Amicus Curiae Brief — Metropolitan Transportation Authority v. Greene

" hy Supreme Com, 6.5.

y FILE.

No. 02-1173 APR 22 88

5 “IN THE ORFICE OF TT GLEN

Supreme Court of the Hnited

—

METROPOLITAN TRANSPORTATION AUTHORITY,

Petitioner,

Vv.

SEAN GREENE,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF OF AMICUS CURIAE

SOUTHEASTERN PENNSYLVANIA

TRANSPORTATION AUTHORITY

IN SUPPORT OF PETITIONER

NICHOLAS J. STAFFIERI

Counsel of Record

JOAN A. ZUBRAS

Southeastern Pennsylvania

Transportation Authority

1234 Market Street

Fifth Floor

Philadelphia, PA 19107

(215) 580-7664

—~Arrorneys for Amicus Curiae

Southeastern Pennsylvania

Transportation Authority

ST IVES BURRUPS/APPELLATE DIVISION, 1617 JFK BOULEVARD, PHILA., PA. 19103 (215) 563-9000

ae

TABLE OF CONTENTS

TABLE OF AUTHORITIES ...........c00000- ii

BRIEF OF AMICUS CURIAE SOUTHEASTERN

PENNSYLVANIA TRANSPORTATION AUTHOR-

ITY INSUPPORT OF PETITIONER............

INTEREST OF THE AMICUS.................

SUMMARY OF ARGUMENT..................

UN 6 heard ois veh eee ek ee wee we

A. Certiorari Should be Granted Because the

FELA Was Not Intended to Apply to State

Government Agencies.................. 5

B. The Expansion of the FELA is Not Warranted

When There Are Worker’s Compensation

Mechanisms in Place and the Extension of

FELA Will Jeopardize the Ability of Agencies

Oy Ig oy eee Kak oe we ea 12

IIR, dba Vo Ve eee eA iey we eae ee 17

a wo -_ =

TABLE OF AUTHORITIES

Cases: Page

Alabama State Docks Terminal Railway v. Lyles, 797

So. 28 433 (Ain. SRGG) 5.5 choca db es snacaees

Alden v. Maine, 527 U.S. 706 (1999)............. 7

Atchison, Topeka & Santa Fe Ry. Co. v. Buell, 480 U.S.

657 (1667)... bss es eee 5

Board of Trustees of the University of Alabama uv.

Garrett, 631 U.S. S56 (AReR). . «nasa ou se unos 7

Brady v. Southern Ry., 320 U.S. 476 (1943)........ 11

Chittister v. Dept. of Community and Economic

Development, 226 F.3d 223 (8rd Cir. 2000)..... 7

Felton v. SEPTA, 952 F.2d 59 (3rd Cir. 1989)...... 8

Gallick v. Baltimore & Ohio Railroad, 372 U.S. 108

(1963) .... sees seves toe ee ee 12

Greene v. Long Island Railroad Company, 280 F.3d 229

(2nd Cir. 3008)... sss0200 54s eee eee passim

Hall v. Southern Pac. Co., 71 F. Supp. 21 (N.D. Call.

1044)... ones we ee 8

Hilton v. South Carolina Public Railways Commission,

502 US. 107 (3901) . .. «i+eus eee 8, 12

Howard v. Illinois Cent. R.R., 207 U.S. 463 (1908) . . 16

Kimmel v. Florida Bd. of Regents, 528 U.S. 62 (2000) 7 |

Ohara v. Council Bluffs Street Railway Co. v. Interstate

Commerce Commission, 230 U.S. 324 (1913)... . 8 |

Parden v. Terminal Railway of Alabama State Docks

Department, 377 U.S. 184 (1964) ............ 8

Reed v. Pennsylvania R. Co., 351 U.S. 502 (1956) .. . 8

Rogers v. Missouri Pacific Railroad, 352 U.S. 500

(1957), reh. den., 353 U.S. 943 (1958)......... 12 |

Spencer v. SEPTA, 525 Pa. 466, 581 A2d 565 (1990). 2 |

ll

|

TABLE OF AUTHORITIES — (Continued)

Cases: Page

United Transportation Workers v. SEPTA, Case #368 14

Welch v. Texas Department of Highways & Public

Transportation, 483 U.S. 468 (1987).......... 8

Will v. Michigan Department of State Police, 491 U.S.

Se ater et Wa oe CE aa ea Ok 8 7

Court Rules:

Rule 37.6 of the United States Supreme Court ..... 1

Federal Statutes:

Es 5 6 6G adie bene a deen eee ees passim

ee rar 2

Ee ar 2

ee | Perera rere ere eee 8

4s eye see eae 8 68: 1

eee ee Os a os hn kv eK ¥ A 9

Pennsylvania Statutes:

Constitution of the Commonwealth of Pennsylvania,

ES a oa

ei acs o's ak aoe oo bs 8 ee ee aoe

ee ee 3,

Eg vee eee ese ewes eees 6,

i eke sw eee eee ess eee ees 6,

OE EES SP Se Tree ee eee ee eee

66 Pa. C.S.A. §2001 (repealed) .................

66 Pa. C.S.A. §2004(d)(2) (repealed) .............

74 Pa. C.S.A. §1501 (a) (repealed)...............

ee ERE gg 8 a

4 ee FR eS

So re

No oF KF OO NNN OH HD I

TABLE OF AUTHORITIES — (Continued)

Cases: Page

oo ee BO) er ere rrr errs

oe eR eee ee ee

PO EO CRs BEF Ee hi os ee ee eee ew eee ees

Pe FO a SO 5 bah sen cawewe eben ee

oo oon

Legislative Materials:

H.R. No. 1386, 60th Cong. Ist Sess. 1908 ......... 10

Other Authorities: -

ee ae SE OOD i ce Sho ck as Ge ae eceeuoee 1l

American Association of Railroads, 1990 Report of

Claim and Litigation Expense .............. 13

Babcock and Oldfather, The Role of the Federal

Employer’s Liability Act in Railroad Safety, 19

Trans. L. J. 881 (1990-1991). ............... 12

Baker, Why Congress Should Repeal the Federal

Employer’s Liability Act of 1908, 29 Harv. J. of

E, Fe iv a hone eek ew he tee 13

John H. Blount & J. Edward Dvorak, III, Justice for the

Injured Railroad Worker (And How to Achieve It)

CR soe se Va be ee ea ea ee 14

Herde, FELA-Should It Be Abolished? 17 Forum 407,

CD Sc Ad hae eee eee Oe eee 12, 14

Legal Intelligencer, “Ex-Amtrak Worker Awarded $2.5

Million in FELA Action”, Feb. 18, 2003, pg. 1 . . 14

W.P.Keeton, D. Dobbs, and B. Keeton & D. Owen,

Posser and Keeton on the Law of Torts........ 12

Phillips, FELA Revisited, 52 Md. L. Rev. 1062 (1993) 13

E. Saphine, FELA and Rail Safety: A Response to

Babcock and Oldfather-the Role of the Federal

Employer’s Liability Act in Railroad Safety, 19

Transp. L. J. 901 (1990-1991)............... 12

1V

BRIEF OF AMICUS CURIA&

SOUTHEASTERN PENNSYLVANIA

TRANSPORTATION AUTHORITY

IN SUPPORT OF PETITIONER

INTEREST OF THE AMICUS

Amicus Curiae Southeastern Pennsylvania Transporta-

tion Authority (hereinafter “SEPTA”) is a statutorily-

created body corporate and politic. SEPTA operates a mass

transit system in the Philadelphia metropolitan area, and

outside the metropolitan area to the extent necessary for the

operation of an integrated system. 74 Pa. C.S.A. §1701 (a),

formerly 74 Pa. C.S.A. $1501 (a) (repealed). SEPTA provides

bus, trolley, trackless trolley, subway, elevated and commu-

ter rail services. As is the case with its bus, subway and

trolley service, almost all of SEPTA’s commuter rail service

is provided within those five counties of Southeastern

Pennsylvania that comprise the Philadelphia metropolitan

area. Only three commuter lines provide links to cities out of

state: one to Wilmington, Delaware, which is operated

pursuant to a co-operative arrangement with the state of

Delaware, and the two lines to Trenton and West Trenton,

New Jersey. In the early 1980’s, SEPTA was deemed to be a

commuter authority under 45 U.S.C. §1004 and took over

operation of certain inter-city commuter rail lines that had

previously been operated by Conrail.’

SEPTA’s enabling statute provides for a board of

directors, which includes individuals appointed by the

governor of Pennsylvania, the leadership of the General

Assembly of Pennsylvania, and representatives from the five

1. Pursuant to Rule 37.6 of the United States Supreme Court, SEPTA

certifies that no counsel for a party authored this brief in whole or in part,

and that no person or entity other than SEPTA has made a monetary

contribution to this brief in preparation or submission. The parties have

provided letters to SEPTA granting consent or have lodged letters with

the Court expressing their blanket consent to the filing of the amicus

brief.

2

Pennsylvania counties that comprise the Philadelphia

metropolitan area. In contrast to the structure adopted for

the Long Island Railroad, SEPTA’s enabling statute did not

create two separate entities to operate the transit and

commuter rail operations; instead SEPTA’s commuter

railroad is operated as a division of SEPTA.

The SEPTA workforce is comprised of approximately

9,100 employees. While most are subject to state workers’

compensation provisions, approximately 1,200 employees

are directly involved in railroad operations and are subject

to the Federal Employers’ Liability Act (hereinafter

“FELA”), 45 U.S.C. §51 et seg. These railroad division

employees are provided pension benefits subject to stan-

dards imposed by the Railroad Retirement Act, 45 U.S.C.

§231, et seq.; SEPTA’s non-railroad employees, on the other

hand, receive standard Social Security coverage. The

railroad hourly employees and the hourly employees in the

non-railroad operations are subject to different collective

bargaining agreements, are represented by different unions,

and are subject to different labor laws. Non-railroad

employees are subject to the Pennsylvania Public Employe

Relations Act, 43 P.S. 1101 et seq., and railroad employees

are subject to the Federal Railway Labor Act, 45 U.S.C. §151

et seq.

Under its enabling act, SEPTA is deemed to be

exercising the public powers of the Commonwealth of

Pennsylvania as an agency and instrumentality thereof.

The Pennsyivania Supreme Court has held that SEPTA is a

Commonwealth Agency for purposes of determining when

the agency can be sued. Accordingly, under Pennsylvania

law, negligence claims brought against SEPTA are limited

to the exceptions set forth in Pennsylvania’s Sovereign

Immunity Statute. 42 Pa. C.S.A. §8501, et seg. See Spencer v.

SEPTA, 525 Pa. 466, 581 A2d 565 (1990). That statute

imposes a cap on the payment of damages for tort actions.

3

SEPTA is currently operating at a deficit. It has never

operated at a profit. Its revenue is derived from the farebox,

transit advertising and real estate rentals. SEPTA’s

operations and capital needs, however, are largely funded

through monies received from the federal government and

the Commonwealth of Pennsylvania, and from the various

counties in which SEPTA operates on a proportionate basis.

In the past ten years, SEPTA has had to initiate two

reduction in force plans and various hiring freezes,

particularly with reference to management and adminis-

trative staff.

Based on SEPTA’s status as a Commonwealth Agency

and recent litigation instituted asserting a FELA cause of

action against it, SEPTA has an interest in this case. SEPTA

has been sued by a salaried employee who does not work for

SEPTA’s Railroad Division. While inspecting a contractor’s

work at a railroad location, the plaintiff allegedly slipped

and fell in a commuter parking lot. The station is on a line

that does not operate interstate and at which no interstate

trains stop. This accident occurred over two years ago and

the employee collected worker’s compensation benefits.

SEPTA has always treated the employee as subject to Social

Security and not as if he were eligible for Railroad

Retirement Benefits. After the Second Circuit opinion in

this case, however, the employee sued SEPTA under the

FELA. His lawyer has readily admitted that the suit was

brought based on the recent holding in Greene v. Long

Island Railroad Company, 280 F.3d 229 (2nd Cir. 2002).

Litigation of this kind will significantly increase SEPTA’s

exposure to damage claims brought by its employees.

SUMMARY OF ARGUMENT

Amicus SEPTA respectfully suggests that the opinion

by the Court of Appeais for the Second Circuit impermis-

sibly expands the scope of FELA coverage. The Court of

Appeals’ expansive holding applying intra-corporate princi-

ples based on a parent-subsidiary analysis has no place in

4

determining the liability of a government agency. In

contrast to the attempts by the District Court in Greene to

define who is and is not a railroad employee, the Court of

Appeals has provided no guidance as to which employees are

in fact covered by the FELA and the result it has reached

will necessarily increase litigation on this subject. In fact,

SEPTA has already been sued in one case attempting to

advance the theory set forth in the Greene decision.

Under the Court of Appeals’ reasoning, whenever a

state transit authority operates a railroad, the entire transit

authority becomes subject to FELA and every employee

becomes, in effect, a railroad worker, irrespective of the

duties he/she performs. This is not in keeping with the

original purposes of the FELA. Moreover, such a holding

would be financially ruinous. Any holding that extends

FELA coverage to all public transit agency employees will

expose already fiscally strapped public transit agencies to

increased litigation costs associated with defending FELA

claims and to unpredictable jury results. Indeed, to avoid

this result, agencies such as SEPTA may be forced to

reconsider whether they can continue to provide railroad

commuter service.

This new rule enunciated by the Court of Appeals will

also interfere with employees’ rights to be covered by Social

Security retirement plans and will impact on their collective

bargaining agreements. The increased costs associated with

permitting every employee to litigate and collect for pain

and suffering for work related injuries will be very

damaging to state agencies that operate with limited

budgets and continuing capital needs. SEPTA therefore

urges this Court to intervene and make it clear that state

agencies are not subject to the FELA or at least limit FELA

to its originally intended scope: those employees who are

directly involved in interstate railroad activities or directly

and substantially affect such commerce.

5

ARGUMENT

A. CERTIORARI SHOULD BE GRANTED BECAUSE

THE FELA WAS NOT INTENDED TO APPLY TO

STATE GOVERNMENT AGENCIES

The holding in this case is not consistent with the

original purpose of the FELA. In Atchison, Topeka & Santa

Fe Ry. Co. v. Buell, 480 U.S. 557, 568 (1987), the courts were

directed to consider both the “nature of the injury and the

character of the tortious activity” when deciding whether

the FELA could be invoked. In the present case, the alleged

tortious activity was the failure to provide a “safer car” for

an employee who was injured in a routine traffic accident on

the way to a railroad station — surely a purely local activity

that has no impact on interstate rail service or commerce.

The application of the FELA to this run-of-the-mill local

traffic accident contravenes the purpose of the FELA, the

principles of federalism, and infringes on a state’s sovereign

immunity.

SEPTA’s status as an instrumentality of the Common-

wealth of Pennsylvania is undeniable. SEPTA was created

when the General Assembly enacted “The Metropolitan

Transportation Authorities Act of 1963”. 66 Pa. C.S.A.

$2001 (repealed). In that statute, SEPTA was given the

right to sue and be sued. 66 Pa. C.S.A. §2004(d)(2) (repealed)

now — 74 Pa. C.S.A. §1701, et seg. Nevertheless, SEPTA is

immune from suit unless a plaintiff has a cause of action

that falls within an exception to Pennsylvania’s Sovereign

Immunity Act. See The Metropolitan Transportation Act of

1994,” 74 Pa. C.S.A. §1741(a)(2). In fact, 74 Pa.C.S.A.

§1711(3) specifically states:

2. SEPTA, pursuant to statutory authority, can exercise powers of

condemnation and eminent domain. 74 Pa. C.S.A. §1741 (12) and 74 Pa.

C.S.A. §1742(6).

6

It is hereby declared to be the intent of the General

Assembly that an authority created or existing under

this chapter . . . shall continue to enjoy sovereign and

official immunity, as provided reaffirmed; (specific

waiver), and shall remain immune from suit except as

provided by and subject to the provisions of 42 Pa. C.S.

§8501 (relating to definitions) through §8528 (relating

to limitations on damages)”.

To understand the scope of SEPTA’s immunity, it is

necessary to review the legislative scheme.

1 Pa. C.S. §2310 states:

§2310. Sovereign Immunity Reaffirmed Specific

Waiver

Pursuant to section 11 of Article I of the

Constitution of Pennsylvania, it is hereby declared to

be the intent of the General Assembly that the

Commonwealth, and its officials and employees acting

within the scope of their duties, shall continue to enjoy

sovereign and official immunity and remain immune

from suit except as the General Assembly shall

specifically waive the immunity. When the General

Assembly specifically waives sovereign immunity, a

claim against the Commonwealth and its officials and

employees shall be brought only in such manner and in

such courts and in such cases as directed by the

provisions of title 42 (relating to judiciary and judicial

procedure) unless otherwise specifically authorized by

statute.

42 Pa. C.S.A. $8521 (a) states:

§8521. Sovereign immunity generally

(a) General rule — Except as otherwise provided -

in this subchapter, no provision of this title

shall constitute a waiver of sovereign immunity

for the purpose of 1 Pa. C.S. §2310 (relating to

7

sovereign immunity reaffirmed; specific waiver)

or otherwise.

Section 8522 sets forth the exceptions to sovereign

immunity applicable to Commonwealth agencies such as

SEPTA.® Consequently, SEPTA is immune from liability

unless the claim is based on one of the exceptions to

sovereign immunity found in 42 Pa. C.S. $8522.

There is an abundance of case law that SEPTA - an

agency and instrumentality of the Commonwealth — cannot

be sued for monetary damages unless sovereign immunity

has been explicitly waived. This longstanding principle of

sovereign immunity is written into the Constitution of the

Commonwealth of Pennsylvania. Article 11 provides that

“suits may be brought against the Commonwealth in such

manner, in such courts, and in such cases as the legislature

may by law direct.” See, e.g., Chittister v. Dept. of

Community and Economic Development, 226 F.3d 223 (8rd

Cir. 2000) (Pennsylvania state agency had not consented to

suit under the FMLA.)

While the Eleventh Amendment governs the jurisdic-

tion of federal courts over the states and immunities from

certain state actions, it is not the source of a state’s

immunity from actions in a state’s own courts. See Alden

v. Maine, 527 U.S. 706 (1999). A state’s immunity from suit

in its own courts is derived from common law and the state

immunity derived from its constitution. A state agency

cannot be deemed to have consented to suit in federal or

state court simply because it operates a railroad. Indeed, the

doctrine of constructive waiver has effectively been

repudiated by recent precedent. Will v. Michigan Depart-

3. There are nine exceptions: negligence claims based on operation of

motor vehicles; injuries due to a medical professional; liability that is

derived from a defect of the real estate; injuries caused by personal

property; potholes and dangerous conditions of highways; custody or

control of animals; liquor state sales; acts of members of national guard;

vaccines and toxoids.

8

ment of State Police, 491 U.S. 58, 65 (1988) (if Congress

intended to alter the usual constitutional balance between

the states and the federal government the intention must be

made clear); Kimmel v. Florida Bd. of Regents, 528 U.S. 62

(2000) (Congress must demonstrate a clear intent to have

ADEA apply to the state); Board of Trustees of the

University of Alabama v. Garrett, 531 U.S. 356 (2001)

(Congress must demonstrate a clear intent to have the ADA

apply to the states.)* It follows that there is no basis for

permitting a FELA action to proceed against a state created

railroad in either state or federal court. See, e.g., Alabama

State Docks Terminal Railway v. Lyles, 797 So. 2d 432 (Ala.

2001).

When the Northeastern Regional Rail Reorganization

Act went into effect, SEPTA - an agency of the

Commonwealth of Pennsylvania — could have contracted

with Amtrak Commuter, another entity, or operate the

railroad itself. SEPTA decided to operate its rail division as

exactly that: a division of SEPTA’s mass transit operations.

4. In Parden v. Terminal Railway of Alabama State Docks Department,

377 U.S. 184 (1964), a five to four majority held that by operating a

railroad in interstate commerce Alabama had waived its immunity to suit.

Emphasis was placed on the fact that Alabama had entered the rail

busiriess twenty years after the FELA had been enacted. The dissenting

Justices did not believe that the requisite intent of Congress to extend the

FELA to the states or that a state could waive immunity by operating a

railroad. Subsequently, a majority of the Supreme Court agreed with the

reasoning of the dissenters. In Welch v. Texas Department of Highways &

Public Transportation, 483 U.S. 468 (1987), the Court expressly overruled

the reasoning of Parden in an action brought under the Jones Act. Id. at

478. The Court held “to the extent that Parden v. Terminal Railway .. . is

inconsistent with the requirement that an abrogation of Eleventh

Amendment immunity by Congress must be expressed in unmistakably

clear language, it is overruled.” Id. In Hilton v. South Carolina Public

Railways Commission, 502 U.S. 197 (1991) an FELA action filed in state

court was found to be maintainable notwithstanding the overruling of

Parden in Welch. Id. at 199, 204-05. The court found that the government

entity had consented to jurisdiction in state court by voluntarily

operating a railroad. In this instance, SEPTA did not choose to

voluntarily operate interstate rail service.

oman *

9

It is true that courts have held that the employees of the

railroad division are subject to the FELA, but that is no

reason to make all of SEPTA’s other operations subject to

the FELA. See, e.g., Felton v. SEPTA, 952 F.2d 59 (8rd Cir.

1989). This was never intended by anyone. After all, the act

that provided for SEPTA to incorporate inter-state lines did

not mention the FELA as an applicable statute. See 45

U.S.C. $591 (repealed). Indeed, the successor statute refers

to the rail operations as being governed by safety provisions

- and the FELA does not contain any safety provisions. See

49 U.S.C. §20101. To expand the FELA to all divisions of

SEPTA would be inconsistent with the intent of the Act.

The Second Circuit holding in Greene taken to its

logical conclusion is that if an entity operates a railroad then

all employees are railroad employees. This holding greatly

expands the FELA and fails to consider whether the services

provided by the employee further or affect interstate

transportation. See, e.g., Reed v. Pennsylvania R. Co., 351

U.S. 502, 507 (1956); Hall v. Southern Pac. Co., 71 F. Supp.

21, 24-25 (N.D. Cal. 1944) (does employee do an act which

laid the foundation for and was an act of another or

subsequent act of interstate commerce or a step towards it).

Further, the Second Circuit would completely abandon the

long recognized distinction between interstate railroads and

urban railroads, such as trolleys and subways. Urban

railroads have long been recognized as outside the scope of

the FELA. See Ohara v. Council Bluffs Street Railway Co. v.

Interstate Commerce Commission, 230 U.S. 324 (1913).

Under the Greene holding, every operational component

will now be deemed part of the railroad operations and this

ignores the language of the statute that a covered employee

of a carrier includes any employee whose duties “shall be in

furtherance of interstate or foreign commerce, or shall in

any way directly or closely and substantially affect such

commerce.” 45 U.S.C. §51 The intent behind the passage of

the FELA was the concern over injuries to employees

10

engaged in the business of interstate railroads and the

holding in Greene abandons that analysis.”

* * * *

After these lines were taken over from Amtrak, SEPTA

treated all of these lines, which were originally part of

Amtrak, as part of the Rail Division. The operation of

SEPTA has been structured in a manner consistent with

this need to distinguish between railroad employees and all

of its other employees. There is no “interstate” aspect to the

job of a porter who cleans a subway station in SEPTA’s City

Transit Division. Nevertheless, under the reasoning of the

Court of Appeals, an individual who was injured because his

chair collapsed in an office remote from a railroad location,

while he was preparing bus schedules, will now be subject to

the FELA merely because SEPTA operates a commuter rail

line as one of its public transit operations. That employee

could now bring a claim under the FELA even though his

activities do not involve and have no significant impact upon

interstate commerce. Moreover, this is plainly not the type

of dangerous work that the FELA was meant to address.

The Court of Appeals and the District Court holdings in

Greene have completely abandoned the statutory mandate

to determine whether the employee is, in fact, furthering

interstate activities.

5. At the time the FELA was enacted to meet the concerns that private

companies were not addressing the needs of railroad employees, a state-

owned railroad could not have been sued without its consent. State-

owned railroads did not have to depend -— as did privately owned railroads

— on common law defenses, such as contributory negligence or the fellow-

servant rule in order to escape liability for injuries to its employees. All

state owned railroads would have had to do would be to invoke the

defense of sovereign immunity. There is no reason to conclude that

Congress intended by its enactment of the FELA to strip the states of this

jealously guarded right of defense, when not even a hint of such an intent

can be gleaned from the legislative history of the act. H.R. Rep. No. 1386,

60th Cong. 1st Sess. 1908.

——

een

nenememennarenten mematenentees

1]

Finally, there is no good reason to apply the parent-

subsidiary or joint venture concept to a government agency

simply to expand the coverage of the FELA. It makes no

sense to adhere to corporate formalities imposed for private/

profit corporations on a state agency. To impose such

requirements on how a state chooses to carry out

government functions interferes with the state’s sovereign

rights. Likewise, a “piercing” or “alter-ego” argument

cannot result in a finding that the state transit agency

should be deemed a railroad for all purposes. A common law

“piercing” or “alter ego” test generally involves two

components - (1) a disregard for corporate formalities and

(2) a use of the corporation in a manner that promotes fraud

or injustice. 38 A.L.R.3d 1102, §15. Assuming that one finds

that corporate formalities were not adhered to, then counsel

for the amicus suggests that no liability could ever be

imposed as the second prong of a piercing test cannot be

met. Piercing is an equitable remedy employed to prevent

fraud or injustice. Fraud or injustice could never be

established when assessing claims against a state agency.

It would be absurd to hold that a sovereign state — which

must consent to suit in the first instance — would have to

engage in a fraud to shield its treasury from claims or that a

state agency funded by the taxpayers was designed to

promote fraud or injustice.

Under the reasoning of the Court of Appeals, any state

agency that operates or provides support to a rail operation

would be subject to the FELA. Indeed, taking the parent-

subsidiary argument to its logical conclusion —- all state

employees would be subject to the FELA because it is the

state itself that operates the railroad. This holding infringes

on the state’s sovereignty and improperly tells the state how

it should operate its mass transit operations. By construing

the FELA to cover all operations of a transit agency, the

Court of Appeals has directly infringed on the right of the

state to organize its agency in the most cost efficient use of

resources and funding.

12

B. THE EXPANSION OF THE FELA IS NOT WAR-

RANTED WHEN THERE ARE WORKER’S COM-

PENSATION MECHANISMS IN PLACE AND THE

EXTENSION OF THE FELA WILL JEOPARDIZE

THE ABILITY OF AGENCIES TO FUNCTION

The FELA is a federal negligence statute. 45 U.S.C. §51

et seq. Liability is not absolute. Brady v. Southern Ry., 320

US. 476, 483-84 (1943). The basis of a recovery is that the

railroad was negligent, that is “whether the employer’s

negligence had played any role in the harm and this

standard of responsibility is based on foreseeability.” See,

e.g., Gallick v. Baltimore & Ohio Railroad, 372 U.S. 108

(1963).°

At the time that the FELA was enacted, the railroad

industry was very different than it is today. The private

railroads were collectively the largest employer in the

country. See Herde, FELA-Should It Be Abolished? 17

Forum 407, 410 (1981). There was an abundance of labor,

unions were virtually unknown, and few states had any type

of worker’s compensation or state disability provisions. See

W.P.Keeton, D. Dobbs, and B. Keeton & D. Owen, Posser

and Keeton on the Law of Torts, at 572-73 (5th Ed. 1984).’

6. As it happens, the case law under the FELA has evolved to be

virtually a strict liability statute resulting in increased litigation costs

because it is virtually impossible to have a case dismissed prior to trial.

Because the FELA only requires the slight evidence of negligence, thereby

requiring less proof, only the slightest degree of evidence results in a

question being raised for the trier of fact. See Rogers v. Missouri Pacific

Railroad, 352 U.S. 500 (1957), reh. den., 353 U.S. 943 (1958).

7. Pennsylvania worker’s compensation provisions do not exempt

railroad workers and cover “all employees”. If, in fact, a state has

exempted railroad workers - which Pennsylvania has not - then FELA

coverage could remain in place or it would be up to the state legislatures

to amend or modify said statutes to address the needs of railroad

employees. In Hilton v. South Carolina Public Railways Commission,

supra, this Court stated that certain states had exempted railroad

workers from coverage and it was concerned over changing long-standing

employee relationships. This rationale, however, should not be

controlling as it disregards the rights of individual states.

13

Railroad work was also considered to be very dangerous,

with one of the highest accident rates in history, including

fatalities. In fact, one railroad employee out of eight was

injured and one out of every 125 was killed.®

Today, there is a debate on whether or not the railroad

industry remains as dangerous as when the FELA was first

enacted. See Babcock and Oldfather, The Role of the Federal

Employer’s Liability Act in Railroad Safety, 19 Trans. L. J.

881 (1990-1991). There is no debate that railroad employ-

ment has decreased continuously. In the time period from

1980 to 1989, railroad employment decreased by 40% and

reportable injuries decreased by 60%. Nevertheless, the

FELA payout during the same time period increased over

130% ($343 million to $789 million). See Baker, Why

Congress Should Repeal the Federal Employer’s Liability

Act of 1908, 29 Harv. J. of Legis, 79, 104 (1992). In 1990, the

average payout of a litigated FELA case was $166,000 as

opposed to $42,000 in 1980. See 1990 Report of Claim and

Litigation Expense-Association of American Railroads;

Phillips, FELA Revisited, 52 Md. L. Rev. 1062 (1993)

(lawsuits, which account for less than 11% of FELA claims

represented 35% of the total FELA payout). This figure

illustrates the catastrophic effect of lawsuit claims on total

payouts. The reason for this increase is not due to

catastrophic injuries but rather to the availability in

8. Notably, in 1988, 50% of the injuries under the FELA were sprains

and strains. In 1988 there were 64 amputations and 1,289 fractures. The

fractures presumably included fingers and toes. The construction,

mining, and manufacturing industries had higher amputation rates and

the mining and construction industries had a higher fracture rate. See E.

Saphine, FELA and Rail Safety: A Response to Babcock and Oldfather-the

Role of the Federal Employer’s Liability Act in Railroad Safety, 19

Transp. L. J. 901 (1990-1991).

14

addition to lost wages — of an award for lost future earnings,

and pain and suffering.?

FELA cases also expose the state agency operating a

commuter railroad to unpredictable awards, even if the

employee is contributorily negligent, because of the

component of pain and suffering and claims of perma-

nency.’° It is also worth noting that FELA claims are

frequently built up by the employees staying out on the

advice of counsel to bolster their claim for damages before a

jury. The same employee who has claimed in litigation that

he is unable ever to return to work and has claimed

9. In a litigated case against SEPTA, an employee claimed that he

slipped due to ballast. Despite the fact that there is no federal standard

for ballast, the employee claimed that the ballast in the rail yard was

harder to walk on than the ballast on mainline track. The employee

returned to work and was earning close to the same amount of money;

nevertheless, he claimed that his opportunities for overtime were limited,

he had experienced pain and suffering, and was unable to play ball with

his child. The employee was awarded over $660,000. Recently reported in

the Legal Intelligencer, “Ex-Amtrak Worker Awarded $2.5 Million in

FELA Action”, Feb. 18, 2003, pg. 1, was an FELA jury verdict. An Amtrak

trackman, age 52, claimed to have two herniated discs. There was no

surgery, his wage loss was estimated to be $350,000 and he was awarded

$2.5 million.

10. Employees sometimes stay out so as to increase an FELA recovery.

A report filed by Amtrak indicated that two years after one accident only

one employee out of eleven had returned to work and that in a minor

derailment in which no passengers were injured all fifteen employees

claimed injury and had not returned to work. See Baker, supra, at 103.

Indeed the trend was toward employees staying out to build up their

claim of permanency. In one litigated SEPTA case, an employee claimed a

permanent back injury and his doctor testified he would not be able to do

his job. As part of the settlement on the record, the employee agreed (1)

not to return to the railroad and (2) to take a sedentary job. After

receiving his settlement, the employee then filed a grievance with the

Railroad Retirement Board to obtain his position back, and claimed he

had recovered. United Transportation Workers’ v. SEPTA, Case #368.

SEPTA then sought repayment of the award paid only two months

earlier. Nevertheless, the court and the Railroad Retirement Board

condoned this behavior and accepted the employee’s claim that he was

miraculously “cured”.

ile iin Laat at,

15

“permanent damage” can then miraculously return to his

former employment after receiving an award or a

settlement. Additionally, since many FELA claimants

immediately retain counsel, the cost of even a settlement

is driven up because an attorney generally obtains a fee of 30

to 40%. See, e.g., Herde, supra.'!

Finally, this opinion will cause havoc with respect to

existing labor negotiations and pension rights. If we are to

treat all employees as if they are now railroad employees

then existing contracts with the non-railroad unions will

have to be renegotiated. Does this mean that all employees

who were previously subject to bargaining with the unions

that represent bus, trolley, and subway operators are now

covered by another union? What about the pensions of

employees in the City Division, a pension that is based on a

formula under the benefits accorded through Social

Security? Moreover, what happens to an employee in his

fifties, who has just joined SEPTA? Under provisions of the

Railroad Retirement Program an employee is required to

work for forty quarters before vesting. Under the reasoning

of Greene, would an employee deemed to be a railroad

employee for purposes of FELA have to start contributing to

the Railroad Retirement System and then be removed from

the Social Security System? If the same employee ceased

next year being involved with railroad projects would he

then go back to Social Security? Since SEPTA’s pension for

non-railroad employees is based on contributions to Social

Security this opinion implicates pension rights of its entire

workforce.

11. A book informing railroad workers of their rights suggests that they

answer as little as possible about an accident. See, John H. Blount & J.

Edward Dvorak, III, Justice for the Injured Railroad Worker (And How to

Achieve It) 3-5 (1987). Obviously, after consulting with an attorney or

union representative the accident report can be phrased in a way to

establish the railroad’s negligence. From the outset of the injury, the

claim is immediately geared towards litigation and to build up the

damages.

16

The Second Circuit opinion invites litigation, will

deplete limited resources and impact on the retirement

benefits and collective bargaining rights of numerous

employees and should be overturned.

17

CONCLUSION

Initially, the first FELA statute was found unconstitu-

tional because it attempted to regulate purely intrastate

activities. See Howard v. Illinois Cent. R.R., 207 U.S. 463

(1908). Subsequently, the statute was reenacted in its

present form to regulate only interstate railroad activities.

See 45 U.S.C. §51 et seg. (1982). The Court of Appeals’

holding in this case jeopardizes any state entity that

operates commuter rail lines and its logical result is for a

state to curtail any such service. Now, instead of 1,200

public employees of SEPTA who are covered by the FELA,

the logical extension of the Court of Appeals’ opinion is that

the remaining 7,900 employees of SEPTA can also now sue

under the FELA. Such an extension to every employee of the

agency — no matter how remotely connected with the

operation of the interstate railroad - was never the intent

of the Act and offends principles of sovereign immunity.

This holding will result in operating deficiencies and may

result in the withdrawal of rail service run by state agencies.

Certiorari should be granted to provide guidance on an

expedited basis before agencies across the country are

exposed to suits and increased costs while the resolution of

who is covered by this Federal statute is further delayed and

subject to litigation in each Circuit.

NICHOLAS J. STAFFIERI

Counsel of Record

JOAN A. ZUBRAS

Southeastern Pennsylvania

Transportation Authority

1234 Market Street

Fifth Floor

Philadelphia, PA 19107

(215) 580-7664