Union Pacific Railroad Company, in its own capacity and in its capacity as successor to Union Pacific Railroad Company Plaintiff- Appellant
v.
United States of America Defendant-Appellee Association of American Railroads Amicus on Behalf of Appellant(s)
Submitted: June 6, 2017
Appeal
from United States District Court for the District of
Nebraska - Omaha
Before
WOLLMAN, ARNOLD, and GRUENDER, Circuit Judges.
ARNOLD, Circuit Judge.
The
Union Pacific Railroad Company seeks a refund of about $75
million in taxes that it paid the federal government from
1991 to 2007 under the Railroad Retirement Tax Act. UP
maintains that the RRTA did not require it to pay taxes when
it paid employees in stock or made what are called
ratification payments to union-member employees. The district
court rejected the refund requests and granted summary
judgment to the government. We reverse and remand.
Anyone
who has earned a paycheck in this country is probably
familiar with the Federal Insurance Contributions Act, if not
by name then by effect. The FICA requires employers to
withhold a tax equal to a percentage of an employee's
wages. 26 U.S.C. § 3102(a). In addition, an employer
must pay a share of the tax. 26 U.S.C. § 3111(a). These
taxes fund social-security and medicare benefits. See
United States v. Quality Stores, Inc., 134 S.Ct. 1395,
1399 (2014).
Rail
carriers and their employees are not subject to FICA
taxation; instead, they pay a somewhat different tax under
the RRTA. See 26 U.S.C. §§ 3201,
3221(a)-(b). As its name suggests, RRTA taxes fund benefits
under the Railroad Retirement Act. See BNSF Ry. Co. v.
United States, 775 F.3d 743, 750 (5th Cir. 2015); 45
U.S.C. §§ 231-231v. Congress first enacted versions
of the RRTA and the RRA in 1934 to stabilize the railroad
industry's private pension plans during the Depression.
Courts struck down that statute, see R.R. Ret. Bd. v.
Alton R.R. Co., 295 U.S. 330, 362 (1935), and its 1935
replacement, see Alton R.R. Co. v. R.R. Ret. Bd., 16
F.Supp. 955, 958-59 (D.D.C. 1936), but Congress's 1937
version survived. Today, the RRA and RRTA resemble both a
social welfare plan and a private pension program; one tier
of benefits and taxes corresponds to what one would expect to
receive from and to pay for social security and medicare,
while the other tier ties benefits to earnings and career
service. Hisquierdo v. Hisquierdo, 439 U.S. 572,
574-75 (1979).
UP is a
rail carrier that is obligated to pay RRTA taxes. During the
time at issue, UP paid employees in company stock in addition
to a monetary salary. UP paid RRTA taxes on the stock
payments, but now it asks the government to refund the money
because, it says, the RRTA did not require it to make those
payments. The government disagrees, arguing that employers
who pay employment taxes under the FICA are obligated to pay
taxes on stock payments, and the Internal Revenue Service, by
regulation, treats the FICA and the RRTA the same on this
matter. See 26 C.F.R. § 31.3231(e)-1(a)(1). The
district court agreed with the government's
interpretation of the statutes and regulations at issue, so
it granted summary judgment in the government's favor and
denied UP's motion for summary judgment, which judgments
we review de novo. Dunham v. Portfolio Recovery Assocs.,
LLC, 663 F.3d 997, 1000 (8th Cir. 2011).
Generally,
when Congress authorizes an agency to issue regulations
interpreting a statute that the agency enforces, we defer to
the agency's interpretation of an ambiguous statute so
long as the interpretation is reasonable. We must first
determine whether the statute is ambiguous, and if not, we
apply the statute as written; if it is ambiguous, we must
decide whether the agency's interpretation is reasonable.
Encino Motorcars, LLC v. Navarro, 136 S.Ct. 2117,
2124-25 (2016).
Beginning,
as we must, with the statutory text, see Henson v.
Santander Consumer USA Inc., 137 S.Ct. 1718, 1721
(2017), we see that the RRTA tax is based on an
employee's "compensation, " which is generally
defined as "any form of money remuneration paid to an
individual for services rendered as an employee to one or
more employers." 26 U.S.C. § 3231(e)(1). On the
other hand, the FICA levies a tax on an employee's
"wages, " which are "all remuneration for
employment, including the cash value of all remuneration
(including benefits) paid in any medium other than
cash." 26 U.S.C. § 3121(a). It seems to us that the
FICA sweeps more broadly than the RRTA: The FICA expressly
mentions the cash value of remuneration not paid in cash,
such as payments in property, whereas the RRTA does not. And
the determiner "all" qualifies
"remuneration" in the FICA definition, appearing to
make "remuneration" unlimited, whereas the word
"money" qualifies "remuneration" in the
RRTA.
But the
parties dispute why the word "money" precedes
"remuneration" in the RRTA. UP maintains that
"money" takes on the ordinary meaning it had at the
time the RRTA was enacted since the RRTA does not define it.
Citing a handful of dictionaries, UP argues that
"money" meant "a medium of exchange." UP
notes that "money" can have a more restrictive
meaning, such as referring only to cash or coins, but since
the phrase "any form of" precedes the word
"money, " then it seems that Congress intended the
RRTA to reach remuneration paid in any medium of exchange,
not just cash or coins. To the government and the district
court, on the other hand, "money" does not do any
work; it is a superfluity, akin to its impotence in phrases
like "money judgment" or "money damages."
Alternatively, they point out, citing their own handful of
dictionaries, that "money" can have an expansive
meaning relating to capital or finance in general, especially
when "money" does the work of an adjective.
We
think that UP has the better argument. First, we are not
convinced that the expansive definition of "money"
that the government advances reflects the ordinary, common
meaning of that term. See Perrin v. United States,
444 U.S. 37, 42 (1979). In fact, one of the dictionaries on
which the government relies notes that in its "popular
sense, 'money' means any currency, tokens,
bank-notes, or other circulating medium in general use as the
representative of value." See Black's Law
Dictionary 1200 (3d ed. 1933). A number of contemporary legal
authorities agree. UP points to an instructive case decided
near the time that the RRTA was enacted in which a testatrix
left her "money" to one person and her personal
property to another. In re Boyle's Estate, 37
P.2d 841, 841 (Cal. Dist. Ct. App. 1934). The trial court
awarded stock that the decedent had owned to the legatee of
the "money." The appeals court reversed, noting
that "[t]here is no doubt that the word 'money'
when taken in its ordinary and grammatical sense does not
include corporate stocks, " and nothing indicated that
"money" was used "in any sense other than its
ordinary and accepted meaning." Id. at 842. The
court explicitly considered broader definitions of money but
did not apply them. Our court, moreover, explained during
that same era that "[t]he sole function of money is as a
necessary medium of exchange in all commerce which has passed
the barter stage, " Emery Bird Thayer Dry Goods Co.
v. Williams, 107 F.2d 965, 971 (8th Cir. 1939), which
seems inconsistent with the notion that "money" in
its ordinary context means any property whatsoever. More
recently, the United States Tax Court said:
A final problem we have with extending the definition of
"money received" in section 1001(b) to encompass
preferred stock is its great dissimilarity to money in any
practical sense. Assuming without deciding that the term
includes not only actual money, but "money
equivalents" as well, it is difficult to see how stock
of any sort could reasonably be viewed as such.
Nestle Holdings, Inc. v. C.I.R., 94 T.C. 803, 814-15
(T.C. 1990). In short, "[t]here are numerous ways to
define 'moneys, ' but dictionaries mostly agree that
the term refers to a generally accepted medium of
exchange." In re Hokulani Square, Inc., ...