Grand Trunk Western Railroad Company v. United States of America
Filing
58
MOTION by Plaintiff Grand Trunk Western Railroad Company for judgment Agreed Motion for Entry of Final Judgment (McKenna, William)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
GRAND TRUNK WESTERN
RAILROAD COMPANY,
Plaintiff,
v.
UNITED STATES OF AMERICA,
Defendant.
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No. 14-cv-10244
Hon. Gary Feinerman
AGREED MOTION FOR ENTRY OF FINAL JUDGMENT
Plaintiff Grand Trunk Western Railroad Company (“GTW”) and defendant United States
of America hereby jointly move this Court to enter a final judgment in this action, substantially
in the form attached to this motion as Exhibit A, in favor of the plaintiff GTW and against the
defendant. The proposed judgment states the amount of the tax refunds under the Railroad
Retirement Tax Act, 26 U.S.C. §§ 3201-3241 (“RRTA”), to be paid to GTW (including both
employer tax and employee tax), plus interest and costs to the plaintiff.
BACKGROUND AND DISCUSSION
This Court originally decided this case for the defendant on cross motions for summary
judgment, holding that stock in GTW’s parent company, Canadian National Railway Company
(“CN”), transferred to employees when they exercised stock options was a form of “money
remuneration” and hence was taxable “compensation” under the RRTA, 26 U.S.C. § 3231(e).
See opinion and judgment entered July 8, 2016 (Dkt 32 and 33 in the instant docket), reported as
Wisconsin Central Ltd. v. United States, 194 F. Supp. 3d 728 (N.D. Ill. 2016). The United States
4837-6110-7849.1
Court of Appeals for the Seventh Circuit affirmed this Court’s decision in an opinion published
May 8, 2017. Wisconsin Central Ltd. v. United States, 856 F.3d 490 (7th Cir. 2017).
The United States Supreme Court reversed the Court of Appeals’ decision on June 21,
2018. The Supreme Court held that the CN stock transferred to employees exercising stock
options was not a form of money remuneration taxable as “compensation” under the RRTA.
Wisconsin Central Ltd. v. United States, 138 S. Ct. 2067 (2018).
After remand to the Court of Appeals and then to this Court in late 2018 for further
proceedings consistent with the Supreme Court’s decision (see Dkt 46 and 47), the parties
(including the Internal Revenue Service) have worked together on the computation of the tax
refunds due to GTW and to its employees based on the Supreme Court’s construction of the
RRTA. The parties agreed on the final refund computations last month. These computations
take into account that employees are allowed to provide written consents to receive back their
withheld portion of the RRTA tax on CN stock. The final agreed computations include both the
employer portion and the employee portion of the tax for each year in issue. These are the tax
refund amounts reflected in the attached proposed final judgment. The parties have also agreed
on the allowable costs.
It should be noted that plaintiff GTW, together with its affiliates Wisconsin Central Ltd.
and Illinois Central Railroad Company which are parties to this litigation in related dockets and
are also receiving RRTA refunds, will distribute the employee portions of the refunds to all the
individual consenting employees together with the interest on each individual employee refund.
Wisconsin Cent. Ltd. v. United States, No. 14-cv-10243 (N.D. Ill.); Ill. Cent. R.R. Co. v. United States,
No. 14-cv-10246 (N.D. Ill.). Essentially identical Agreed Motions for Entry of Final Judgment are being filed
simultaneously in all three dockets.
4837-6110-7849.1
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CONCLUSION
For the reasons stated, both parties respectfully move this Court to enter final judgment in
favor of the plaintiff GTW and against the defendant United States, and order the payment of tax
refunds, interest and costs to the plaintiff in a judgment substantially in the form attached hereto
as Exhibit A.
Dated: March 6, 2019
Respectfully submitted,
RICHARD E. ZUCKERMAN
Principal Deputy Ass’t Attorney General
/s/ William J. McKenna
William J. McKenna
Jonathan W. Garlough
FOLEY & LARDNER LLP
321 North Clark Street, Suite 2800
Chicago, IL 60654-5313
Tel 312.832.4541
Fax 312.832.4700
wmckenna@foley.com
jgarlough@foley.com
/s/ Noreene Stehlik
NOREENE STEHLIK
Trial Attorney, Tax Division
U.S. Department of Justice
Post Office Box 55
Washington, DC 20044
Tel 202.514.6489
Richard F. Riley, Jr.
David T. Ralston, Jr.
FOLEY & LARDNER LLP
3000 K Street, N.W., Suite 600
Washington, DC 20007-5109
Tel 202.295.4712
Fax 202.672.5399
rriley@foley.com
Of Counsel:
PRASHANT KOLLURI
Assistant United States Attorney
Attorneys for Defendant
Attorneys for Plaintiff
4837-6110-7849.1
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CERTIFICATE OF SERVICE
I, William J. McKenna, an attorney, do hereby certify that on March 6, 2019, I
electronically filed the foregoing Agreed Motion for Entry of Final Judgment with the Clerk of
the United States District Court for the Northern District of Illinois. Notice and service of this
filing will be provided to all counsel of record via CM/ECF.
/s/ William J. McKenna
4837-6110-7849.1
EXHIBIT A
AGREED FORM OF FINAL JUDGMENT
4837-6110-7849.1
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
GRAND TRUNK WESTERN
RAILROAD COMPANY,
Plaintiff,
v.
UNITED STATES OF AMERICA,
Defendant.
)
)
)
)
)
)
)
)
)
)
No. 14-cv-10244
Hon. Gary Feinerman
FINAL JUDGMENT IN A CIVIL ACTION
Pursuant to the decision of the Supreme Court of the United States in Wisconsin Central
Ltd. v. United States, 138 S. Ct. 2067 (June 21, 2018), and reflecting the agreed tax refund
computations of the parties, judgment is entered in favor of the plaintiff, Grand Trunk Western
Railroad Company (“GTW”), and against the defendant, United States of America.
Defendant shall pay the sum of $507,710.40 to GTW, representing a refund of taxes
under the Railroad Retirement Tax Act, 26 U.S.C. §§ 3201-3241, as detailed in Table 1 below,
together with interest at the overpayment rate established under 28 U.S.C §§ 1961(c)(1) and
2411 and 26 U.S.C. §§ 6611(a), 6621(a)(1) and 6622, and for the period provided in 26 U.S.C.
§ 6611(b)(2).
Defendant shall also pay costs to GTW in the amount of $905.00, pursuant to 28 U.S.C.
§§ 2412(a)(1) and 1920, as detailed in Table 2 below.
4847-8501-0825.2
TABLE 1. REFUNDS OF TAX TO GTW
The refunds of tax, exclusive of interest, to be paid to plaintiff GTW, with respect to each
taxable year in suit and showing the employer tax and the employee tax separately, are as follows:
Taxable Year
2006
2007
2008
2009
2010
2011
2012
TOTALS FOR GTW:
Employer Refund
Employee Refund
Total Refund
$ 88,616.63
$ 32,752.55
$ 44,332.01
$ 32,253.75
$ 45,435.58
$ 30,832.18
$ 33,516.39
$ 60,026.48
$ 26,174.44
$ 31,771.39
$ 22,505.05
$ 28,995.49
$ 15,886.51
$ 14,611.96
$ 148,643.10
$ 58,926.99
$ 76,103.40
$ 54,758.79
$ 74,431.07
$ 46,718.69
$ 48,128.35
$ 307,739.08
$ 199,971.32
$ 507,710.40
TABLE 2. COSTS TO GTW
U.S. District Court, N.D. Ill. filing fee (Dec. 22, 2014)
U.S. Court of Appeals for the 7th Cir. filing fee (Aug. 29, 2016)
$ 400.00
$ 505.00
COSTS ALLOWED TO GTW:
$ 905.00
DATE: _______________________
_____________________________________
Gary Feinerman
United States District Judge
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4847-8501-0825.2
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