[00:00:01] Speaker ?: Case number 19, Judge 1088, please. [00:00:39] Speaker 01: Good morning, Your Honors. [00:00:40] Speaker 01: My name is Brennan McCarthy. [00:00:41] Speaker 01: I represent Stephen Seth in the matter of Seth v. Railroad Retirement Board case number 19-1088. [00:00:46] Speaker 01: This isn't actually an important case. [00:00:52] Speaker 01: I sort of stumbled on this. [00:00:53] Speaker 01: Mr. Seth is my wife's uncle, to be blunt, Your Honor. [00:00:56] Speaker 01: I am a true courtroom attorney. [00:01:00] Speaker 01: You will not find me in the climes of higher appellate courts very often. [00:01:04] Speaker 01: I create the records that Your Honor usually reads. [00:01:07] Speaker 01: I don't come up here and argue this is unusual for me. [00:01:10] Speaker 01: But this is for, I took a look at this particular case and was struck basically by the nature of this case. [00:01:18] Speaker 01: And what happened was in 1997, the Railroad Retirement Board found that my client was working for a company, we'll call them RPI, and was not being controlled by CSX. [00:01:30] Speaker 01: CSX later said, perhaps we've made a boo-boo, and we can reconsider that. [00:01:36] Speaker 01: And the nature of his work has changed. [00:01:38] Speaker 02: To be clear, I thought what CSX said is the nature of the work has changed. [00:01:41] Speaker 01: They did, Your Honor. [00:01:41] Speaker 02: That's not the same thing as saying we made a boo-boo. [00:01:44] Speaker 01: But what happened, Your Honor, was when the hearing examiner did his examination, he found that in fact during the entire work period that Mr. Seth had worked for RPI, he had been directed by CSX. [00:01:56] Speaker 04: You're relying on that phrase, uncontroverted position of Mr. Seth. [00:02:03] Speaker 04: Correct. [00:02:05] Speaker 04: But of course, that was not before him in that proceeding, right? [00:02:09] Speaker 04: Well, I think what happened- The lack of controversy is of questionable weight. [00:02:16] Speaker 01: It could be, Your Honor, except that at the very beginning, what happened was it becomes a chicken and an egg problem. [00:02:21] Speaker 01: What he says is, during this period, [00:02:24] Speaker 01: Mr. Seth was directed by CSX, but we're not going to consider this period that's four years prior to him actually saying something. [00:02:32] Speaker 01: When they truncated that claim, they simply cut that off from any of their considerations. [00:02:37] Speaker 01: And what I'm saying is, is that if you follow the line of what the examiner said, he said during the entire period, [00:02:44] Speaker 01: So what the board is asking us to do is to assume that this must mean that during the period when it was truncated from May of 87 through November of 87 and January 91 through December of 1992, he must not have been directed. [00:02:59] Speaker 04: But he didn't make that reasoning either. [00:03:02] Speaker 04: Certainly. [00:03:03] Speaker 04: I thought it was only saying there was no [00:03:06] Speaker 04: There was an absence of a finding with respect to that period. [00:03:09] Speaker 01: It surely was correct. [00:03:11] Speaker 01: Well, there was no absence of finding, Your Honor. [00:03:13] Speaker 01: What the finding was is that because of the four-year statute of limitations, this isn't even part of my hearing, he had made the determination beforehand that he wasn't going to consider those periods. [00:03:26] Speaker 01: And my point on this is, if you look at 211.16, this should have, even if this was good faith, [00:03:33] Speaker 01: That four-year period should have been set aside. [00:03:36] Speaker 01: They should have gone back and made that determination back to his periods of employment by RPI. [00:03:42] Speaker 04: Where does this begin? [00:03:43] Speaker 04: We have a, it goes before the hearing examiner to examine the period that is within the four years and he looks at that. [00:03:54] Speaker 04: It's not within the four years. [00:03:58] Speaker 04: At some point, the special section of 211-16-2 kicked in. [00:04:09] Speaker 04: But when did that kick in? [00:04:12] Speaker 01: Well, Your Honor, what happened was when they came out in 1997 and made their initial determination saying that my client was not due benefits as an employee of RPI under the Railroad Retirement Board scheme, [00:04:24] Speaker 01: They then reconsidered that in 2007. [00:04:26] Speaker 04: The effect of that examiner's... Well, in 2007, they were looking at RPI's proposal that it be reclassified. [00:04:36] Speaker 01: They were, Your Honor, and what the examiner found when he examined that was my client was in fact being directed by CSX, and that is on 110 of the administrative record. [00:04:48] Speaker 01: That's his finding. [00:04:50] Speaker 01: There was no difference between these two companies. [00:04:53] Speaker 01: No difference at all. [00:04:56] Speaker 01: CSX was controlling RPI. [00:04:58] Speaker 03: In 1987, when he was transferred, this works better if you let us finish the question. [00:05:08] Speaker 03: He was transferred in 1987, and he was told at the time that you're no longer under the railroad [00:05:14] Speaker 03: retirement plan. [00:05:15] Speaker 03: Is that correct? [00:05:16] Speaker 01: That is correct. [00:05:17] Speaker 01: So why didn't he lodge an objection then? [00:05:19] Speaker 01: Because there's no vehicle. [00:05:21] Speaker 01: He could have been told that actually, Your Honor, but we don't know that either. [00:05:24] Speaker 01: This is sort of my problem with this. [00:05:27] Speaker 01: This is a creaky old statute. [00:05:29] Speaker 01: It's creaky. [00:05:30] Speaker 01: And I actually saw a court call up that. [00:05:32] Speaker 01: It said it's a creaky old statute. [00:05:33] Speaker 01: I see nothing where they have to tell you you're not under the railroad. [00:05:38] Speaker 03: Maybe I misunderstood. [00:05:38] Speaker 03: I thought he was told at the time that [00:05:41] Speaker 03: You're now here. [00:05:42] Speaker 03: You're no longer paying taxes. [00:05:45] Speaker 03: You're no longer getting the benefits. [00:05:47] Speaker 03: Am I wrong on that? [00:05:49] Speaker 01: I may be. [00:05:51] Speaker 01: I haven't seen that in the record, Your Honor. [00:05:53] Speaker 01: I think that would be an assumption. [00:05:54] Speaker 01: It's not an unfair assumption. [00:05:56] Speaker 01: I would hope that they would tell him. [00:05:57] Speaker 02: Well, does their pay stub show? [00:05:59] Speaker 02: Would their pay stub show where their taxes are on? [00:06:02] Speaker 01: Your Honor. [00:06:03] Speaker 02: One of my questions is, how do they get notice? [00:06:06] Speaker 01: And that's my question, too. [00:06:07] Speaker 01: This is why this statute to me is creaky and strange. [00:06:11] Speaker 01: I think the only reason was he lodged his objection when the board was conducting its investigation of whether or not they were under improvement. [00:06:25] Speaker 02: But you haven't made any argument about lack of notice. [00:06:28] Speaker 01: I have not made, because I haven't seen anywhere that it was raised actually in the record. [00:06:33] Speaker 03: So in the March 1987 letter from CXX Realty. [00:06:38] Speaker 03: 1997, Your Honor. [00:06:39] Speaker 03: Yeah, Exhibit 53. [00:06:40] Speaker 03: Correct, Your Honor. [00:06:42] Speaker 03: Says that you're no longer under railroad retirement. [00:06:46] Speaker 03: So he knew that in 1987, so. [00:06:48] Speaker 01: Was it 87? [00:06:49] Speaker 03: 1987. [00:06:49] Speaker 03: Right. [00:06:50] Speaker 03: So my question is why, [00:06:53] Speaker 01: I have absolutely no idea, Your Honor, but what I am saying is that in terms of what happened here is you can see that I don't think CSX is being wholly truthful here. [00:07:07] Speaker 01: They said they didn't direct his work in that letter. [00:07:09] Speaker 03: What did the examiner find about that? [00:07:11] Speaker 01: The examiner found that they were absolutely, in fact, he was under the direct control of CSX. [00:07:17] Speaker 01: But, I mean, about the truthfulness. [00:07:20] Speaker 01: He said that because he couldn't find a science element, he said that it wasn't fraudulent. [00:07:26] Speaker 03: Right, right. [00:07:26] Speaker 03: And what I'm saying is... And how are we to review that? [00:07:28] Speaker 01: What's our standard of review for... Well, the standard of review, Your Honor, I think for fraud, in my argument, makes this point. [00:07:36] Speaker 01: is they're using basically the Social Security Administration or the IRS definition of fraud, which is almost a criminal standard. [00:07:44] Speaker 01: And I use McCarthy versus Payne-Stewart, which is, science is eliminated. [00:07:48] Speaker 01: Fraud is any kind of fraud. [00:07:49] Speaker 01: It's constructive fraud. [00:07:50] Speaker 01: In fact, under McCarthy-Payne, under that line of cases, I can make the argument that their payment of his benefits or of his benefits for his benefit [00:08:00] Speaker 01: Makes him a fiduciary. [00:08:01] Speaker 03: So you've got a constructive fraud root. [00:08:02] Speaker 03: What is there about his relationship with them that created a fiduciary duty? [00:08:08] Speaker 01: Because they're paying his benefits. [00:08:11] Speaker 01: Basically, they're paying his retirement benefits for his benefit. [00:08:15] Speaker 01: It's almost an Arista situation. [00:08:16] Speaker 01: Basically, their duty bound to be truthful. [00:08:19] Speaker 01: If he fell under the penumbra of the railroad board and was actually being directed by them, they have a duty to be truthful because they're the ones that are paying the benefit. [00:08:27] Speaker 01: And they didn't do it here. [00:08:27] Speaker 04: Did you make this argument for the board? [00:08:29] Speaker 01: He did not make this argument before the board, Your Honor, because that's the other problem. [00:08:34] Speaker 01: They're doing this to guys that are just railroad workers. [00:08:36] Speaker 01: They're not represented by counsel. [00:08:38] Speaker 01: This isn't like a traditional thing. [00:08:40] Speaker 01: And I think that Your Honors could find that if there is a, if this is a discretionary standard where they basically breach that, I think Your Honors can overturn it, whether it was raised or not. [00:08:52] Speaker 01: But the fact of the matter is, is I don't think the board has any real direction on what fraud is. [00:08:57] Speaker 01: They're using an IRS standard that's almost beyond a reasonable doubt and asking a bunch of railroad guys that drive engines and make tracks to prove that some multi-billion dollar companies are committing fraud. [00:09:09] Speaker 01: I think that's ridiculous. [00:09:10] Speaker 04: Can we go back a moment? [00:09:11] Speaker 04: Sure. [00:09:12] Speaker 04: I thought you said that at page 110. [00:09:15] Speaker 04: Correct, your honor. [00:09:15] Speaker 04: And you're talking about the joint appendix, but all [00:09:18] Speaker 04: all the labeling is AR. [00:09:20] Speaker 04: Correct, Your Honor. [00:09:21] Speaker 04: That administrative record. [00:09:22] Speaker 04: Finding that he was doing transportation work. [00:09:29] Speaker 04: Correct, Your Honor. [00:09:31] Speaker 04: I'm looking at AR 110. [00:09:36] Speaker 04: It seems to be a letter from 1995. [00:09:44] Speaker 04: It didn't seem to have anything to do with what you were saying. [00:09:47] Speaker 01: Well, I said the examiner made a finding that RPI was not engaged in an independent trade or business from CSX. [00:09:51] Speaker 01: My apologies, Your Honor. [00:09:52] Speaker 01: It's AR0027, Your Honor. [00:09:56] Speaker 01: 0027. [00:09:57] Speaker 01: And the examiner made a finding that RPI was not engaged in an independent trade or business from CSX transportation. [00:10:04] Speaker 01: Because RPI and CSX are under the common control of CSX Corporation. [00:10:08] Speaker 01: They actually directed his work. [00:10:11] Speaker 01: And I took a look at that council's letter from 1995 to the 96 period and it almost fell over. [00:10:20] Speaker 01: It completely counters what they said there. [00:10:22] Speaker 01: And in that original thing, that was a whitewash. [00:10:25] Speaker 01: They basically discounted what all the employees were saying and said, we broke the end. [00:10:30] Speaker 01: Have a nice day. [00:10:31] Speaker 01: You're not getting real-world retirement or benefits. [00:10:34] Speaker 01: And I think that's wrong. [00:10:35] Speaker 01: And I think that was fraud. [00:10:37] Speaker 01: So if one of my clients did this, I'd be asking if you'd watch Toothbrush. [00:10:42] Speaker 04: Just going back to that passage. [00:10:44] Speaker 04: Certainly, Your Honor. [00:10:45] Speaker 04: Now page AR 27. [00:10:47] Speaker 04: Yes, Your Honor. [00:10:51] Speaker 04: It says RPI is not engaged in the penetrator business from CSX Transportation. [00:10:57] Speaker 04: That's correct. [00:10:58] Speaker 04: So I'm sorry. [00:10:59] Speaker 04: How does that speak to the period before 1993? [00:11:03] Speaker 01: Because, Your Honor, what he said was, because I can't consider [00:11:07] Speaker 01: because of the statute of limitations issue that the board has created. [00:11:10] Speaker 04: I'm just looking at this passage that you showed my attention to as a finding that would meet 211-16b-22. [00:11:19] Speaker 04: And I look at it and I don't see how it could possibly do that. [00:11:26] Speaker 01: Because, Your Honor, it was a reconsideration of its earlier decision. [00:11:31] Speaker 01: Basically, it re-raised under the same facts, right? [00:11:34] Speaker 01: And what he said was, at the very beginning, I'm going to eliminate from four years prior to when he said something. [00:11:42] Speaker 01: By doing that, it, by definition and by the effect of the order itself, simply cut those years off from consideration. [00:11:50] Speaker 01: There's no finding at all. [00:11:51] Speaker 01: There's no that he fell under what he said there or that it didn't. [00:11:56] Speaker 04: The regulation requires a finding, and you're turning that into the regulation being triggered by the absence of a finding. [00:12:06] Speaker 01: Well, Your Honor, I would say that the regulation requires that the employer was not covered under the Railroad Retirement Act. [00:12:15] Speaker 01: I think that basically the guidance that is missing here is when is this particular provision either that or fraud. [00:12:26] Speaker 01: Because I think this meets fraud. [00:12:29] Speaker 01: I'm sorry. [00:12:30] Speaker 01: And I know it's a tough thing to say, but. [00:12:32] Speaker 01: Well, let's stick with the finding. [00:12:34] Speaker 01: Sure. [00:12:34] Speaker 01: I think that what the board needs is its guidance. [00:12:38] Speaker 01: It seems to be wrapped around the axle, basically saying that we can't, it would be the rarest of occasions where we can go beyond four years when you have a record where it is very evident that CSX was not wholly truthful with them because they directed his work. [00:12:55] Speaker 01: And so what I'm missing here is what is fraud? [00:13:00] Speaker 01: Is it as defined by the IRS code? [00:13:02] Speaker 01: I don't think it is. [00:13:03] Speaker 01: I think when you have a federal statute or CFR, you can use any definition of fraud you want. [00:13:10] Speaker 01: You don't have to use beyond a reasonable doubt fraud. [00:13:13] Speaker 01: It can be constructed fraud. [00:13:14] Speaker 02: You just said any one they want, and they thought the most relevant one to use was the one borrowed from the taxes. [00:13:19] Speaker 01: But I think that that's also overly restrictive, Your Honor. [00:13:22] Speaker 01: They're using basically a heightened standard of fraud when you can use common fraud, and they don't even care anymore. [00:13:27] Speaker 03: We're instructed to give a lot of deference to agencies when they're interpreting their own regulations. [00:13:33] Speaker 01: I'm well aware, Your Honor, but I think that it's arbitrary and capricious for them to ask for a railroad guy [00:13:38] Speaker 01: to prove a multi-billion company had assigned to her meant the definition of fraud is defined under another section of the U.S. [00:13:47] Speaker 01: Code against the company. [00:13:49] Speaker 01: It's impossible because the nature of the proceeding itself is not an adversarial proceeding. [00:13:57] Speaker 02: Well, that argument would apply to any definition of fraud. [00:14:01] Speaker 02: That argument would apply to any definition of fraud. [00:14:03] Speaker 01: Well, depending, Your Honor, because if you find that they have a duty to provide these monies, I think then it goes actually into a lower... Well, duty usually sounds like negligence. [00:14:17] Speaker 01: It could, Your Honor, if you find they have a fiduciary duty. [00:14:20] Speaker 02: Negligence is not fraud. [00:14:20] Speaker 01: I know that, Your Honor. [00:14:21] Speaker 01: If you find they have a fiduciary duty, in other words, they have a duty to pay these things. [00:14:25] Speaker 02: Negligence by a fiduciary is automatically fraud? [00:14:27] Speaker 01: No, Your Honor. [00:14:28] Speaker 01: Fraud by a fiduciary is automatically fraud. [00:14:30] Speaker 01: And it's not by a proponent to the others. [00:14:32] Speaker 02: Excuse me, that's going in circles. [00:14:35] Speaker 02: You said railroad workers can't prove fraud. [00:14:38] Speaker 01: I would say that would be almost nigh on impossible. [00:14:42] Speaker 02: Right, but I'm saying that doesn't help your position because you still think they need to prove fraud. [00:14:47] Speaker 01: I think that they can't prove fraud as defined, a science element as defined under the U.S. [00:14:53] Speaker 01: Code for basically tax fraud. [00:14:56] Speaker 01: I think that when you're saying they have to basically prove tax fraud to prove fraud when the tax fraud statute is completely axiomatic. [00:15:04] Speaker 02: Tell me what fraud you think they can prove. [00:15:06] Speaker 01: Fraud. [00:15:08] Speaker 01: I think they can prove... Excuse me. [00:15:10] Speaker 02: Sorry. [00:15:10] Speaker 02: Not negligence. [00:15:11] Speaker 02: Tell me what fraud... No, Your Honor. [00:15:13] Speaker 01: Nor was I making the point that negligence... Actually, it was constructive fraud, Your Honor. [00:15:20] Speaker 02: And what does that test? [00:15:22] Speaker 01: Well, constructive fraud is if the individual is under a duty, right, as stated in McCarthy v. Payne-Weber, which is from the District of Illinois, basically it's whether or not the statement they said was with a reckless disregard to the truth. [00:15:36] Speaker 02: Okay, so they're gonna they can prove reckless disregard. [00:15:39] Speaker 01: They just reckless disregard. [00:15:40] Speaker 01: They said that he was not controlled by them. [00:15:42] Speaker 01: And if finding was that he was. [00:15:45] Speaker 01: So were they lying then? [00:15:45] Speaker 01: Are they lying now? [00:15:49] Speaker 02: Your brief says you're seeking benefits under both the Railroad Retirement Act and the Railroad Unemployment Insurance Act. [00:15:54] Speaker 02: I thought this was just now, Your Honor. [00:15:56] Speaker 01: It would just be the road. [00:15:57] Speaker 01: It would just be the railroad because that's their [00:16:00] Speaker 01: That's what they do, Your Honor. [00:16:01] Speaker 01: He's just looking for the time periods that he was barred, which was May of 97. [00:16:05] Speaker 02: He's just looking for retirement benefits. [00:16:07] Speaker 01: He's looking for retirement benefits, Your Honor. [00:16:09] Speaker 01: He just wants to get paid what he should be. [00:16:12] Speaker 01: That's it. [00:16:14] Speaker 01: And I think there was a reckless disregard for the truth there. [00:16:16] Speaker 01: I don't think there's any other way to read that, uh, that, uh, report to Thomas. [00:16:21] Speaker 01: Thank you. [00:16:21] Speaker 01: Thanks very much, Your Honor. [00:16:24] Speaker 03: You didn't reserve any time for rebuttal, but I presume you'd like some, so we'll give you back a couple minutes. [00:16:29] Speaker 01: Good morning. [00:16:35] Speaker 00: Good morning, Your Honors. [00:16:38] Speaker 00: May it please the Court, my name is Peter Orlowitz on behalf of the United States Railroad Retirement Board. [00:16:42] Speaker 00: In order to pay benefits under the Railroad Retirement Act, the Board keeps records of service and compensation for each individual in the railroad industry. [00:16:50] Speaker 00: Under Section 9 of that Act, those records are conclusive [00:16:54] Speaker 00: unless any error is called to the board's attention within four years of the date that the railroads are required to report it to the board. [00:17:00] Speaker 00: In this case, because the board reasonably found that none of the regulatory exceptions to that four-year limit were applicable to Mr. Sett's case, this court should deny Mr. Sett's petition for review. [00:17:10] Speaker 02: Well, I had a question about that because the board said it can't give relief if it finds it inequitable. [00:17:22] Speaker 02: That's on one page. [00:17:24] Speaker 02: administrative record six. [00:17:26] Speaker 02: A number of times on that page it says, reasonable reliance doesn't matter. [00:17:31] Speaker 02: We cannot decide merely because it finds it inequitable. [00:17:35] Speaker 02: Correct? [00:17:36] Speaker 00: Yes, Your Honor. [00:17:37] Speaker 02: Isn't the fourth exception to the time period an equitable one? [00:17:44] Speaker 00: I believe it is, Your Honor. [00:17:45] Speaker 02: In this case... So that was just wrong when they said they couldn't exercise an equitable judgment. [00:17:50] Speaker 00: In light of the Seventh Circuit's decision in Warehouser, where the board did go beyond four years in the absence of a fraud... Did anybody raise, point out to the Seventh Circuit that there was an equitable exception? [00:18:01] Speaker 00: Not that I'm aware of, Your Honor. [00:18:02] Speaker 02: No, so maybe they just weren't aware of it. [00:18:05] Speaker 02: They weren't ruling on that. [00:18:07] Speaker 02: I'm sorry, so the board's position is that Warehouser silently vacated that part of the regulation? [00:18:15] Speaker 00: No, Your Honor, but that regulation allowing... You're not in the Seventh Circuit now, anyhow. [00:18:19] Speaker 00: I'm sorry? [00:18:19] Speaker 02: You're not in the Seventh Circuit here, anyhow. [00:18:21] Speaker 00: No, Your Honor. [00:18:23] Speaker 02: So is that still, is Romanet IV still a valid exception? [00:18:28] Speaker 00: We believe it is. [00:18:29] Speaker 00: It wasn't raised in this case at any point, particularly. [00:18:32] Speaker 02: OK. [00:18:32] Speaker 02: But the issue, and that's an important point. [00:18:35] Speaker 02: I take that. [00:18:37] Speaker 02: What do I do with the fact that the board, as part of its explanation for its decision in this case, said we can't make a judgment based on equitable [00:18:48] Speaker 02: So at least it thought it had the argument before it that this is unfair and I was reasonably reliant and he was making equity arguments to them and he was pro se. [00:18:59] Speaker 02: And so they thought they were being asked [00:19:04] Speaker 02: to make an adjustment on equity grounds. [00:19:06] Speaker 02: I know you're saying it wasn't raised, but the argument seems to have been presented. [00:19:09] Speaker 02: Otherwise, I don't know why that language is in the decision. [00:19:11] Speaker 02: And they had a rule. [00:19:13] Speaker 02: Isn't that a problem with their decision? [00:19:15] Speaker 02: They have a rule that says they can do exactly what they said they couldn't do in the opinion. [00:19:20] Speaker 00: So to the extent that that regulation is at issue, the board's position is that they decided not to. [00:19:27] Speaker 02: It's within their discretion to decline. [00:19:29] Speaker 02: That's not what the opinion says. [00:19:31] Speaker 02: It says we can't. [00:19:32] Speaker 02: That is not. [00:19:32] Speaker 02: We know the difference between an agency decision that says I can't and I won't. [00:19:38] Speaker 02: And this is, as I read it, unless you can point to me a different language, this is a we can't. [00:19:42] Speaker 00: I don't have different language to point you to, Your Honor. [00:19:44] Speaker 02: Right. [00:19:45] Speaker 02: So it was a we can't. [00:19:47] Speaker 00: in light of warehousing. [00:19:48] Speaker 02: And that was wrong. [00:19:49] Speaker 02: So when he asked them, he made arguments to them. [00:19:51] Speaker 02: He might not have pointed to a regulation because he was a pro se railroad worker. [00:19:56] Speaker 02: But when he was asking them to consider the equities of the situation and they said, we can't, that was legal error. [00:20:05] Speaker 00: The predominant feature. [00:20:06] Speaker 02: It may not have been raised here, but that was legal error. [00:20:08] Speaker 00: The predominant feature of Mr. Seth's arguments to the board at the... I'm not asking about predominant features. [00:20:13] Speaker 02: I'm just asking about the fact that they thought they had to say, we can't exercise equity. [00:20:18] Speaker 02: That's one of the features of the decision. [00:20:21] Speaker 00: In light of the fact that Mr. Seth focused on fraud in his arguments, and because that's where the warehouse case is important, because it involved the finding of fraud, and once the board said there's... That doesn't make sense to me, because I don't understand that. [00:20:34] Speaker 02: I don't understand that. [00:20:35] Speaker 02: The board, yeah, we're dealing with a pro se at this stage. [00:20:38] Speaker 02: The board cannot, the board's regulations bind the board as well and the board cannot ignore its own regulations merely because it finds them inequitable under the circumstances of this case. [00:20:50] Speaker 02: In the absence of fraud, right, we can't do that. [00:20:53] Speaker 02: And then again, it says it doesn't, even if he reasonably relied on what he was told, all on that same page, [00:21:01] Speaker 02: So it sounds to me like they said, we have no power, unless we find fraud as we have defined it, we have no power to provide a remedy in this case. [00:21:13] Speaker 02: That's how I read, you can tell me if I'm reading it wrong, I would like to understand that. [00:21:17] Speaker 02: That's how I read that page of the decision and that just seems flatly wrong under the regulations. [00:21:23] Speaker 00: I don't know that the board specifically considered the catch-all of any equitable case that the board decides is or is not. [00:21:30] Speaker 02: I thought the board was an expert here and it would know all four of its exceptions to the four-year time limit. [00:21:39] Speaker 00: I don't have a better explanation for you, Your Honor. [00:21:43] Speaker 00: I'm sorry. [00:21:43] Speaker 00: It is clear from the record that the board did not reconsider the 97 decision involving CSX real property as an entity when it decided in 2007 that they would be prospectively covered as an employer. [00:21:56] Speaker 00: Briefly, I want to mention the reason the Railroad Unemployment Insurance Act is an issue is that coverage under one act implies coverage under the other. [00:22:03] Speaker 00: The board doesn't differentiate between the two. [00:22:05] Speaker 00: So when the board makes a finding about... We have different time limits though, right? [00:22:11] Speaker 00: For appealing... [00:22:13] Speaker 00: a determination under the RUIA, excuse me, the Railroad Employment Insurance Act, the timelines are different. [00:22:19] Speaker 00: But in terms of the definition of who is a covered employer, who is a covered employee, they're identical. [00:22:27] Speaker 00: And the best indication, most compelling indication I can point to that the board did not reconsider its 97 decision is when the board made the initial decision on Mr. Seth's claim here in 2017, the labor member of the board wrote a separate concurring opinion. [00:22:42] Speaker 00: that emphasized in 1997 the labor member dissented from that 1997 determination. [00:22:49] Speaker 00: The labor member thought at that time CSX real property should have been covered. [00:22:53] Speaker 00: The labor member in 2017 said, I still agree with that determination, and yet still said, I agree that the four-year limit applies to Mr. Seth's case and agreed with the result in this case. [00:23:06] Speaker 00: And so if Mr. Seth's counsel is correct that the 97 decision was reconsidered implicitly by the 2007 coverage decision, then the labor member's concurrence in 2017 is unnecessary and wrong. [00:23:23] Speaker 00: So unless the labor member misread the board's decision and misunderstood exactly what was going on, there was no reconsideration of the 1997 decision. [00:23:34] Speaker 00: CSX real property as an entity was not covered up until January 1st, 2007. [00:23:42] Speaker 00: And that 2007 decision said that they were covered prospectively from that point on. [00:23:46] Speaker 00: There's no inconsistency between saying... Would you speak to the fraud exception, please? [00:23:51] Speaker 00: Yes, Your Honor. [00:23:52] Speaker 00: The Board's regulations don't specifically define fraud. [00:23:56] Speaker 00: The fraud exception is completely created by regulation. [00:23:59] Speaker 00: It's not in the statute. [00:24:00] Speaker 00: It's not in Section 9 at all. [00:24:02] Speaker 00: Congress's unambiguous intent was to protect the board from being compelled to correct after the four years. [00:24:10] Speaker 00: And so even though the board's regulations don't define fraud in 211.16 specifically, we do have a regulation at 255.11 that compares fault and fraud. [00:24:21] Speaker 00: And it says unlike fraud, fault does not require specific intent to deceive, deliberate intent to deceive. [00:24:28] Speaker 00: And so that scientific requirement, that deliberate intent to deceive is in the board's regulations in terms of what fraud is required. [00:24:36] Speaker 00: In the decision in this case, the board articulated for purposes of that four-year limit, fraud requires intentional wrongdoing on the part of the employer with the specific intent to alter the employer's obligations under the act. [00:24:48] Speaker 02: You're claiming deference to that interpretation in this case? [00:24:53] Speaker 00: Yes, Your Honor. [00:24:55] Speaker 02: Didn't you give a different definition of fraud to the Seventh Circuit in the Weyerhaeuser case? [00:25:00] Speaker 00: The Wehrhaeuser case didn't, the board did not define fraud other than to say that whatever Wehrhaeuser did it was not that. [00:25:07] Speaker 02: Well on page 602 it says, listen I'm taking the 7th Circuit as a word and I assume you are too. [00:25:13] Speaker 02: The board points out that it had previously found for fraud that the knowing failure to report compensation in the service as required in the Act met the standard set forth in 21116B, the fraud one. [00:25:26] Speaker 02: Knowing failure to report compensation in service is different than [00:25:30] Speaker 02: deliberate intent. [00:25:32] Speaker 02: And that it's quite from the opinion, and I listened to the oral argument, it's very clear that a different, and the brief as well, that a different definition of fraud was being advanced in that case. [00:25:44] Speaker 02: But the decision here doesn't acknowledge the change in interpretation by the board. [00:25:51] Speaker 02: So can we give it deference? [00:25:54] Speaker 00: The definition provides the Seventh Circuit [00:25:57] Speaker 00: 7th Circuit determined that that was an error of law to rely on that. [00:26:01] Speaker 02: No, it said fraud's not an issue in this case, so we're not going to address it, even assuming is what they said. [00:26:05] Speaker 02: So one, they didn't invalidate it. [00:26:08] Speaker 02: And so don't you two get deference? [00:26:12] Speaker 02: You may change your minds if it's reasonable, but you have to acknowledge a change in position. [00:26:18] Speaker 02: And given how sent to a wirehouser was to your case here, I was just curious why the board didn't acknowledge that it was changing positions on fraud. [00:26:27] Speaker 00: To the extent that the board changed its position, I'll also point out during the course of the examiner's proceeding, the examiner proposed a definition of fraud, at which point all parties, including Mr. Seth and including CSX as the employer, were provided an opportunity to comment on the report to provide exceptions to object to the definition of fraud. [00:26:48] Speaker 02: That happens all the time in notice and comment rulemaking, but the Supreme Court has said that agencies have to acknowledge if they're changing positions. [00:26:56] Speaker 02: They can, and they just have to acknowledge it, address any reliance interests, and then explain reasonably their new position. [00:27:04] Speaker 02: But that didn't happen here. [00:27:08] Speaker 00: Correct, Your Honor. [00:27:09] Speaker 00: The regulation itself, of course, hasn't changed. [00:27:16] Speaker 03: Why should we give deference to the board's interpretation of fraud? [00:27:20] Speaker 03: Is there some substantive expertise that the board has about the meaning of fraud? [00:27:29] Speaker 00: Beyond the fact that it is the board's regulations and the highly deferential standard of review, all this court needs is that the board's decision was supported by substantial evidence. [00:27:43] Speaker 03: Is that right? [00:27:43] Speaker 03: I mean, I thought our deference was tied to some expertise that the agency has in this area. [00:27:51] Speaker 00: Well, review of the decision, I should say. [00:27:53] Speaker 03: I'm not aware of any special expertise that the board has with respect to the definition of fraud. [00:27:59] Speaker 03: Are you? [00:28:01] Speaker 00: No, you're on. [00:28:03] Speaker 02: And it wasn't, it's a little hard to say it was assigned by Congress because Congress didn't create the fraud exception as you've acknowledged. [00:28:10] Speaker 02: They just said four years flat. [00:28:18] Speaker 00: I want to briefly address Mr. Seth's argument that there's somehow a fiduciary duty. [00:28:24] Speaker 00: There is no statutory provision of the Railroad Retirement Act that assigns a fiduciary duty to the employer. [00:28:31] Speaker 00: I'm not aware of any cases that have a general duty of an employer to employees. [00:28:37] Speaker 00: The duty under ERISA for benefit plans is statutory, and the Railroad Retirement Board or the Railroad Retirement Act as a governmental plan is explicitly [00:28:47] Speaker 00: accepted from that position. [00:28:48] Speaker 02: So the employer's duty to pay taxes on behalf of the employee, right, when they pay taxes to Social Security here, they're handing over the employee's money. [00:29:01] Speaker 02: They're doing that on behalf of the employee. [00:29:03] Speaker 02: I'm just curious about this. [00:29:05] Speaker 02: Is that just purely a contractual relationship or do they have some, imagine not what happened here, some company says, I'd rather keep that for myself. [00:29:15] Speaker 02: Is that just a, is that not a breach of [00:29:17] Speaker 02: fiduciary obligation, and on that narrow question as to payment of my taxes for me. [00:29:24] Speaker 00: I don't believe that... The board doesn't find it necessary to have a position on that specifically, other than to say that there's no fiduciary duty here. [00:29:36] Speaker 02: I don't know that a fiduciary... How can you say there's no fiduciary duty here without having a position on whether there's a fiduciary duty attached to that action? [00:29:45] Speaker 00: I don't know whether a fiduciary duty obligation is the right standard. [00:30:01] Speaker 00: Whatever obligation an employer has toward its employees, [00:30:07] Speaker 00: As I said, I don't have any case law to support that or to suggest that that is the appropriate standard. [00:30:12] Speaker 00: In the cases where there is a fiduciary duty is explicitly assigned by statute or some authority, and here we don't have that. [00:30:21] Speaker 02: Common law. [00:30:22] Speaker 00: And I'm not aware of any common law interpretation of the fiduciary duty that would imply a duty here. [00:30:30] Speaker 03: Great. [00:30:31] Speaker 03: Thank you very much. [00:30:35] Speaker 03: Mr. McCarthy, we'll give you back two minutes for rebuttal, just for rebuttal. [00:30:38] Speaker 01: I'll try and make it as quick as possible, Your Honor. [00:30:41] Speaker 01: Your Honor, I did also notice the equity exception. [00:30:45] Speaker 02: But you didn't argue it. [00:30:47] Speaker 01: I did not, Your Honor, mainly being, but if you take a look at that decision, you'll see they just automatically got rid of that too. [00:30:53] Speaker 01: Basically, what they're doing is they're putting their entire emphasis [00:30:58] Speaker 01: on that one particular section, they're not reading it as a whole. [00:31:03] Speaker 02: Sorry, does Weyerhaeuser cite that exception? [00:31:05] Speaker 02: Hm? [00:31:05] Speaker 02: Does Weyerhaeuser, you're saying Weyerhaeuser got rid of that exception? [00:31:08] Speaker 01: Well, basically they're saying that... I'm not asking basically what they're saying, I'm asking... It is basically what they're saying, Your Honor. [00:31:14] Speaker 02: Well, do they cite it? [00:31:15] Speaker 01: They do cite Weierhaeuser, Your Honor. [00:31:18] Speaker 02: Does Weierhaeuser cite the equity exception? [00:31:22] Speaker 01: No. [00:31:22] Speaker 01: I do not believe that they cite the... When I looked at it, Your Honor, I do not believe they cite that. [00:31:26] Speaker 02: Is there any evidence they were aware of it or it was argued to them? [00:31:29] Speaker 01: No, I've seen nothing on that one. [00:31:30] Speaker 02: Okay, so it's a little hard to say they overruled it and got rid of it. [00:31:33] Speaker 01: I don't think they did, Your Honor. [00:31:35] Speaker 03: And you didn't argue this before? [00:31:36] Speaker 01: I did not, but it does feed into what my argument is. [00:31:43] Speaker 03: You didn't argue this before? [00:31:45] Speaker 03: Yes or no? [00:31:46] Speaker 01: No. [00:31:47] Speaker 01: But, Your Honor, it shows what they're doing is they're not reading that CFR section as a whole. [00:31:54] Speaker 01: They are placing all of their emphasis on that fraud exception under their definition of fraud. [00:32:00] Speaker 01: This entire section, this equity section, what they're basically thinking is that WireHouse basically won't allow them under any circumstances other than fraud. [00:32:10] Speaker 01: That's the only exception. [00:32:12] Speaker 04: Not saying that. [00:32:14] Speaker 04: Not saying that. [00:32:14] Speaker 04: The case was argued on the basis of the two exceptions mentioned in 211-16-B-22. [00:32:23] Speaker 04: Nobody was saying that fraud was the only basis before and behind the four-year rule. [00:32:29] Speaker 01: But I believe what they said of our recall, and I honestly don't have it in front of me, Your Honor, and my memory is not what it used to be, but what they said was that wirehouser will, in the absence of fraud, is defined under the code under wirehouser. [00:32:44] Speaker 01: We can't go beyond four years. [00:32:46] Speaker 01: There's no mention at all of that. [00:32:48] Speaker 02: Under the fraud exception. [00:32:49] Speaker 02: That's all they were saying is under this fraud exception. [00:32:51] Speaker 02: Under the fraud exception. [00:32:52] Speaker 02: Unless a finding of fraud is made. [00:32:54] Speaker 01: Correct. [00:32:54] Speaker 02: We can't go further. [00:32:56] Speaker 01: Yes, Your Honor. [00:33:00] Speaker 01: But in other words, what I'm looking at when I look at their various rulings, their entire emphasis is on that particular part of that exception, nothing else. [00:33:08] Speaker 01: That equity, I don't think that this has been used at all, even though that could be used as a grounds. [00:33:13] Speaker 01: There's no doubt about it. [00:33:14] Speaker 01: There's no doubt about it. [00:33:17] Speaker 03: The other thing, Your Honor, is that... Your time is up. [00:33:20] Speaker 03: Further questions? [00:33:22] Speaker 03: Thank you very much. [00:33:23] Speaker 03: Thank you very much, Your Honor.