Opposition Brief — Washington Metropolitan Area Transit Authority v. Brock

Supreme Court, U.S.

f\ ; FILED *

o/

No. 86-1080 | MAR 28 1987

cea acme JR.

In the Supreme Court of the Buittetr States ———

OCTOBER TERM, 1986

WASHINGTON METROPOLITAN AREA TRANSIT

AUTHORITY; PETITIONER

Vv.

WILLIAM R. BROCK, SECRETARY OF LABOR

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE :

DISTRICT OF COLUMBIA CIRCUIT |

BRIEF FOR THE RESPONDENT IN OPPOSITION

CHARLES FRIED |

Solicitor General |

Department of Justice

Washington, D.C. 20530 ;

(202) 633-2217 |

GEORGE R. SALEM

Solicitor of Labor

ALLEN H. FELDMAN\

Associate Solicitor

MARY-HELEN MAUTNER

Counsel for Appellate Litigation

JAMES M. KRAFT

Attorney

Department of Labor

Washington, D.C. 20210

>

‘ on ond e

QUESTION PRESENTED

Whether the Washington Area Metropolitan Tran-

sit Authority may be required to contribute to a

statutory workers’ compensation fund that assumes

part of individual employers’ liabilities to workers

injured before mid-1982 in certain cases arising in

the District of Columbia.

(1)

TABLE OF CONTENTS

Page

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aid an ahiniaiscneetgneeintanemicipeanensntenmantoannesimnnnesios 2

a SG IE Oe 10

a ai ndinpeianensniiiniiaesenonacnaads 19

TABLE OF AUTHORITIES

Cases:

Garcia v. San Antonio Metropolitan Transit Au-

thority, 469 U.S. 528 (1985) .............................--- 11

Head Money Cases, 112 U.S. 580 (1884) -................ 9

Helvering Vv. Powers, 293 U.S. 214 (1934) _............ 11

Keerer vy. Washington Metropolitan Area Transit

Authority, 800 F.2d 1173 (D.C. Cir. 1986), cert.

denied, No. 86-1181 (Mar. 9, 1987) —.........-......... 3

Lawson v. Suwannee Fruit & S.S. Co., 336 U.S.

IT di inidiebdicdid-scaciidanenclidatncnebubevictnvatapdelssbhanase 4,18

Malone v. WMATA, 622 F. Supp. 1422 (E.D. Va.

SHE IRA ae ees Sen Ie a ee 16,17

Massachusetts vy. United States, 435 U.S. 444

a oa seni ans icicmactbeabapeie 8, 9, 10, 11, 12, 13

NLRB vy. Sears, Roebuck & Co., 421 U.S. 132

a a a, 16

Rambo v. United States, 492 F.2d 1060 (6th Cir.

1974), cert. denied, 423 U.S. 1091 (1976)........ 14

South Carolina ex rel. Tindal vy. Block, 717 F.2d

874 (4th Cir. 1983), cert. denied, 465 U.S. 1080

i cpuidaipintiaiealil 10, 14

Washington Metropolitan Area Transit Authority

v. Johnson, 467 U.S. 925 (1984) 2.022.222.2220. 3, 15,18

Youakim v. Miller, 425 U.S. 231 (1976) ~............... 16

Statutes and regulations:

District of Columbia Workmen’s Compensation

Act, ch. 612, $§ 1-2, 45 Stat. 600 —..................... 2

(ill)

IV

Statutes and regulations—Continued : Page

Longshore and Harbor Workers’ Compensation

Act, Pub. L. No. 98-426, 98 Stat. 1639, 33 U.S.C.

(Supp. II) 901 et seq. .. 2

§ 44(c) (2), 33 U.S.C. (Supp. II) 944(c) (2).. 5

Longshoremen’s and Harbor Workers’ Compensa-

tion Act, 33 U.S.C. (1982 ed.) 901 et seq......... 2

i Ee SUI cinoisiieinclaridnisicendinbidigabaneaieiiabaianiiets 17-18

re ele ECD cencencscnenerninsvctetenenennins 3

a I ia ic scrcatcnldeed naceniianenoneaianintd 3, 17-18

X_N Raa eae Meme 8, 4, 16, 18

et I IE ND irccicnncsmsitssnnancincaestiinasiunniin 4

re i cea aiicscincinnnnsnecemiperediiocgubens 3,18

§ 8,38 U.S.C. (1962 ed.) 906 ............................... 17

By MR 8 oR”. 2 Ee ener eee are 3, 4,18

§ 8(f), 33 U.S.C. (1982 ed.) 908(f) —........2. 17

at I ic iks ailksasidcacloventnnicinhinile 4

ER 8 SIRS ae ee 3,18

ras Oe et I ci cenietilitle 4

§ 18(b), 33 U.S.C. (1982 ed.) 918 (b) ...00 4

7S Sif oe | eee ENS. x

Og Se re I IID hiiccsecsincsensistonnintconiniioces 3

I ee 4

On i 5, 12

§ 44(c) (2), 33 U.S.C. (1982 ed.) 944(c) (2).. 4-5

§ 44(g), 33 U.S.C. (1982 ed.) 944(g) 2. 5

Pf gtk eR | |. | Reece Rac eee ee 7

§ 44(i), 33 U.S.C. (1982 ed.) 944 (i) 202. 3

§ 44(j), 33 U.S.C. (1982 ed.) 944(j) -.......... 4,5, 12,17

Washington Metropolitan Area Transit Authority

Interstate Compact, D.C. Code Ann. §§ 1-2431

Be ED edenntctesspaecisiviiettinshiinniadantalaittaaiee 6

§ 1-1431:

SETI scsanscSsincssrsoticaniaseitsacidebiaibaasiihanidainicaabihccchialbccts 17

i aN tdchaihsactvesebiscbebcipteaheaaihapleneaadoh beosimcaciial 15, 16, 17

iii aii ict eee nsheinssloseceisanhbpibanileicatoedanianiand 6, 7, 9, 10, 14, 15

PITTI snatintiiatacaorcecivaiishemisesociniesbapesicilaihadetialiaiiae teed 6, 16

RRR RE eerie OD Wen hs Tee NE ee Pe 15

Pub. L. No. 89-744, § 5(a), 80 Stat. 13853 —00. 15

Pub. L. No. 93-198, 87 Stat. 774 et seq. ... 2

V

Statutes and regulations—Continued: Page

D.C. Code Ann:

§ 36-301 et seq. (1981 & Supp. 1986) ................. 2

a eteniiaanenn 4

§§ 36-501 to 36- 502 (1973) .. LT OD SO OT 2

20 C.F.R.:

ow OL) Rb.) nara 2

Section 702.146 (c) (1982) ........................-.ceeccecee 5

Iu the Supreme Court of the United States

OCTOBER TERM, 1986

No. 86-1080

WASHINGTON METROPOLITAN AREA TRANSIT

AUTHORITY, PETITIONER

v.

WILLIAM R. Brock, SECRETARY OF LABOR

ON PETITIUN FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-

18a) is reported at 796 F.2d 481. The opinion of the

district court (Pet. App. 22a-3la) is reported at 614

F. Supp. 1419.

JURISDICTION

The judgment of the court of appeals was entered

on July 18, 1986, and rehearing was denied on Octo-

ber 2, 1986 (Pet. App. 19a-20a). The petition for a

writ of certiorari was filed on December 31, 1986.

The jurisdiction of this Court is invoked under 28

U.S.C. 1254(1).

(1)

2

STATEMENT

1. As presently applicable to injuries to employees

occurring on or before July 26, 1982, the District of

Columbia Workmen’s Compensation Act, ch. 612,

§§ 1-2, 45 Stat. 600, formerly codified at D.C. Code

Ann. §§ 36-501 to 36-502 (1973) (DCWCA), ex-

tends the workers’ compensation protection of the

Longshoremen’s and Harbor Workers’ Compensation

Act, 33 U.S.C. (1982 ed.) 901 et seq., to all em-

ployees in the District of Columbia for all work-

related injuries or deaths." The Longshoremen’s and

Harbor Workers’ Compensation Act, 33 U.S.C. (1982

ed.) 901 et seq., as it continues to be applicable to

such injuries, provides injured workers with guaran-

teed workers’ compensation for work-related in-

juries." Under the Longshoremen’s Act, every cov-

1 The District of Columbia enacted a new workers’ compen-

sation law, D.C. Code Ann. §§ 36-301 et seq. (1981 & Supp.

1986), pursuant to “home rule” authority granted to the Dis-

trict of Columbia by Pub. L. No. 93-198, 87 Stat. 774 et seq.

As it deals with the issues raised here, the new law is gen-

erally similar to the Longshoremen’s Act. While the new

law became effective on July 26, 1982, for injuries after that

date, employers continue to be liable for injuries arising out

of work before that date under the earlier DCWCA. See Pet.

App. 3a; 20 C.F.R. 701.101(b) (1986). The “special fund”

obligation which is the subject of this case pertains to a fund

used only to pay claims which arose before the effective date

of the new law.

2? The Longshoremen’s and Harbor Workers’ Compensation

Act was amended in 1984 by Pub. L. No. 98-426, 98 Stat.

1639 et seq., and retitled the Longshore and Harbor Work-

ers’ Compensation Act (33 U.S.C. (Supp. II) 901 et seq.).

The provisions of the Longshoremen’s Act, as they existed in

1982, continue to apply to claims derived from injuries occur-

ring before the effective date of the 1982 D.C. law. Keener v.

Washington Metropolitan Area Transit Authority, 800 F.2d

3

ered employer is “liable for and shall secure the pay-

ment to his employees of [workers’] compensation.”

33 U.S.C. 904(a). An employer “secures” compensa-

tion either by purchasing an insurance policy or by

obtaining permission from the Secretary of Labor to

self-insure (33 U.S.C. 932(a); Washington Metro-

politan Area Transit Authority v. Johnson, 467 U.S.

925, 928 (1984)).° In exchange for securing com-

pensation—so that injured employees obtain the stat-

utory disability compensation and other benefits—the

employer is immune from employee tort suits for

work-related injuries. See 33 U.S.C. 905, 907, 908,

909.

The Longshoremen’s Act prescribes the amount of

compensation to be paid for four classes of disability

based on the extent and permanence of the disability.

33 U.S.C. 908. The Act also limits the amount the

employer must pay in “second injury” cases—that is,

where a partially disabled worker sustains an em-

ployment-related injury and the extent of the result-

ing permanent disability is greater than would have

resulted absent the pre-existing disability, 33 U.S.C.

908(f).* After the employer has paid compensation

1173, 1175 (D.C. Cir. 1986), cert. denied, No. 86-1181 (Mar. 9,

1987). Therefore, like petitioner, we refer here to the pre-

amendment Longshoremen’s Act. However, if a specific sec-

tion of that Act has been changed by the 1984 Longshore Act,

we have so indicated by including the year in the citation (¢.¢.,

33 U.S.C. (1982 ed.) 944 (i) ).

5 Petitioner has been self-insured under 33 U.S.C. 932(a)

since 1973 (Pet. App. 24a). Hereafter, references to “em-

ployers” include the approved insurance carriers of those

employers who are not self-insured.

* As petitioner explains (Pet. 18-19), if a person who had

lost one eye in an earlier accident lost his other eye in a

4

for—typically—104 weeks of permanent disability,”

the remainder of the compensation due for the per-

manent disability is paid out of a “special fund”

established by 33 U.S.C. 944. 33 U.S.C. 908(f).

The special fund’s primary intended purpose is to

minimize any disincentive for employers to hire dis-

abled workers by eliminating the risk that the em-

ployer will have to bear all of the worker’s loss from

a work-related injury sustained while in that em-

ployer’s service. See Lawson v. Suwannee Fruit &

S.S. Co., 336 U.S. 198, 202 (1949).7 The special fund

spreads the cost of relieving employers of full liabil-

ity in second injury cases; it is financed in major

part by contributions from employers subject to the

Act, according to pro-rated assessments made by the

Secretary of Labor. 33 U.S.C. (1982 ed.) 944(c)

second accident, he would then be entitled to disability com-

pensation due a blind person, considerably greater than that

due for loss of one eye.

5 The employer pays all compensation for the disability

during any period of medical recovery (33 U.S.C. 908(f)),

and pays medical benefits indefinitely (33 U.S.C. 907).

6 The new District of Columbia workers’ compensation law

(see note 1, supra) establishes a new “special fund” for

injuries occurring after its effective date of July 26, 1982.

D.C. Code Ann. § 36-340 (1981).

7 Approximately 90 percent of the monies in the special fund

are spent on compensation for second injury victims (Pet.

App. 3a). Other payments from the fund include (33 U.S.C.

(1982 ed.) 944(j)): (1) inflation-indexed increases in com-

pensation for pre-1972 injuries or deaths (33 U.S.C. 910(h));

(2) medical examinations (33 U.S.C. 907(e)); (3) defaults

in payment due to employer insolvency (33 U.S.C. (1982

ed.) 918(b)); and (4) additional compensation for injured

workers undergoing vocational rehabilitation (33 U.S.C.

908 (g)).

5

(2).8 The amount of each employer’s contribution is

based upon a formula set out in Section 44(c) (2) and

20 C.F.R. 702.146(c) (1982). Pet. App. 4a. After

first estimating the expenses of the fund for the com-

ing year, the Secretary of Labor calculates for each

employer the ratio of: (1) its direct payments° un-

der the Act made during the previous year; and (2)

the total direct payments made under the Act by all

employers during the same period. Each employer’s

contribution to the special fund is then set at the cal-

culated fraction of the total estimated fund liabili-

. ties for the upcoming year, so that each bears the

same proportionate share of projected special fund

liabilities as that employer’s share of the total direct

compensation liabilities for the previous year. Pet.

App. 4a; 20 C.F.R. 702.146(c) (1982).

The special fund is segregated from general reve-

nues: “all monies and securities in such fund shall

be held in trust by [the] Treasurer [of the United

States] and shall not be money or property of the

United States” (33 U.S.C. 944(a)). Further, neither

the United States nor the Secretary of Labor is liable

for payments in amounts greater than the proceeds

contained in the fund (83 U.S.C. (1982 ed.) 944

(g)), and payments may be made only for purposes

specified in the Longshoremen’s Act itself (33 U.S.C.

(1982 ed.) 944 (j)).

8 The 1984 Longshore Act amendments make some changes,

not applicable here, in the methods for calculating contribu-

tions to the fund (see 33 U.S.C. (Supp. II) 944(c) (2); note

2, supra).

® These direct payments are the compensation that the em-

ployer has itself paid to injured workers (see 33 U.S.C. (1982

ed.) 944(c)(2)), apart from the liabilities assumed by the

special fund.

—ceaeeannanae ieee

6

2. Petitioner, Washington Metropolitan Area Tran-

sit Authority (WMATA), is an agency established by

an interstate compact entered into by the District

of Columbia, Maryland and Virginia” to operate a

rapid transit system and other public transportation

facilities and services in the Washington, D.C. area.

Pet. App. 22a. Under the WMATA Compact, peti-

tioner is liable for torts committed by its employees

and agents in the conduct of any proprietary func-

tion. WMATA Compact, Section 80. Petitioner has

consistently maintained that as an employer in the

District of Columbia, it is subject to and covered by

the Longshoremen’s Act, as extended by the DCWCA,

for all work-related injuries sustained by its workers

before July 26, 1982. Pet. App. 3a, 23a; Pet. 10.

Pursuant to the DCWCA, it has obtained permission

to act as a self-insurer (Pet. App. 24a); paid work-

ers’ compensation benefits (id. at 3a); and asserted

its right to the statutory limitation on benefit pay-

ments in second injury cases (Pet. 10; Pet. App. 3a).

From 1974 until mid-1982, petitioner paid its con-

tributions to the special fund (Pet. App. 2a, 4a). At

that juncture, however, it notified the Secretary that

it would no longer make payments into the special

fund, and demanded a refund of its payments over

the past decade, asserting (ibid.) that Section 78 of

the WMATA Compact immunizes it from such assess-

ments. That section provides that petitioner shall not

be required to pay federal, state, or District of Co-

lumbia “taxes or assessments upon any of the prop-

erty acquired by it * * * or upon its activities in

10 Washington Metropolitan Area Transit Authority Inter-

state Compact, codified as amended at D.C. Code Ann. §§ 1-

2431 to 1-2441 (1981).

7

the operation and maintenance of any transit facili-

ties or upon any revenue therefrom * * *.”

The Secretary has continued to make payments

from the special fund to injured WMATA employees.

In 1984 these payments were approximately $446,000.

Pet. App. 10a n.7.

3. The Secretary of Labor commenced this action

to collect the overdue contributions from petitioner

(see 33 U.S.C. 944(i)), and petitioner counter-

claimed for a refund of its past special fund contribu-

tions.“ The district court granted summary judg-

ment for the Secretary, holding that the WMATA

Compact tax exemption does not include petitioner’s

contributions to the special fund. Pet. App. 2a, 22a,

30a. The court reasoned that petitioner’s payments

to the fund are not taxes within the meaning of Sec-

tion 78 of the WMATA Compact because they are

not intended to finance general public expenses, but

rather “to supply a specific fund with a specific pur-

pose.” Pet. App. 24a-26a. Further, even if the assess-

ment is viewed as a tax, it is not within the purview

of the WMATA Compact exemption because it is not

a tax on petitioner’s “property, activities [or] reve-

nues,” the categories to which Section 78 of the Com-

pact limits the exemption. Pet. App. 26a-27a. The

court noted that “Congress easily could have provided

a blanket exemption but chose not to do so.” Jd. at

27a.

The district court observed that to exempt peti-

tioner from contributing to the special fund would be

inconsistent with congressional policy, since the pur-

pose of the fund is to spread second injury costs

"| Petitioner’s obligation to make payment under the new

D.C. workers’ compensation law, applicable to injuries occur-

ring on or after July 26, 1982, is not an issue in this case.

8

among all covered employers. Thus, “[a]ll the other

participants’ liabilities are increased due to WMATA’s

refusal to pay * * * [and] WMATA’s refusal is in

contravention of the statutory requirement that

* * * “the employer shall secure the payment of

compensation’” (Pet. App. 29a-30a (quoting 33

U.S.C. 982; emphasis omitted) ).

4. The court of appeals affirmed, holding that peti-

tioner “enjoys neither constitutional nor compact im-

munity from the obligation to make payments to the

Fund” (Pet. App. 2a). Petitioner is not entitled to

constitutional intergovernmenta] tax immunity be-

cause the special fund is a user fee rather than a

prohibited tax under the definition of user fee set out

in Massachusetts v. United States, 485 U.S. 444

(1978). Pet. App. 2a-8a, 6a-7a. In that decision’s

language joined by a majority of the Court, “a State

can have no constitutional objection to a revenue

measure * * * [s]o long as the charges do not dis-

criminate against state functions, are based on a fair

approximation of use of the system, and are struc-

tured to produce revenues that will not exceed the

total cost to the Federal Government of the benefits

to be supplied” (435 U.S. at 466-467).

The court noted (Pet. App. 8a-9a) that petitioner

made no contention as to the two aspects of this test

concerning discrimination against state functions

and assessment of excessive contributions. Petition-

er’s only contention was that there was no “fair ap-

proximation” of its share of the cost, because its con-

tributions exceeded the payout to its injured em-

ployees. Noting that the statistics upon which peti-

tioner based this claim were so ambiguous that there

was “some doubt about [the claim’s] accuracy * * *

as a factual matter” (Pet. App. 9a & n.7), the court

9

concluded that in any event, the Massachusetts test

was satisfied. It reasoned that the method used in

determining an employer’s contribution to the fund

is rationally designed to approximate prospective

payments by the fund to petitioner’s employees (Pet.

App. 10a), and thus “bear[s] a fair relation to the

benefit” received by petitioner (id. at 10a-1la). Ac-

cording to the court, employers who made greater

direct payments in the previous year are likely to be

those having “more employees, more handicapped em-

ployees, less safe working conditions, or some combi-

nation of these three characteristics.” Jd. at 1la-12a.

Moreover, the court observed, petitioner, like other

employers, receives indirect benefits from the fund

over and above actual payouts to its workers, includ-

ing freedom from tort liability, more productive em-

ployees, and the increased incentive to other employ-

ers to hire partially disabled former WMATA work-

ers, thus reducing petitioner’s compensation costs.

Ibid.

The court of appeals also concluded that petitioner’s

payment to the special fund “is properly regarded

not as a tax from which [Section 78 of] the Compact

exempts WMATA, but as a fee attendant to regula-

tion.” Pet. App. 6a-7a. Analyzing the language of

Section 78, the court concluded that “a levy is properly

defined as a ‘tax’ within the meaning of [that provi-

sion] when its principal purpose is to raise revenue,

not to regulate activities” (Pet. App. 15a). The court

noted the distinction between money raised for the

general support of the government and money raised

for the uses of a particular regulatory statute, citing,

inter alia, the Head Money Cases, 112 U.S. 580

(1884), and quoted the observation in South Carolina

ex rel. Tindal v. Block, 717 F.2d 874, 887 (4th Cir.

10

1983), cert. denied, 465 U.S. 1080 (1984), that

“Tijf regulation is the primary purpose of a statute,

revenue raised under the statute will be considered a

fee rather than a tax” (Pet. App. 16a). Since the

central purpose of the workers’ compensation scheme,

of which the special fund is an integral part, is to

determine and assure prompt payment of employers’

liabilities for industrial accidents, it concluded that

the employer contributions to the fund are more like

tort awards than revenue-raising taxes. Jd. at 16a-

17a.

ARGUMENT

The issues presented by this case are, first, whether

the contributions due from petitioner to the special

fund fairly approximate the benefits it receives there-

from, so that there is no constitutional immunity

under Massachusetts v. United States, supra; and

second, whether Section 78 of the WMATA compact

relieves petitioner of the obligation to contribute.

Neither issue merits review by this Court. The dis-

puted questions concern only the participants in the

WMATA Compact, and even they are affected only

as to compensation payable to individuals who were

injured before July 26, 1982." In any event, review

is not merited because the courts below correctly re-

jected petitioner’s claims.

As petitioner notes (Pet. 22 n.4), the Longshore Act em-

ploys a somewhat different formula for determining special

fund assessments. Accordingly, a decision in this case would

not be directly applicable to similar issues that might arise

under that Act. Moreover, the new District of Columbia

workers’ compensation statute is also somewhat different than

the statutes involved here (see note 1, supra); questions

concerning the scope and applicability of that statute should

be resolved in a case arising under it.

11

1. States have no immunity from nondiscrimina-

tory revenue measures that operate as user fees, since

such measures do not threaten state sovereignty, but

“operate[] only to ensure that each member of a class

of special beneficiaries of a federal program pay([s]

a reasonable approximation of its fair share of the

cost of the program to the National Government”

(Massachusetts v. United States, 435 U.S. at 454

(plurality opinion) ). Petitioner’s contribution to the

special fund is clearly such a permissible user fee.”

In this Court (Pet. 29), as below (Pet. App. 8a-9a)

petitioner does not dispute that the special fund con-

tribution system does not discriminate against state

functions, and is designed to produce total revenues

that equate with the total federal expenditures (see

page 5, supra). Petitioner asserts only that the Mas-

sachusetts test is not satisfied because the amounts

petitioner is required to contribute are said to exceed

13 The court of appeals therefore found it unnecessary to

consider other possible bases for rejecting petitioner’s consti-

tutional claim. It did, however, note (Pet. App. 7a n.6) that

there is some uncertainty as to “whether the doctrine of state

immunity from federal taxation retains any substantive con-

tent at all.”” Assuming it does, this Court has held in Helvering

v. Powers, 293 U.S. 214 (1934), that the operation of a street

railway is a proprietary function, and such functions have

traditionally been held to be outside the scope of the state’s

immunity from taxation. We submit that since Massachusetts

v. United States, supra, so plainly indicates that petitioner

is entitled to no constitutional immunity because the chal-

lenged contributions are in the nature of user fees, there is

no more need for this Court than for the court of appeals to

consider in this case whether the state tax immunity doctrine

survives, and if so, whether the distinction between “pro-

prietary” and “essential” governmental functions remains

relevant. Cf. Garcia v. San Antonio Metropolitan Transit

Authority, 469 U.S. 528, 539-545 (1985).

12

greatly the payouts to former WMATA employees

(Pet. 29).* The accuracy of petitioner’s analysis

of the costs and benefits that have resulted from its

participation in the scheme is highly questionable.”

Assuming it is accurate, that analysis does not show

a lack of “fair approximation” under the Massachu-

setts test.

The calculation of contributions based on the pro-

portion of each employer’s direct payments for the

previous year is at least as closely related to the bene-

fits that each employer can reasonably anticipate

from the fund as the flat, weight-based aircraft regis-

tration fee was related to the civil aviation benefits

in Massachusetts (485 U.S. at 446). And here, as

there, “[a] more precisely calibrated formula * * *

would, of course, be administratively more costly”

(id. at 469). Compare Pet. App. 10a-12a. As the

court of appeals noted (id. at lla), the funding

method selected can be expected to result in larger

contributions to the fund by larger employers, and

4 Petitioner also suggests in passing (Pet. 29) that there

is no limit on the purposes to which its contributions may be

applied. This is plainly incorrect: the special fund is segre-

gated from general revenues (33 U.S.C. 944(a)), and pay-

ments therefrom may be made only for the purposes specified

in the Longshoremen’s Act itself (33 U.S.C. (1982 ed.)

944(j)).

5 In the first place, as the court below noted (Pet. App. 9a-

10a n.7), the statistical basis for petitioner’s claim is highly

speculative—it may well be that the payouts to former

WMATA employees have been substantially greater than

petitioner assumes. In the second place, petitioner’s argument

ignores the fact that it receives other benefits from its partici-

pation in the fund beyond payouts to former employees—in-

cluding, for example, protection from possible very large tort

liability (Pet. App. 12a).

13

those with more vulnerable workers—precisely those

employers that can also be expected to require the

largest payouts from the fund.

Petitioner claims (Pet. 11, 17) that its contribu-

tions to the fund will necessarily rise as other em-

ployers settle pre-1982 injury claims, thus reducing

their direct payouts and therefore their contributions

to the fund. Even if petitioner is correct in predict-

ing that other employers, but not petitioner, will

settle cases and reduce their direct payments, that

does not establish such an absence of relationship

between costs and benefits that the contributions must

be considered an unconstitutional tax rather than a

user fee.

This statutory scheme, especially with its decreasing

pool of beneficiaries suffering from pre-1982 injuries,

and correspondingly decreasing fund payouts, simply

poses no threat of the imposition of charges that will

“unduly interfere with, or destroy a State’s ability to

perform essential services” (Massachusetts, 435 U.S.

at 467 (language joined by majority of Court) ).*

16 Petitioner makes much of the economic burden imposed

by the required contribution, but, as the Court noted in Massa-

chusetts, 435 U.S. at 465-466:

a State has no constitutional complaint when it is re-

quired to pay the cost of benefits received * * * [and]

even if the [system utilized] does cost it somewhat more

than it would have to pay under a perfect user-fee sys-

tem, there is still no interference with the values protected

by the implied constitutional tax immunity of the States.

The possibility of a slight overcharge is no more offensive

to the constitutional structure than is the increase in the

cost of essential operations that results either from the

fact that those who deal with the State may be required

to pay nondiscriminatory taxes on the money they receive

or from the fact a jury may award an eminent domain

claimant an amount in excess of what would be “just

compensation” in an ideal system of justice.

14

2. Petitioner’s contention that the tax exemption

in the WMATA Compact excuses it from contribut-

ing to the special fund is equally without merit. The

court of appeals analyzed the precise language of

Section 78 of the Compact to determine the rationale

for the tax exemption contained therein, and correctly

concluded that the assessed contributions to the special

fund do not constitute an exempt “tax or assessment”

under that rationale, but are instead fees attendant

to regulation.”

As the court of appeals explained (Pet. App. 14a-

16a), a levy is not a “tax” within the meaning of

Section 78 of the WMATA Compact when its primary

purpose is to regulate activities, rather than to raise

revenue for the general support of the government.”

See, e.g., South Carolina ex rel. Tindal vy. Block, 717

F.2d 874, 887 (4th Cir. 1983), cert. denied, 465 U.S.

1080 (1984), and other cases cited at Pet. App.

Petitioner apparently believes (Pet. 27-28) that the

presence of the term “assessment” in the tax exemption pro-

vision should lead to a different result. But as petitioner

itself recognizes (Pet. 24, 28), an “assessment” is simply

a particular kind of tax. Cf. Rambo v. United States, 492

F.2d 1060, 1061 n.1 (6th Cir. 1974), cert. denied, 423 U.S.

1091 (1976). It is apparent that the term “assessment” is

no broader than the term “tax,” either in the Compact or in

the cases cited by petitioner.

** It makes no difference that second injury funds exist in

other states and that other statutes may sometimes charac-

terize the contributions as “taxes” (see Pet. 18-19). It is the

true nature of the contributions, not the name given them,

that controls.

1” Petitioner attempts to distinguish South Carolina ex rel.

Tindal v. Block, supra, by arguing (Pet. 23-24) that the fee

there was tantamount to a penalty. The Fourth Circuit,

however, concluded that “[t]he clear language and structure”

of the statute showed that the federal assessment on the com-

mercial sale of milk was designed to regulate the production

en |

15

16a. Section 78 of the Compact states that petitioner

is created “for a public purpose” and “[a]ccordingly,

[petitioner] shall not be required to pay taxes or

assessments” (emphasis added). The “public pur-

pose” of petitioner provides no basis for exempting

it from regulatory fees.

The special fund is an integral part of the overall

workers’ compensation scheme, the primary purpose

of which is to regulate employers’ liabilities for in-

dustrial accidents. See Washington Metropolitan

Area Transit Authority v. Johnson, 467 U.S. at 931-

932. As the court below explained (Pet. App. 16a-

17a), the workers’ compensation scheme also in-

directly regulates employer conduct by increasing con-

tributions to the special fund when the employer’s

proportion of direct compensation liabilities in-

creases.” In other words, “fees associated with the

statute are better compared with tort awards than

with revenue-raising taxes.”** Pet. App. 17a.”

of milk by reducing overproduction, and by spreading the

financial burdens of the price support system. See 717 F.2d

at 887.

2° Petitioner mistakenly asserts (Pet. 21) that an em-

ployer’s contribution does not depend on its workers’ comper

sation experience. This is merely a variation on its factual

argument that the assessment is not a fair approximation of

the benefit received. See pages 12-13, supra.

21 Section 5(a) of Pub. L. No. 89-774, 80 Stat. 1353 (codi-

fied at D.C. Code Ann. § 1-2440 (1981)), stating that all

inconsistent United States or District of Columbia laws are

amended to eliminate such inconsistencies, adds nothing to

petitioner’s position (see Pet. 16-17). If the required con-

tributions to the special fund are not taxes within the mean-

ing of the tax exemption section, there is no inconsistency

between the Compact and federal or District of Columbia

laws.

22 Petitioner also asserts that it is excused from payment by

Section 77 of the Compact. That section exempts petitioner

16

3. Finally, strong considerations of equity support

the result reached below. Petitioner’s payment into

the special fund is the quid pro quo for its relief from

from “all laws, rules, regulations and orders of the signa-

tories and of the United States otherwise applicable * * * ex-

cept that laws, rules, regulations and orders relating to in-

spection of equipment and facilities, safety and testing shal!

remain in force and effect.” Since petitioner never claimed

exemption on the basis of that section in the courts below,

the applicability of Section 77 to the particular facts of

this case was not considered, and ought not to be reviewed

by this Court. See, e.g., NLRB v. Sears, Roebuck & Co., 421

U.S. 132, 163-164 (1975) (“without a lower court opinion

on the legal issue * * * we normally decline to consider a

legal claim,” citing cases) ; Youakim y. Miller, 425 U.S. 231,

234 (1976) (“Ordinarily, this Court does not decide ques-

tions not raised or resolved in the lower court,” citing cases).

This claim is, in any event, without merit. The Section 77

exemption expressly does not apply to state and federal rules

and regulations relating to inspection, safety, and testing;

as the court of appeals explained (Pet. App. 16a-17a), the

workers’ compensation scheme, including the special fund

provision, “indirectly regulates employers’ conduct by hold-

ing them accountable for accidents”; it thus contributes to

the safety not only of employees, but also of members of the

public who use petitioner’s facilities. The legislative history

of Section 7 suggests it was designed to make WMATA’s

revenue bonds saleable by assuring its independence “with

respect to fares, service and other activities which affect net

revenues” (Malone v. WMATA, 622 F. Supp. 1422, 1428-1429

(E.D. Va. 1985) (quoting testimony of Jerome Alper, counsel

to drafters of WMATA Compact)). That purpose would not

be served by exempting petitioner from workers’ compensa-

tion laws, and thus exposing it to the risk of potentially

enormous, and largely unpredictable, tort liability for acci-

dental injuries or death of employees. Moreover, Section 80

of the Compact establishes that petitioner “shall be liable for

its contracts and its torts.” Petitioner has always main-

tained that it is covered by the Longshoremen’s Act, thereby

achieving the substitute for tort liability provided by the Act,

as

17

the obligation to pay full workers’ compensation bene-

fits to its employees who suffer second injuries, and

more fundamentally, for its relief from potential tort

liability for its employees’ injuries.

Petitioner seriously mischaracterizes the role of the

special fund in the statutory workers’ compensativa

scheme, when it contends (Pet. 17-20) that the special

fund has no role as a substitute for tort liability.

Section 8 of the Longshoremen’s Act, 33 U.S.C. (1982

ed.) 908, defines the amount of compensation to be

paid for different degrees of disability. Section 8(f),

33 U.S.C. (1982 ed.) 908(f), also relieves the em-

ployer from part of the compensation it would other-

wise have to pay in “second injury” cases, transfer-

ring to the special fund, after 104 weeks, payment of

the remaining disability compensation for which the

employer would otherwise be responsible. See pages 3-

4; supra. See also 33 U.S.C. (1982 ed.) 944(j). Sec-

so that any claim of exemption from regulation is incon-

sistent with its own conduct. Malone v. WMATA, 622 F.

Supp. 1422 (E.D. Va. 1985), which petitioner cites for the

proposition that it is broadly exempt from regulation (Pet.

12-13), observes that petitioner’s compliance with the Vir-

ginia workmen’s compensation laws “has no bearing on”

whether other forms of regulation are precluded by Section

77 because the state workmen’s compensation statute “‘is

basically a tort statute which under Section 80 the author-

ity [petitioner] has acknowledged it will honor.” 622 F. Supp.

at 1429 n.10. Finally, Section 66(e) of the Compact expressly

provides that employees of private transportation systems

acquired by petitioner shall not be “placed in any worse posi-

tion with respect to workmen’s compensation” as a result of

the transfer of their employment to petitioner. Those ern-

ployees thus continue to be covered by workmen's compensa-

tion. It would be impractical and inequitable to have such

coverage turn on the individual’s employment history; Section

66(e) thus strongly suggests that all petitioner’s employees

are covered.

18

tions 4 and 5, 33 U.S.C. 904, 905, guarantee that

payments under Section 8, as well as Sections 7 and

9 (see page 3, supra), will be made to the in-

jured employee irrespective of the employer’s fault

and, in exchange, provide that such payments are the

employee’s exclusive remedy against the employer.

This substitution of guaranteed compensation for tort

responsibility, the “compromise at the heart of work-

ers’ compensation” (Washington Metropolitan Area

Transit Authority v. Johnson, 467 U.S. at 932), ap-

plies to the entire period of disability compensation

to which the worker is entitled, regardless of whether

the payments are made by the specific employer for

whom the employee worked at the time of the dis-

abling work-related injury, or by the special fund

under the transfer of payment provisions of Section

8(f). After the 104-week period, the disabled em-

ployee remains entitled to payments and the employer

remains immune from a tort suit. The purpose of

the Section 8(f) transfer of payment to the special

fund is simply to spread the cost of full statutory

compensation for “second injuries” among all em-

ployers having workers’ compensation liabilities under

the Act, so that employers will not refuse to hire a

disabled worker out of fear that the worker’s exist-

ing disability will lead to inordinate compensation lia-

bilities in the event of a later accident. Pet. App. 4a;

see Lawson v. Suwannee Fruit d& S.S. Co., 336 U.S.

at 201-202.

Absent these interconnected provisions, petitioner

would be liable for all torts committed in the opera-

tion of its transit system resulting in personal injury

to its workers. Since petitioner accepts the statutory

release of its tort liability for pre-July 26, 1982, in-

dustrial injuries, including the Section 8(f) limita-

tion of its obligation to pay in “second injury” cases,

19

it cannot escape its attendant obligation to pay its

share of the expenses of compensating these “second

injury” workers.

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

CHARLES FRIED

Solicitor General

GEORGE R. SALEM

Solicitor of Labor

ALLEN H. FELDMAN

Associate Solicitor

MARY-HELEN MAUTNER

Counsel for Appellate Litigation

JAMES M. KRAFT

Attorney

Department of Labor

MARCH 1987

& U. S. GOVERNMENT PRINTING OFFicE; 1967 161483 40272