Transportation APRIL 2003 FELA Liability for Public Transporation Authorities: An Expansive Decision with Significant Implications In Greene v. Long Island R. Co., 280 F.3d 224 (2d Cir. 2002) (Greene), the United States Court of Appeals for the Second Circuit (the Court) held that the Metropolitan Transportation Authority (MTA) operates an interstate common carrier by railroad within the meaning of the Federal Employers Liability Act (FELA), 45 U.S.C. §§ 51-60, by virtue of its extensive involvement in the activities of its FELA-covered subsidiary, the Long Island Railroad Company (LIRR). The Greene decision has significant implications for public transportation authorities and freight railroad holding companies that do not directly engage in interstate common carrier operations, but manage and supervise various functions of common carrier affiliates subject to FELA. Mr. Greene brought claims in the United States District Court for the Eastern District of New York against MTA (and LIRR) pursuant to FELA.2 MTA moved for summary judgment on the FELA claims, arguing that it could not be liable under FELA because MTA was not a common carrier by railroad as defined in FELA. In essence, MTA argued that it was merely the owner of LIRR and did not itself provide common carrier operations. The district court denied the motion and concluded that because of MTAs extensive involvement in LIRRs activities, MTA operates a common carrier subject to FELA.3 The district court noted that the suit against MTA under FELA is permissible because Greene is no less employed by a common carrier today than when he performed the same duties when employed by the LIRR. 4 THE FACTS MTA, a public benefit corporation created under New York law, owns LIRR and several other rail and public transit affiliates. Plaintiff Sean Greene was employed prior to 1998 by LIRR as a police officer, conducting parking lot surveillance at LIRR railroad stations. In January 1998, MTA consolidated the separate police forces that its affiliates (including LIRR) had maintained and formed the MTA Police Department. Mr. Greene became an MTA employee and continued to perform parking lot surveillance at LIRR stations. Mr. Greene was injured in an auto accident while on duty.1 THE DECISION The district court certified the issue of whether MTA was a common carrier subject to FELA for interlocutory appeal. Section 51 of FELA provides in pertinent part: [e]very common carrier by railroad while engaging in [interstate or foreign] commerce shall be liable in damages to any person suffering injury while he is employed by such carrier in such commerce for such injury or death See Greene v. Long Island R. Co., 99 F. Supp.2d 268, 270-71 (E.D.N.Y. 2000). Greene also brought claims against the owner and the driver of the other automobile involved in the collision. See id. at 270-71. 3 Id. at 274. 4 Id. 1 2 Kirkpatrick & Lockhart LLP resulting in whole or in part from the negligence of any of the officers, agents, or employees of such carrier, or by reason of any defect or insufficiency, due to its negligence, in its cars, engines, appliances, machinery, track, roadbed, works, boats, wharves, or other equipment. Section 57 of FELA defines the term common carrier to include: the receiver or receivers or other persons or corporations charged with the duty of the management and operation of the business of a common carrier. On appeal, the Court focused on the definition of common carrier pursuant to Section 57 and analyzed whether MTA is within the scope of FELA as a manager or operator of LIRRs business. The Court analyzed the extent of MTAs participation in LIRRs business and concluded that MTA was directly and integrally involved in the essential business aspects of LIRRs operations. 5 The Court found the following facts to be significant indicators of such involvement: 1) MTA participates directly and extensively in the financial side of LIRR operations by performing budgeting, cash management and other financial functions; 2) MTA is involved in advertising and marketing for LIRR; 3) MTA provides subsidies for LIRR operations; 4) MTA provides certain real estate, risk management and legal functions for LIRR; 5) MTA is directly involved in LIRRs negotiations with labor unions; and 6) MTA plans and funds capital improvements for LIRRs commuter rail services.6 The Court also noted that MTA was directly and integrally involved in providing police services that were directly in furtherance of LIRRs business as a railroad.7 The Court further observed that prior to consolidation of the police forces, LIRR police officers were covered by FELA. The Court specifically noted that one of the benefits that MTA 5 6 7 8 perceived it would receive as a result of consolidation of the security forces was having the workers out from under the FELA system.8 Based upon the Courts analysis of MTAs involvement in the business aspects of LIRRs operations, the nature of the police services provided by MTA, and Greenes status as an employee covered by FELA prior to consolidation, the Court held that MTA was a common carrier subject to FELA liability with respect to the police officers employed by MTA to provide security for LIRR railroad parking lots. IMPLICA TIONS IMPLICATIONS The Greene decision has significant implications (in the Second Circuit and in other circuits if it is followed in other circuits) for public transportation authorities that do not directly engage in interstate common carrier operations, but are involved in the essential business aspects of common carrier affiliates subject to FELA. Even if a public transportation authority is not a common carrier by railroad in the traditional sense, it still may face the risk of FELA liability. In essence, Section 57 of FELA presents a way in which entities managing or operating the business of a common carrier can be subject to FELA liability. Many public transportation authorities play a significant role in the management and supervision of common carrier affiliates subject to FELA. In addition, financial and administrative considerations often compel public transportation authorities to consolidate services and perform common functions for such entities. The Greene decision shows that such participation might subject a public transportation authority to the risk of FELA liability if it does not: i) prevent or limit its personnel from performing certain essential business functions (such as railroad police services) for FELA-covered common carrier affiliates; and ii) make certain that such affiliates are equipped with the resources and expertise necessary to operate and perform such essential functions independently of the public transportation authority. In addition, before implementing organizational changes (such as consolidating services for FELAcovered carrier affiliates), public transportation authorities should consider whether such changes See Greene, 280 F.3d at 239. See id. at 236-39. Id. at 239. Id. Kirkpatrick & Lockhart LLP 2 expose the transportation authority to the risk of FELA liability. Although Greene did not turn explicitly on the fact that the plaintiff continued to perform the same railroad services for LIRR after the consolidation, the decision suggests that the Court was influenced by this factor. The Greene decision also has significant implications (in the Second Circuit and wherever else it is followed) for freight railroad holding companies that do not directly engage in interstate common carrier operations, but are involved in the essential business aspects of common carrier affiliates subject to FELA. Just as with public transportation authorities, if a freight railroad holding company is actively involved in operations or management of its subsidiary freight railroad, the holding company could be subject to FELA liability by virtue of Section 57 of FELA. Unless the Supreme Court reverses or narrows the scope of the Greene case, the implications of Greene in the Second Circuit and anywhere else it is followed will remain significant for public transportation authorities and freight railroad holding companies that manage and supervise various functions of common carrier affiliates subject to FELA. TRACIE D. SPEAR 202.778.9390 email@example.com EDWARD J. FISHMAN 202.778.9456 firstname.lastname@example.org FOR FURTHER INFORMATION, please consult one of the lawyers CONCLUSION The MTA has filed a petition for certiorari with the Supreme Court on the Greene case. In addition to arguing that the Greene decision conflicts with applicable precedent in other circuits that nonoperating entities are not subject to FELA, MTA argued that it is immune from FELA suits in federal court under the Eleventh Amendment. listed below: Boston Harrisburg Pittsburgh Jeffrey S. King Carleton O. Strouss Theodore A. McConnell Stephen M. Olson San Francisco Robert J. Sherry Washington Edward J. Fishman Kevin M. Sheys 617.261.3179 717.231.4503 412.355.6566 412.355.6496 415.249.1032 202.778.9456 202.778.9290 email@example.com firstname.lastname@example.org email@example.com firstname.lastname@example.org email@example.com firstname.lastname@example.org email@example.com ® Kirkpatrick & Lockhart LLP Challenge us. ® www.kl.com BOSTON n DALLAS n HARRISBURG n LOS ANGELES n MIAMI n NEWARK n NEW YORK n PITTSBURGH n SAN FRANCISCO n WASHINGTON ............................................................................................................................................................ This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. © 2003 KIRKPATRICK & LOCKHART LLP. ALL RIGHTS RESERVED.