Six cases involving the Railroad Retirement Board were resolved by the courts during fiscal year 2007, and several significant legal opinions were issued.

Court Cases

Eight cases of various types involving petitions for review of decisions of the Railroad Retirement Board were pending in the courts at the beginning of
fiscal year 2007, and one new case was opened during the year. Six cases were resolved during fiscal year 2007, and three cases were pending at the end of the year. The following describes the cases of most significance to railroad employers and employees.

On April 20, 2007, the United States Court of Appeals for the District of Columbia Circuit issued a decision affirming the decision of the Board in the case of American Orient Express Railway Company, LLC v. U.S. Railroad Retirement Board. At issue in this case was a coverage decision issued by the Board which had found American Orient Express Railway Company LLC, and its predecessor American Orient Express Railway Incorporated, to be covered rail carrier employers under the Railroad Retirement and Unemployment Insurance Acts.

On September 24, 2007, the United States Court of Appeals for the Seventh Circuit issued a decision in Weyerhaeuser Company v. Railroad Retirement Board, which affirmed in part and reversed in part a coverage decision issued by the Board that certain individuals who were on the payroll of Weyerhaeuser Company were actually performing covered rail service for the DeQueen and Eastern Railroad, a subsidiary of Weyerhaeuser. The Board’s decision granted service credits for certain individuals for specific periods of time, but denied service credits for certain other claimed periods of time based on the time limit within which requests to amend creditable service records must be made. The Court agreed with the Board’s decision that creditable service was performed for the DeQueen and Eastern Railroad. However, the Court also agreed with the position of Weyerhaeuser that the Board’s regulations would not permit the crediting of service beyond four years in the absence of a finding of fraud. Accordingly, the Court reversed the Board’s decision, which had granted limited retroactivity beyond the four-year period, and remanded the case for further consideration of the period for which service may be credited.

Legal Opinions

The following Legal Opinions are presented here because of their special significance or interest.

Legal Opinion L-2007-07 concerned an overpayment in the amount of a marital property award to the divorced spouse of a railroad employee annuitant. The employee annuitant was entitled to a disability annuity; however, he earned in excess of the monthly allowable disability earnings limitation for certain months, which meant that his annuity was not payable for those months. A marital property award under the Railroad Retirement Act is a portion of the annuity payable to the employee annuitant. Accordingly, when the annuity was not payable to the employee annuitant because of excess earnings, the marital property portion was also not payable. Because the employee annuitant did not notify the Board of his excess earnings, the annuity was not withheld for the months of earnings and the marital property portion was also erroneously paid to his divorced spouse for those months. Under Board regulations, the marital portion erroneously paid to the divorced spouse is considered an overpayment subject to recovery under section 10 of the Railroad Retirement Act. Section 10(c) of the Act provides that recovery of an overpayment may be waived if it is determined that the recipient is without fault and that recovery would be contrary to the purpose of the Act or against equity or good conscience. Legal Opinion L-2007-07 advised that although the employee annuitant was not without fault in causing the overpayment because he failed to notify the Board of his earnings, waiver of recovery may still apply in the case of the divorced spouse if she is without fault and recovery would be either contrary to the purpose of the Act or against equity or good conscience.

Legal Opinion L-2007-08 addressed the question of whether the Board may accept as proof of marriage the electronic image of the certificate of marriage obtained directly from the database of the clerk of a county court in Florida. L-2007-08 concluded that under Board regulations found at 20 CFR 219.31, the electronic image would constitute acceptable proof of marriage.

A settlement in payment of a wrongful discharge claim may be credited as compensation earned in past years for benefit entitlement purposes under the Railroad Retirement Act if the settlement includes pay for time lost, and if the employee’s employment relation to the employer for the months lost is completely reinstated. Legal Opinions L-2007-10 and L-2007-12 considered how two settlements of wrongful discharge claims would result in compensation creditable to the employee for benefit entitlement purposes.

L-2007-10 concerned identifying the amount of compensation to be credited from the wrongful discharge claims which were included in a settlement. A paragraph of the settlement allocated a sum which was agreed to be compensation subject to taxation under the Railroad Retirement Tax Act. The settlement agreement also allocated other sums to attorney’s fees and to other damages to be paid to the employee. Since the employee was reinstated as part of the settlement of claims, L-2007-10 advised that the employment relation was reinstated for the period of time between discharge and reinstatement. Given that the definition of compensation subject to the Tax Act and the Retirement Act are essentially the same, compensation in the amount identified by the settlement as subject to the Railroad Retirement Tax Act was to be allocated as compensation to months between discharge and reinstatement for purposes of the Railroad Retirement Act.

Legal Opinion L-2007-12 concerned a case where reinstatement and back pay arose from separate litigation. A Public Law Board decision under the Railway Labor Act found the employee to have been wrongfully discharged, and reinstated him to full seniority but without any back pay. The employee then brought a separate back pay claim in U.S. District Court under a State law. When the District Court ruled the Railway Labor Act decision did not preempt a back pay claim under State law, the parties proposed a payment to settle the case. L-2007-12 advised that while a settlement payment of a wrongful discharge claim may be credited as compensation only if the employment relationship for the period of time lost is fully reinstated, the Railroad Retirement Act did not prevent reinstatement and pay for time lost from being ordered in separate adjudications. Since the employee was reinstated with full seniority under the earlier Railway Labor Act decision, the settlement of the subsequent State court action for back pay could therefore include a payment for claimed months lost which would be credited as compensation to those months under the Railroad Retirement Act.

Appeals

Any claimant for benefits under the Railroad Retirement or Railroad Unemploy-ment Insurance Acts may appeal a determination he or she feels is not justified. This appeal must be filed within certain time frames. Appeals are heard and decided by the Bureau of Hearings and Appeals. An appellant who is dissatisfied with the decision on his or her appeal may further appeal the case to the three-member Board within a prescribed period of time.

Railroad Retirement Act

During fiscal year 2007, 594 appeals were filed with the Bureau of Hearings and Appeals under the Railroad Retirement Act, and the Bureau rendered decisions in 501 appeals. The initial or reconsideration decision was sustained in 161 cases. In 340 appeals the decision was favorable to the claimant in whole or in part.

Ninety-one appeals were filed with the Board in fiscal year 2007, which, added to the 39 appeals carried over from the previous year, brought the total to be considered to 130. Of 96 decisions, 68 sustained previous rulings of the hearings officer, nine were reversed, two were sustained in part and reversed in part, one was remanded to Operations, 12 were remanded to the Bureau of Hearings and Appeals, and four were dismissed. At the end of the year, 34 appeals were pending before the Board.

Railroad Unemployment Insurance Act

During fiscal year 2007, 31 appeals were filed with the Bureau of Hearings and Appeals under the Railroad Unemployment Insurance Act, and the Bureau rendered decisions in 27 appeals. The initial or reconsideration decision was sustained in 21 cases. In six appeals the decision was favorable to the claimant in whole or in part.

Six appeals were filed with the Board in fiscal year 2007, which, added to the five carried over from the previous year, brought the total to be considered to 11. The Board rendered decisions in seven cases of appeals from the decision of the referee, affirming the decision in five cases, remanding one to the Bureau of Hearings and Appeals and dismissing one. At the end of the year, four appeals were pending before the Board.