges that § 3231(e)(1)(iii) applies only to short-term

traveling expenses given the statute’s legislative history and the context in which it

was enacted. Conversely, CSX maintains that such a reading contradicts the plain

language of the text, which excludes from compensation “an amount paid . . . for

traveling or other bona fide and necessary expenses incurred or reasonably

expected to be incurred in the business of the employer . . . .” Id. (emphasis

added). We agree with CSX. A straightforward reading of this statute suggests

that it covers more than travel. The government’s argument that § 3231(e)(1)(iii)

primarily concerns short-term travel is only persuasive if we make inferences from

legislative history, but we do not typically “resort to legislative history” when a

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statute is relatively clear, and we “certainly should not do so to undermine the plain

meaning of the statutory language.” Harris v. Garner, 216 F.3d 970, 976 (11th

Cir. 2000) (en banc); see also CBS Inc. v. PrimeTime 24 Joint Venture, 245 F.3d
1217, 1224 (11th Cir. 2001) (“The ‘plain’ in ‘plain meaning’ requires that we look

to the actual language used in a statute, not to the circumstances that gave rise to

that language.”).

      Where the Supreme Court has instructed that we should construe

compensation in the RRTA narrowly, and the plain language of the statute

excludes bona fide and necessary business expenses that meet certain statutory

requirements from compensation, we decline to read the statute inconsistently with

those commands. Accordingly, we hold that relocation benefits and moving

expenses that comport with the statutory requirements of 26 U.S.C. §

3231(e)(1)(iii) are excluded from taxable compensation under the RRTA.

      Our decision today does not mean that a railroad can exclude from

compensation anything it deems necessary for its business. Section 3231(e)(1)(iii)

excludes from compensation only certain forms of payments (advances,

allowances, and reimbursements), only if they are bona fide and necessary business

expenses, and only if they are substantiated in accordance with the statutory

requirements. Whether CSX complied with these statutory requirements is outside

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the scope of today’s decision and may be considered by the district court on

remand.

      We reverse the judgment of the district court and remand for further

consideration of the statutory requirements and the calculation of CSX’s taxable

compensation in accordance with this opinion.

      REVERSED AND REMANDED.

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JORDAN, Circuit Judge, concurring:

      I join the court’s opinion, and add the following thoughts with respect to 26

U.S.C. § 3231(e)(1)(iii), a provision of the RRTA.

      “In determining the meaning of a statute, a court looks first to its language.”

R.R. Concrete Crosstie Corp. v. R.R. Ret. Bd., 709 F.2d 1404, 1407 (11th Cir. 1983).

In relevant part, subsection (e)(1)(iii) exempts from taxable compensation the

amount railroads pay “for traveling or other bona fide and necessary expenses

incurred or reasonably expected to be incurred in the business of the employer.”

This language is undeniably broad, but it is also unmistakably clear; it exempts

“traveling expenses” and “other bona fide and necessary expenses” as long as they

are incurred or reasonably expected to be incurred in the employer’s business.

Relocation benefits, in my view, fit comfortably within this broad provision.

      We interpret words “consistent with their ‘ordinary meaning . . . at the time

Congress enacted the statute.’” Wisconsin Cent. Ltd. v. United States, 138 S. Ct.
2067, 2070 (2018) (citation omitted). When Congress enacted subsection (e)(1)(iii)

in 1976, “bona fide” meant “[d]one or made in good faith.” American Heritage

Dictionary 195 (2d ed. 1976).      See also Webster’s Third New International

Dictionary 250 (1981) (defining “bona fide” as “made in good faith without fraud or

deceit”). And although “necessary” can mean things that are “essential” or that

“must be had,” see id. at 1510, in tax cases the Supreme Court has “consistently

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construed the term ‘necessary’ as imposing only the minimal requirement that the

expense be ‘appropriate or helpful.’” Comm’r v. Tellier, 383 U.S. 687, 689 (1966)

(citation omitted).

      CSX argues that its relocation benefits are bona fide and necessary expenses,

incurred to move qualified and experienced employees where they are needed

instead of hiring new ones. The government does not dispute that CSX’s relocation

benefits are generally bona fide or necessary. Instead, it argues that the statutory

text covers only short-term travel, and that relocation benefits do not constitute

expenses for such travel.

      The government makes two points in support of its position, both of which

rely on the structure of § 3231. The government first asserts that the general

“traveling or other bona fide and necessary expenses” language of subsection

(e)(1)(iii) is limited by a more specific provision in the Internal Revenue Code.

Specifically, § 3231(e)(5) states that compensation does not include benefits that an

employee can reasonably expect to exclude from his or her income, and references

several other sections of the Code, including 26 U.S.C. § 132 (“Certain fringe

benefits”), which in turn excludes “qualified moving expense[s].” See § 132(a)(6).

According to the government, “traveling and other bona fide and necessary

expenses” cannot include relocation benefits because the Code already addresses

moving expenses in another provision. The government’s second point is related to

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its first. It says that if we read subsection (e)(1)(iii) to include relocation benefits,

such a reading would render subsection (e)(5) superfluous.

      The Fifth Circuit recently found these arguments persuasive in BNSF Railway

Co. v. United States, 775 F.3d 743, 759 (5th Cir. 2015). There, the railroad also

claimed that certain relocation benefits were exempt under § 3231(e)(1)(iii). The

government maintained in BNSF, as it does here, that under the specific-general

canon and the rule against superfluity subsection (e)(1)(iii) must have a narrower

meaning that excludes relocation benefits. The Fifth Circuit agreed and held “that a

more reasonable interpretation of § 3231(e)(1)(iii) permits exclusion of payments to

employees for traveling expenses and bona fide and reasonable expenses related to

travel,” but not relocation benefits. BNSF Railway Co., 775 F.3d at 759.

      With respect, I am not persuaded. As a general rule, when the relevant

language is straightforward, our interpretive function ceases and we should “enforce

[the statute] according to its terms.” United States v. Ron Pair Enters., 489 U.S.
235, 241 (1989). Statutory canons are often useful tools, but they “are no more than

rules of thumb that help courts determine the meaning of legislation.” Connecticut

Nat’l Bank v. Germain, 503 U.S. 249, 253 (1992). When the plain meaning is clear,

that “often vitiates the need to consider any of the other canons.” CBS Inc. v.

PrimeTime 24 Joint Venture, 245 F.3d 1217, 1225 n.6 (11th Cir. 2001). See also

New York ex rel. New York State Office of Children and Family Services v. U.S.

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Dept. of Health and Human Services, 556 F.3d 90, 97 (2d Cir. 2009) (explaining that

it is “unnecessary . . . to resort to canons of construction” when the statutory

language is clear); United States v. Roberson, 459 F.3d 39, 55 (1st Cir. 2006)

(“Absent a conflict between the two provisions, resort to the canons of construction

(which are, after all, only tools of construction) is unnecessary.”).

      The terms “traveling,” “bona fide,” and “necessary” may be broad, but they

are not vague. And their plain meaning vitiates any need for us to rely on the

specific-general or superfluity canons. See Penn. Dept. of Corrections v. Yeskey,

524 U.S. 206, 212 (1998) (“[T]he fact that a statute can be applied in situations not

expressly anticipated by Congress does not demonstrate ambiguity. It demonstrates

breadth.”).

      Even if we were to consider the canons invoked by the government, the

drafting history of the two subparagraphs casts doubt on the government’s theory

that subsection (e)(5) removes relocation benefits from the ambit of subsection

(e)(1)(iii). Congress enacted subsection (e)(1)(iii)—then labelled subsection (iv)—

in 1976, and its language has since remained unchanged. See 90 Stat. 2526, Pub. L.

95-547 (Oct. 18, 1976). Congress did not add subsection (e)(5) until nearly a decade

later, in 1984. See 98 Stat. 884, Pub. L. 98-369 (July 18, 1984). Subsection (e)(5)

has, from its passage, excluded benefits that employees could claim under specific

provisions of the Internal Revenue Code, including § 132. But § 132 did not include

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an exception for moving reimbursements until 1993. See 107 Stat. 474, Pub. L. 103-

66 (Aug. 10, 1993). Because subsection (e)(5) itself did not include moving

expenses until a much later amendment to a cross-referenced provision, there is no

reason to believe that Congress intended to exclude moving expenses from

subsection (e)(1)(iii) when it enacted subsection (e)(5).

      On a related note, nothing in the text of subsection (e)(5) suggests that

Congress intended to repeal subsection (e)(1)(iii) sub silentio. Absent an explicit

statement, later statutes are not presumed to impliedly repeal earlier ones. See Nat’l

Ass’n of Home Builders v. Defs. of Wildlife, 551 U.S. 644, 662 (2007). Courts only

infer a statutory repeal when the “later statute ‘expressly contradict[s] the original

act’” or when “such a construction ‘is absolutely necessary . . . in order that [the]

words [of the later statute] shall have any meaning at all.’” Id. (alterations in

original) (quoting Traynor v. Turnage, 485 U.S. 535, 548 (1988)).

      There is no such contradiction here, for subsections (e)(1)(iii) and (e)(5) do

not conflict; they both exclude certain benefits from the definition of

“compensation.” The former excludes expenses that serve the employer’s interests

(those expenses that are incurred or expected to be incurred in the business of the

employer), and the latter excludes expenses that benefit the employee. At most, the

subsections overlap, and courts “[do] not hesitate[ ] to give effect to two statutes that

overlap, so long as each reaches some distinct cases.” J.E.M. Ag Supply, Inc. v.

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Pioneer Hi-Bred Int’l, Inc., 534 U.S. 124, 144 (2001). Subsection (e)(5) covers

moving expenses only by cross-reference to § 132. It also covers numerous fringe

benefits unrelated to travel, including working conditions, employee discounts, and

retirement planning services. See § 132(a)(2), (3), & (7). So subsection (e)(5) will

continue to cover far more than subsection (e)(1)(iii) could ever reach.

      We expect some overlap in complex statutory schemes like the Internal

Revenue Code. See Mercy Hosp., Inc. v. Azar, 891 F.3d 1062, 1068 (D.C. Cir. 2018)

(“A little overlap, either by accident or design, is to be expected in any complex

statutory scheme with interdependent provisions.”). See also Michael Livingston,

Congress, the Courts, and the Code: Legislative History and the Interpretation of

Tax Statutes, 69 Tex. L. Rev. 819, 826-27 (1991) (noting that “[w]hat makes the tax

law so complex” is the “maddening way in which the provisions overlap, intersect,

and occasionally even contradict each other within a given transaction.”). If we can

say anything good about this present state of affairs, it is that overlap provides

Congress with the flexibility to change one part of the Code without necessarily

undermining a policy choice made elsewhere. For example, Congress recently chose

to temporarily suspend the exclusion for qualified moving expense reimbursements

under § 132(g)(6). See 131 Stat. 2088, Pub. L. 115-97 (Dec. 22, 2017). The overlap

between subsections (e)(1)(iii) and (e)(5) gave Congress the room to make that

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change for employees without significantly interrupting the practices of railroads

under the RRTA.

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