RAILROAD (EMPLOYMENT JURISDICTION OF RAILROAD RETIREMENT BOARD) / D.C. Circuit vacated and remanded a decision of the Railroad Retirement Board holding that a holding company of certain shortline / Class III railroads was an “employer” for the purposes of (1) the Railroad Retirement Act, and (2) the Railroad Unemployment Insurance Act – the D.C. Circuit: Not such an “employer” because such holding company was not “under common control” with a railroad.

Indiana Boxcar Corporation v. Railroad Retirement Board, No. 12-1150, Slip copy (U.S. Court of Appeals for the District of Columbia Circuit, April 9, 2013). Free copy available here.

Note amicus brief filed by the trade group for short line / Class III railroads, the American Short Line and Regional Railroad Association.

The key question at stake is whether or not holding companies that own and operate such short line / Class III railroads are “employers” under the jurisdiction  of the Railroad Retirement Board – with all the differences that indicates for their legal and financial obligations vis-à-vis their employees. Such holding companies include names like Genesee & Wyoming (with its purchase last year of another great shortline / Class III railroad holding company, RailAmerica), and smaller concerns like TBG Holdings.

The gist of the D.C. Circuit’s opinion was that under Railroad Retirement Board precedent of long standing, the term “common control” did not apply to two companies in a parent-subsidiary relationship. Here, the Railroad Retirement Board departed from such precedent and failed to offer any explanation of that departure. Correspondingly, under the Administrative Procedure Act, the D.C. Circuit held that the Railroad Retirement Board’s decision was “arbitrary and capricious”.