July 2024

Cox v. Total Quality Logistics, Inc.

United States District Court for the Southern District of Ohio, Western Division

June 12, 2024, Decided; June 12, 2024, Filed

Case No. 1:22-cv-00026

Reporter

2024 U.S. Dist. LEXIS 104456 *; 2024 WL 2962783

COX, et al., Plaintiffs, vs. TOTAL QUALITY LOGISTICS, INC., et al., Defendants.

Core Terms

preemption, brokers, state law, brokerage services, negligent hiring, transportation, preempted, motor vehicle, motor carrier, hiring, carrier, transportation of property, significant economic, regulation, route, words, negligence claim, interpretations, Deregulation, common-law, preemptive, courts

Counsel: [*1] For Robert Cox, As duly appointed Personal Representative and Special Administrator of the Estate, on behalf of, Greta Cox, Robert Brion Ragland, Plaintiffs: Wesley Matthew Nakajima, LEAD ATTORNEY, Charles Matthew Rittgers, Rittgers & Rittgers, Lebanon, OH; Gus John Lazares, Rittgers & Rittgers, Cincinnati, OH; Justin A. Sanders, Covington, KY.

For Total Quality Logistics, Inc., Defendant: Gregory Michael Utter, LEAD ATTORNEY, Callow & Utter, LLC, Cincinnati, OH.

For Total Quality Logistics, LLC, Defendant: Gregory Michael Utter, LEAD ATTORNEY, Callow & Utter, LLC, Cincinnati, OH; Collin L. Ryan, Keating Muething & Klekamp, PLL, Cincinnati, OH.

Judges: Jeffery P. Hopkins, United States District Judge.

Opinion by: Jeffery P. Hopkins

Opinion

OPINION AND ORDER

This case concerns the transportation of a condiment company’s goods that resulted in a fatal automobile accident. On May 6, 2019, Defendants Total Quality Logistics, Inc., and Total Quality Logistics, LLC (together, “TQL”) contracted with Kraft Heinz to transport a load of goods from Illinois to California. TQL, as a registered broker who works with trucking companies to transport goods, entered into an agreement with Golden Transit Inc. (“Golden Transit”), a third-party [*2] carrier, to pick up the goods and transport them to California.

Around the same time, Greta Cox (the “Decedent”) was on a trip across the country with her grandson, Plaintiff Robert Brion Ragland (“Mr. Ragland”). On May 8, 2019, the Decedent was tragically killed when her car was hit from behind by a tractor-trailer driven by third-party Amarjit Singh Khaira (“Mr. Khaira”) while under the employment of Golden Transit. Mr. Ragland survived the accident with injuries.

Plaintiffs Estate of Greta Cox, Robert Cox, and Mr. Ragland (collectively, “Plaintiffs”) have now brought a lawsuit against TQL alleging negligent hiring and supervision of Golden Transit and Mr. Khaira. As explained below, the Court finds that Plaintiffs’ negligent hiring claim is preempted by 49 U.S.C. § 14501(c)(1) of the Federal Aviation Administration Authorization Act of 1994 (“FAAAA”). Accordingly, the Court GRANTS TQL’s Motion to Dismiss (Doc. 6) and DISMISSES Plaintiffs’ Complaint (Doc. 1) WITH PREJUDICE. The Court further DENIES the two pending Motions for Leave to File Supplemental Authority (Docs. 14, 23) as MOOT.

I. BACKGROUND

TQL is a registered broker that works with shippers to find authorized motor carriers to transport goods throughout the United States. Doc. 1, ¶ 12.¹ On May 6, 2019, TQL contracted with [*3] Kraft Heinz to transport a load of goods from Illinois to California. Id. at ¶ 14. TQL subsequently negotiated with Golden Transit to transport the goods across the country. Id. at ¶ 16. Plaintiffs allege that TQL ignored a “history of publicly available red flags” when vetting Golden Transit, which include a history of safety violations. Id. at ¶¶ 20-21. Despite these alleged red flags, Golden Transit was hired and assigned a driver, Mr. Khaira, to pick up the load on May 7, 2019, and deliver it by May 11, 2019. Id. at ¶¶ 24-25.

Around that same time, the Decedent and Mr. Ragland were engaged in a cross-country trip. Id. at ¶ 28. On May 8, 2019, the Decedent was driving across Oklahoma with Mr. Ragland in the passenger seat. Id. at ¶ 29. As the two approached a construction work zone, traffic became congested, and Decedent slowed their vehicle to a glacial pace. Id. at ¶ 33. Contemporaneously, a semi-truck, driven by Mr. Khaira, failed to recognize the flow of traffic had slowed and crashed into Decedent’s vehicle. Id. at ¶¶ 39-45. The Decedent died from the crash and Mr. Ragland sustained injuries. Id. at ¶¶ 46-47.

Plaintiffs sued Golden Transit and Mr. Khaira in Oklahoma for negligence [*4] related to the accident. See Estate of Greta Cox, et al. v. Golden Transit, Inc., et al., No. 5:19-cv-01049 (W.D. Okla.).² Plaintiffs dismissed the Oklahoma lawsuit after a settlement. Id.; Doc. 6-5.

Plaintiffs have now brought a lawsuit against TQL alleging three different counts of negligent hiring and supervision of Golden Transit and Mr. Khaira. Doc. 1. TQL has subsequently moved to dismiss the Complaint. Doc. 6.

II. STANDARD OF REVIEW

TQL seeks to dismiss the Complaint for failure to state a claim under Rule 12(b)(6). Under Fed. R. 12(b)(6), a plaintiff must “state[] a claim for relief that is plausible, when measured against the elements” of a claim. Darby v. Childvine, Inc., 964 F.3d 440, 444 (6th Cir. 2020) (citing Binno v. ABA, 826 F.3d 338, 345-46 (6th Cir. 2016)). “To survive a motion to dismiss, in other words, [the plaintiff] must make sufficient factual allegations that, taken as true, raise the likelihood of a legal claim that is more than possible, but indeed plausible.” Id. (citations omitted).

In making that assessment, the Court must similarly “construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” Bassett v. Nat’l Collegiate Ath. Ass’n, 528 F.3d 426, 430 (6th Cir. 2008) (internal quotation omitted). That is true, however, only as to factual allegations. The Court need [*5] not accept as true Plaintiff’s legal conclusions. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). Moreover, the well-pled facts must be sufficient to “raise a right to relief above the speculative level,” such that the asserted claim is “plausible on its face.” Iqbal, 556 U.S. at 678; Twombly, 550 U.S. at 546-47. Under the Twombly/Iqbal plausibility standard, courts play an important gatekeeper role, ensuring that claims meet a plausibility threshold before defendants are subjected to the potential rigors (and costs) of the discovery process. “Discovery, after all, is not designed as a method by which a plaintiff discovers whether he has a claim, but rather a process for discovering evidence to substantiate plausibly-stated claims.” Green v. Mason, 504 F. Supp. 3d 813, 827 (S.D. Ohio 2020).

III. LAW AND ANALYSIS

TQL argues that Plaintiffs’ negligent hiring claims should be dismissed for three reasons. The Court finds one of those reasons dispositive. Specifically, TQL argues, in part, that Plaintiffs’ negligent hiring claims are preempted by 49 U.S.C. § 14501(c)(1) of the FAAAA. The Court agrees.

A. Federal Preemption.

Federal preemption doctrine owes its existence to the Supremacy Clause of the United States Constitution, which obligates that “the Laws of the United States which shall be made in Pursuance” of the Constitution “shall be the supreme Law of the Land.” U.S. Const. art. VI, cl. 2. In short, the Supremacy Clause precludes courts from giving [*6] effect to state laws that conflict with federal laws. See State Farm Bank, FSB v. Reardon, 539 F.3d 336, 341-42 (6th Cir. 2008).

The Sixth Circuit has identified three different types of federal preemption:

(1) express preemption, which occurs when Congress expresses an intent to preempt state law in the language of the statute; (2) field preemption, where Congress intends fully to occupy a field of regulation; and (3) conflict preemption, where it is impossible to comply with both federal and state law, or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.

Pertuso v. Ford Motor Credit Co., 233 F.3d 417, 425 (6th Cir. 2000) (internal quotation marks omitted). Given that the language FAAAA expressly bars states from “enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to a price, route, or service” of any motor or air carrier, 49 U.S.C. § 14501(c)(1), this case concerns express preemption. See Solo v. UPS Co., 819 F.3d 788, 797 (6th Cir. 2016). The Court must look at the history, language, and structure of the FAAAA to determine whether Plaintiffs’ state law claims fall within the FAAAA’s express prohibitions and, if so, whether any exception saves the claims from preemption.

B. The FAAAA Bars Plaintiffs’ Claims.

In 1978, Congress initially began its effort to deregulate [*7] interstate transportation industries with a focus on deregulating domestic air travel. See Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 255-56, 133 S. Ct. 1769, 185 L. Ed. 2d 909 (2013). In 1994, Congress followed that effort up when it enacted the FAAAA as part of a greater push to deregulate interstate transportation industries. Id. at 569 U.S. 256. The FAAAA signified Congress’s change in attention to the trucking industry. Congress enacted the legislation in part because it found “that state governance of intrastate transportation of property had become ‘unreasonably burden[some]’ to ‘free trade, interstate commerce, and American consumers.'” Id. at 256 (alteration in original) (quoting City of Columbus v. Ours Garage & Wrecker Service, Inc., 536 U.S. 424, 440, 122 S. Ct. 2226, 153 L. Ed. 2d 430 (2002)). The FAAAA includes several provisions barring such unreasonably burdensome state regulations. See, e.g., 49 U.S.C. § 14501(a)(1), (b)(1), (c)(1).

The relevant preemptive language lies in 49 U.S.C. § 14501(c)(1), which governs “Motor Carriers of Property.” The provision provides that a state:

may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.

49 U.S.C. § 14501(c)(1). Several exceptions follow, including the so-called safety exception in 49 U.S.C. § 14501(c)(2)(A). Under this exception, any express preemption [*8] from § 14501(c)(1) shall not:

restrict the safety regulatory authority of a State with respect to motor vehicles, the authority of a State to impose highway route controls or limitations based on the size or weight of the motor vehicle or the hazardous nature of the cargo, or the authority of a State to regulate motor carriers with regard to minimum amounts of financial responsibility relating to insurance requirements and self-insurance authorization.

49 U.S.C. § 14501(c)(2)(A).

A comprehensive view of the FAAAA’s structure illustrates a tug-of-war between its broad prohibition of certain state laws and its narrow exceptions. Specifically, “Congress broadly disallowed state laws that impede its deregulatory goals,” in the market for motor carriers, brokers, freight forwarders, and the like, with § 14501(c)(1). Ye v. GlobalTranz Enters., 74 F.4th 453, 458 (7th Cir. 2023). And then made specific carve-out laws within a state’s “safety regulatory authority . . . with respect to motor vehicles,” even though such laws may burden interstate commerce, with § 14501(c)(2)(A). Id. (citing Ours Garage, 536 U.S. at 441). It thus follows that to solve the issue of preemption here, the Court must make two determinations.

First, do Plaintiffs’ negligent hiring claims fall within 49 U.S.C. § 14501(c)(1)? The Court finds that common law tort claims, such as negligent hiring, fit [*9] within the text of § 14501(c)(1). Namely, the Court finds such claims fall within § 14501(c)(1)’s express prohibition on the enforcement of state laws “related to a . . . service of any . . . broker . . . with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1).

Second, do the claims fit in 49 U.S.C. § 14501(c)(2)(A)’s safety exception? If not, Plaintiffs’ claims are preempted. The Court ultimately finds that Plaintiffs’ claims are preempted because a common law negligence claim enforced against a broker is not a law that is “with respect to motor vehicles.” 49 U.S.C. § 14501(c)(2)(A). Plaintiffs’ claims therefore fail as a matter of law.

The Court will further address each of the issues presented in turn.

i. Common Law Tort Claims, Like Negligent Hiring Claims, Fall Within the Language of the FAAAA.

TQL argues that Plaintiffs’ negligent hiring claims fall within § 14501(c)(1)’s express prohibition on the enforcement of state laws “related to a . . . service of any . . . broker . . . with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). Plaintiffs argue in the alternative. The Court agrees with TQL.

The Court must begin with the FAAA’s text, “which necessarily contains the best evidence of Congress’ pre-emptive intent.” Dan’s City Used Cars, 569 U.S. at 260. Specifically, the Court looks at the language that prohibits state [*10] laws that are “related to” broker services. In the preemption context, the Supreme Court instructs that “related to” or “relating to” has a “broad preemptive purpose.” See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383, 112 S. Ct. 2031, 119 L. Ed. 2d 157 (1992) (interpreting an identical provision of the Airline Deregulation Act); see also Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364, 370-71, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008) (explaining that interpretations of the Airline Deregulation Act directly apply to the Federal Aviation Administration Authorization Act). Thus, to be “related to” broker services under § 14501(c)(1), the state law in question need only have a “connection with, or reference to” broker services. Rowe, 552 U.S. at 370 (emphasis removed) (quoting Morales, 504 U.S. at 384). While a state law may be preempted even if the law’s effect on broker services “is only indirect,” such indirect effects still require a clear, articulable connection because the FAAAA cannot preempt state laws that impact broker services in only a “tenuous, remote, or peripheral” manner. Id. at 370-71 (quoting Morales, 504 U.S. at 386, 390).

The Sixth Circuit has not decided whether the FAAAA’s preemption clause applies to state law tort claims. However, this Court finds the Supreme Court’s determinations in Morales and Rowe instructive. In Morales, the Supreme Court made four holdings regarding interpretation of an identical preemption provision in the Airline Deregulation Act of 1978 [*11] (“ADA”):

(1) that state enforcement actions having a connection with, or reference to, carrier rates, routes, or services are pre-empted; (2) that such pre-emption may occur even if a state law’s effect on rates, routes, or services is only indirect; (3) that, in respect to pre-emption, it makes no difference whether a state law is consistent or inconsistent with federal regulation; and (4) that pre-emption occurs at least where state laws have a significant impact related to Congress’ deregulatory and pre-emption-related objectives.

Lee v. Werner Enters., Inc., No. 3:22 CV 91, 2022 U.S. Dist. LEXIS 200848, 2022 WL 16695207, at *3 (N.D. Ohio Nov. 3, 2022) (quoting Morales, 504 U.S. at 384-87) (cleaned up). Then several years later, the Supreme Court held the same rulings apply to the preemption provision of the FAAAA in Rowe:

In Morales, this Court interpreted the pre-emption provision in the Airline Deregulation Act of 1978. And we follow Morales in interpreting similar language in the 1994 Act before us here. We have said that “when judicial interpretations have settled the meaning of an existing statutory provision, repetition of the same language in a new statute indicates, as a general matter, the intent to incorporate its judicial interpretations as well.”

Rowe, 552 U.S. at 370.

The Seventh Circuit—the most recent federal appellate circuit to rule on this issue—has interpreted Morales and Rowe to embrace a two-part [*12] test that requires the party seeking preemption to show both that a state: (1) enacted or attempted to enforce a state law; and (2) that state law relates to prohibitions of the preemptive provision, either by expressly referring to them or by having a significant economic effect. See GlobalTranz, 74 F.4th at 458; see also Headstream Techs., LLC v. FedEx Corp., No. 22-1410, 2023 U.S. App. LEXIS 2680, 2023 WL 1434054, at *2-3 (6th Cir. Feb. 1, 2023) (finding that state common law claims are preempted by the ADA’s preemption requirement because the claims directly related to the defendant’s services as an air carrier and affect pricing). In other words, if Plaintiffs’ common law tort claims fall within the language of the § 14501(c)(1), the only question is whether the Ohio law underlying the claims expressly refers to, or has a significant economic impact on, broker services.

Regarding the first part, the Court finds Northwest, Inc. v. Ginsberg, 572 U.S. 273, 134 S. Ct. 1422, 188 L. Ed. 2d 538, (2014) instructive. In construing the identical provision under the ADA, the Supreme Court found that “state common-law rules fall comfortably within the language of the ADA pre-emption provision.” Ginsberg, 572 U.S. at 281-84 (holding “that the phrase ‘other provision having the force and effect of law’ includes common-law claims”). This Court follows the lead of the Supreme Court in Ginsberg, as well as the three Circuits to rule on this FAAAA issue and finds the same. See GlobalTranz, 74 F.4th at 459 [*13] (“[T]he first preemption requirement is easily met.”); Aspen Am. Ins. Co. v. Landstar Ranger, Inc., 65 F.4th 1261, 1266 (11th Cir. 2023) (“[S]tate-law negligence claims seek to enforce a ‘provision having the force and effect of law’ subject to FAAAA preemption.”); Miller v. C.H. Robinson Worldwide, Inc., 976 F.3d 1016, 1025 (9th Cir. 2020) (“As an initial matter, there is no question that common-law claims are within the scope of the preemption clause.”) (citing Ginsberg, 572 U.S. at 284).

Regarding the second part, the Court finds that nothing about either Ohio tort law or Plaintiffs’ theory of negligent hiring expressly refer to broker services. Therefore, the Court must focus its inquiry on whether Plaintiffs’ claims have a significant economic effect on broker services.

Plaintiffs allege that TQL engaged in “negligent hiring, selection, instruction, training, supervision, and retention” of Golden Transit and Mr. Khaira. Doc. 1, PageID 2. TQL offers services as a broker in the form of “selling, providing, or arranging for, transportation by motor carrier for compensation.” 49 U.S.C. § 13102(2) (defining “broker”). As such, Plaintiffs’ claims center on TQL’s broker services by challenging the adequacy of care the company took—or failed to take—in hiring Golden Transit and Mr. Khaira to provide shipping services.

The enforcement of such a claim and the accompanying imposition of liability would have a significant economic effect on broker services. “By recognizing common-law negligence claims, courts would impose in the name of state law a new and clear duty of care on brokers, the breach of which would result in a monetary judgment.” [*14] GlobalTranz, 74 F.4th at 459. This mode of enforcement is exactly what Plaintiffs seek. As the Seventh Circuit reasoned:

To avoid these costly damages payouts, [TQL] and other brokers would change how they conduct their services—for instance, by incurring new costs to evaluate motor carriers. Then, by changing their hiring processes, brokers would likely hire different motor carriers than they would have otherwise hired without the state negligence standards. Indeed, that is the centerpiece of [Plaintiffs’] claim[s]: that [TQL] should not have hired [Golden Transit and Mr. Khaira].

Id. In sum, increasing the risk for brokers when hiring motor carriers—an essential part of their industry—has a significant economic impact on broker services because it increases the cost of doing business.

Based on the foregoing, Plaintiffs’ negligent hiring claim has much more than a tenuous, remote, or peripheral relationship to broker services. The relationship is direct because subjecting a broker’s hiring decisions to a common-law negligence standard would have significant economic effects. As such, Plaintiffs’ claims are expressly preempted by § 14501(c)(1).

This conclusion is consistent with our sister court, the United States Court for the [*15] Northern District of Ohio, and the three circuit courts that have considered this issue. See McCarter v. Ziyar Express, Inc., No. 3:21 CV 2390, 2023 U.S. Dist. LEXIS 4552, 2023 WL 144844, at *3 (N.D. Ohio Jan. 10, 2023) (finding plaintiff’s negligence claims are preempted by the FAAAA); Lee, 2022 U.S. Dist. LEXIS 200848, 2022 WL 16695207, at *5 (same); GlobalTranz, 74 F.4th at 459 (finding that the plaintiff’s negligent hiring claim directly relates to broker services and is expressly preempted by the FAAAA); Miller, 976 F.3d at 1024 (“[A] claim that imposes an obligation on brokers at the point at which they arrange for transportation by motor carrier has a ‘connection with’ broker services.”); Aspen, 65 F.4th at 1267 (“[T]he [Act] makes plain that [the plaintiff’s] negligence claims relate to a broker’s services.”).

ii. Common Law Negligence Claims Enforced Against a Broker Do Not Fit Within the FAAAA’s Safety Exception.

Even if Plaintiffs’ claims are preempted, the Court must consider whether it is saved by the safety exception in 49 U.S.C. § 14501(c)(2)(A). The safety exception provides that laws within a state’s “safety regulatory authority . . . with respect to motor vehicles” are not preempted. 49 U.S.C. § 14501(c)(2)(A). Following the lead of the Seventh and Eleventh Circuits, the Court finds that the safety exception does not save Plaintiffs’ negligent hiring claims from preemption. See GlobalTranz, 74 F.4th at 464 (“Ye’s negligent hiring claim against GlobalTranz does not fall within the scope of § 14501(c)(2)’s safety [*16] exception.”); Aspen, 65 F.4th at 1272 (“[N]egligence claims are not ‘with respect to motor vehicles’ under the FAAAA’s safety exception.”).

As before, the Court begins with the statutory text. Congress limited the safety exception’s application to state laws “with respect to motor vehicles.” 49 U.S.C. § 14501(c)(2)(A). The Supreme Court has interpreted “with respect to” to mean “concern[s].” See Dan’s City Used Cars, 569 U.S. at 261. The scope of the exception is thus narrowed to those laws concerning “motor vehicles,” which are defined as a “vehicle, machine, tractor, trailer, or semitrailer . . . used on a highway in transportation.” 49 U.S.C. § 13102(16) (defining “motor vehicle”). Notably, there is no mention of “brokers” (like TQL) in the safety exception’s text, or in Congress’s definition of “motor vehicles.” Compare 49 U.S.C. § 13102(2) (defining “broker”) with 49 U.S.C. § 13102(16) (defining “motor vehicle”). The Court finds this omission to be significant because it indicates that Congress intended claims concerning brokers to be outside the scope of the safety exception. See Dan’s City Used Cars, 569 U.S. at 261-62 (concluding that a state’s law was not “with respect to transportation of property” under § 14501(c)(1) where it concerned post-towing storage, which does not constitute “transportation” as defined in § 13102(23)(B)).

The Court’s finding is additionally supported by the structure [*17] of 49 U.S.C. § 14501(c). While Congress expressly included broker services in § 14501(c)(1)’s express preemption provision, Congress declined to include such a reference in 49 U.S.C. § 14501(c)(2)(A). Congress also expressly declined to include such reference in § 14501(c)(2)’s two other saving provisions for “intrastate transportation of household goods” and “tow truck operations.” 49 U.S.C. § 14501(c)(2)(B)-(C). If Congress intended for brokers to be included in the safety exception it would have. Instead, Congress marked a line in the sand when it limited the safety exception’s application to state safety regulations related to “motor vehicles.” So does this Court.

Plaintiffs argue that the Court should follow the Ninth Circuit’s 2-1 decision in Miller , which found that the safety exception did apply to negligent hiring claims against brokers. Miller, 976 F.3d at 1030-31. The Court does not find Miller’s reasoning persuasive for a couple reasons.

First, Miller relied upon a presumption against preemption. See id. at 1021, 1027-28. However, the Supreme Court instructs that such a presumption does not apply where a “statute contains an express preemption clause,” and requires courts to “focus on the plain wording of the clause, which necessarily contains the best evidence of Congress’ pre-emptive intent.” Puerto Rico v. Franklin Cal. Tax-Free Tr., 579 U.S. 115, 125, 136 S. Ct. 1938, 195 L. Ed. 2d 298 (2016) (quoting Chamber of Commerce of United States of America v. Whiting, 563 U.S. 582, 594, 131 S. Ct. 1968, 179 L. Ed. 2d 1031 (2011)). The Court’s decision thus focuses [*18] on the language of the safety exception which expressly does not include brokers or brokers services.

Second, the Ninth Circuit interpreted the “with respect to” language in § 14501(c)(2)(A) too broadly. The Miller court misread the Supreme Court’s opinion in Dan’s City Used Cars when it concluded that the safety exception’s narrow “with respect to” language is “synonymous” with the more expansive language of “relating to.” Miller, 976 F.3d at 1030. The Supreme Court went to great lengths to differentiate the two phrases when contrasting the ADA’s air-carrier preemption provision with the FAAAA by stating that “the FAAAA formulation contains one conspicuous alteration—the addition of the words ‘with respect to the transportation of property.’ That phrase massively limits the scope of preemption ordered by the FAAAA.” Dan’s City Used Cars, 569 U.S. at 261 (quotations omitted). And “for purposes of FAAAA preemption, it is not sufficient that a state law relates to the price, route or service of a motor carrier in any capacity,” the addition of the words “with respect to” require the law to “also concern a motor carrier’s transportation of property.” Id. (emphasis added). In other words, the Supreme Court differed from the Ninth Circuit when it found that an interpretation of the FAAAA’s [*19] “with respect to” language (included in the safety exception) should be interpreted in a more narrow and focused manner than “relates to.”

The Court therefore finds that the Supreme Court’s decision in Dan’s City Used Cars instructs that “with respect to” more narrowly means “concerns” rather than the more inclusive “relate.” See id.; see also GlobalTranz, 74 F.4th at 465 (“Given Congress’s choice in § 14501(c)(1) to use ‘relat[ed] to,’ its use of ‘with respect to’ in § 14501(c)(2)(A) implies a different scope.”). As a result, the phrase “with respect to motor vehicles” in the safety exception supports a narrower interpretation than the Ninth Circuit formulated in Miller. And that interpretation does not include brokers.

* * * *

Based on the foregoing and following the recent decisions by the Seventh Circuit, Eleventh Circuit, and the Northern District of Ohio, this Court finds the claims against TQL, the freight brokers in this case, are preempted by the FAAAA and must be dismissed.³

IV. CONCLUSION

For the reasons stated, the Court GRANTS the Motion to Dismiss of TQL (Doc. 6) and DISMISSES Plaintiffs’ Complaint (Doc. 1) WITH PREJUDICE. The Court further DENIES the two pending Motions for Leave to File Supplemental Authority (Docs. 14, 23) as MOOT. The Court ORDERS the [*20] clerk to ENTER JUDGMENT and TERMINATE this matter from the docket.

SO ORDERED

June 12, 2024

/s/ Jeffery P. Hopkins

Jeffery P. Hopkins

United States District Judge

End of Document

¹The Court notes that Plaintiffs believe that TQL served as an “authorized motor carrier” concerning the transportation of goods in this case. Doc. 1, ¶¶ 13-15. While Plaintiffs did not attach the relevant contract to their Complaint, TQL attached it to their motion to dismiss. Doc. 6-2. The contract clearly states that TQL served as a “BROKER” and Golden Transit served as the “CARRIER.” Doc. 6-2, PageID 137. Because Plaintiffs’ allegation is contradicted by the contract, “the [contract] trumps the allegation.” Gulfside Casino P’ship v. Churchill Downs Inc., 861 F. App’x 39, 42 (6th Cir. 2021).

²The court may take a judicial notice of Plaintiffs’ prior lawsuit and subsequent dismissal with prejudice against Golden Transit and Mr. Khaira. Lyons v. Stovall, 188 F.3d 327, 332 n.3 (6th Cir. 1999) (“[I]t is well-settled that ‘[f]ederal courts may take judicial notice of proceedings in other courts of record.'”).

³Plaintiffs’ claim for punitive damages (Count IV) is a derivative claim that relies on the three negligent hiring claims to survive. Graham v. Am. Cyanamid Co., 350 F.3d 496, 514-15 (6th Cir. 2003) (dismissing punitive damages claim because it is “derivative in nature” and must be dismissed if the primary cause of action does not survive). Because the Court dismisses Plaintiffs’ negligent hiring claims (Counts I-III), their punitive damages claim must also be dismissed.

Clark v. Progressive Cnty. Mut. Ins. Co.

United States District Court for the Western District of Louisiana, Lafayette Division

May 30, 2024, Decided; May 30, 2024, Filed

CIVIL DOCKET NO. 6:23-cv-00625

Reporter

2024 U.S. Dist. LEXIS 96604 *

LINDA CLARK VERSUS PROGRESSIVE COUNTY MUTUAL INSURANCE COMPANY, ET AL

Core Terms

cancellation, Trucking, Endorsement, insured, summary judgment, effective, mailing, notice, argues, cancellation notice, insurance policy, effective date, subject accident, motor carrier, Declarations, Certificate, non-moving, damages

Counsel: [*1] For Linda Clark, Plaintiff: Scott F Higgins, LEAD ATTORNEY, Laborde Earles Law Firm (LAF), Lafayette, LA.

For Progressive County Mutual Insurance Co, Defendant: Rachel Marie Anderson, LEAD ATTORNEY, Robin Danielle Cassedy, Strauss Massey & Dinneen, New Orleans, LA; Guy D Perrier, Sean Paul Rabalais, Perrier & Lacoste, New Orleans, LA.

For Yannier Casas Sosa, Kyan Trucking L L C, Defendants: Ian A MacDonald, LEAD ATTORNEY, Jones Walker (LAF), Lafayette, LA.

For State Farm Mutual Automobile Insurance Co, Defendant: Sarah Eilts Assad, LEAD ATTORNEY, Casten & Pearce, Shreveport, LA.

Judges: DAVID C. JOSEPH, UNITED STATES DISTRICT JUDGE. MAGISTRATE JUDGE DAVID J. AYO.

Opinion by: DAVID C. JOSEPH

Opinion

MEMORANDUM RULING

Before the Court is a MOTION FOR SUMMARY JUDGMENT (the “Motion”) [Doc. 43] filed by Progressive County Mutual Insurance Company (“Progressive”). Progressive seeks dismissal of all claims against it on grounds that the commercial auto insurance policy issued by Progressive to defendant Kyan Trucking, LLC (“Kyan Trucking”), was cancelled prior to the automobile accident at issue. After careful consideration, and for the reasons set forth below, Progressive’s Motion is GRANTED. Specifically, the Court finds [*2] that Kyan Trucking is not an insured under the Progressive insurance policy in connection with the subject accident, and that Progressive therefore has no duty to defend Kyan Trucking or defendant Yannier Casas Sosa.

Factual Background and Procedural History

This lawsuit arises out of a motor vehicle collision that occurred on July 14, 2022, in which a truck driven by defendant Yannier Casas Sosa (“Sosa”), an alleged employee of defendant Kyan Trucking, struck Plaintiff Linda Clark’s (“Plaintiff”) vehicle in a parking lot, causing her injuries.¹

Prior to the accident, on September 17, 2021, Kyan Trucking applied for an insurance policy with Progressive. [Doc. 43-2, p. 1, ¶ D(1); pp. 3-8]. In the Application for Insurance, Kyan Trucking listed its address as “716 S. Eagle St., Weimar, TX 78962” (the “Weimar address”). Thereafter, Progressive issued Texas commercial auto insurance policy number 04078762-0 (the “Policy”) to Kyan Trucking with an effective date of September 22, 2021. [Doc. 43-2, pp. 31-98]. The Policy contained a Form MCS-90 — Endorsement for Motor Carrier Policies of Insurance for Public Liability under Sections 29 and 30 of the Motor Carrier Act of 1980 (the “MCS-90 Endorsement”),² [Doc. 43-2, ¶ D(2)], as well as a “Form [*3] F — Uniform Motor Carrier Bodily Injury and Property Damage Liability Insurance Endorsement” (the “Form F Endorsement”).³ [Doc. 43-2, pp. 17-30]. The Form F Endorsement provides:

FORM F

UNIFORM MOTOR CARRIER BODILY INJURY AND PROPERTY DAMAGE LIABILITY INSURANCE ENDORSEMENT

It is agreed that:

1. The certification of the policy, as proof of financial responsibility under the provisions of any State motor carrier law or regulations promulgated by any State Commission having jurisdiction with respect thereto, amends the policy to provide insurance for automobile bodily injury and property damage liability in accordance with the provisions of such law or regulations to the extent of the coverage and limits of liability required thereby; provided only that the insured agrees to reimburse the company for any payment made by the company which it would not have been obligated to make under the terms of this policy except by reason of the obligation assumed in making such certification.

2. The Uniform Motor Carrier Bodily Injury and Property Damage Liability Certificate of Insurance has been filed with the State Commissions indicated below.

3. This endorsement may not be cancelled without cancellation [*4] of the policy to which is it attached. Such cancellation may be effected by the company or the insured giving thirty (30) days notice in writing to the State Commission with which such certificate has been filed, such thirty (30) days notice to commence to run from the date the notice is actually received in the office of such Commission.

Attached to and forming part of policy No. CA 04078762-0 issued by Progressive County Mutual Ins Co, herein called Company, of PO BOX 94739, CLEVELAND, OH 44101 to KYAN TRUCKING LLC of 18190 HOLLY FOREST DR, KATY, TX 77084-0000.

[Doc. 43-2, p. 18].

The Policy also contains the following cancellation provision:

CANCELLATION AND NONRENEWAL ENDORSEMENT

…

CANCELLATION

You may cancel this policy by calling or writing us, and stating the future date that you wish the cancellation to be effective.

We may cancel this policy by mailing a notice of cancellation to the first named insured shown on the declarations page at the last known address appearing in our records. Notice of cancellation, with the reasons for cancellation, will be mailed at least 10 days before the effective date of cancellation.

…

With respect to cancellation, [*5] this policy is neither severable nor divisible. Any cancellation will be effective for all coverage for all persons and all autos.

If this policy is canceled, coverage will not be provided as of the effective date and time shown in the notice of cancellation.

[Docs. 43-2, pp. 82-83].

On November 8, 2021, Progressive issued a new Policy Declarations page, effective November 7, 2021, which includes the following changes to the Policy: (i) auto coverage schedule; (ii) driver information; (iii) radius of operation for an auto; and, importantly, (iv) Kyan Trucking’s mailing address. [Doc. 46-1, p. 12]. The new mailing address for Kyan Trucking is listed as “18190 Holly Forest Dr., Katy, TX 77084-0000” (the “Holly Forest Drive address”).

On June 9, 2022, Progressive mailed a Notice of Cancellation of the Policy to Kyan Trucking at the Holly Forest Drive address, with an effective date of cancellation on July 13, 2022 (the day before the subject accident) at 12:01 a.m. [Doc. 43-2, p. 99]. The reason for the cancellation was “nonpayment of premium.” The subject motor vehicle accident occurred on July 14, 2022. On March 8, 2023, Plaintiff filed suit against Progressive, Mr. Sosa, Kyan Trucking, [*6] and State Farm Mutual Automobile Insurance Company (“State Farm”)⁴ in the 15th Judicial District Court for the Parish of Lafayette, Louisiana, alleging that the defendants are solidarily liable for the full amount of damages for her personal injuries. Progressive removed the matter to this Court on May 10, 2023. [Doc. 1].

On April 30, 2024, Progressive filed the instant Motion, arguing that it is entitled to summary dismissal of all claims against it on grounds the Policy issued by Progressive to Kyan Trucking was cancelled prior to the auto accident at issue and, therefore, Progressive has no duty to defend Kyan Trucking or defendant Yannier Casas Sosa, nor any obligation to pay for the Plaintiff’s damages, except to the extent Plaintiff proves the MCS-90 Endorsement attached to the policy was in effect and triggered by the accident. Plaintiff opposed the Motion on May 17, 2024 [Doc. 45], and Progressive filed a Reply brief on May 22, 2024 [Doc. 46]. All issues having been fully briefed, the Motion is now ripe for review.

Law and Analysis

I. Summary Judgment Standard

A court should grant a motion for summary judgment when the pleadings, including the opposing party’s affidavits, “show [*7] that there is no dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56; see also Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). In applying this standard, the Court should construe “all facts and inferences in favor of the nonmoving party.” Deshotel v. Wal-Mart Louisiana, L.L.C., 850 F.3d 742, 745 (5th Cir. 2017); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986) (“The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.”). The party moving for summary judgment bears the burden of demonstrating that there is no genuine issue of material fact as to issues critical to trial that would result in the movant’s entitlement to judgment in its favor, including identifying the relevant portions of pleadings and discovery. Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995). If the movant fails to meet this burden, the court must deny the moving party’s motion for summary judgment. Id.

If the movant satisfies its burden, however, the non-moving party must “designate specific facts showing that there is a genuine issue for trial.” Id. (citing Celotex, 477 U.S. at 323). In evaluating motions for summary judgment, the court must view all facts in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). There is no genuine issue for trial — and a grant of summary judgment is warranted — when the record as a whole “could not lead a rational [*8] trier of fact to find for the non-moving party[.]” Id.

II. Analysis

A. Texas Law Governs

The parties do not dispute that Texas law applies to this insurance contract dispute.⁵ Under Texas law, insurance policies are interpreted using the general principles of contract construction. Terry Black’s Barbecue, L.L.C. v. State Farm Auto. Mut. Ins. Co., 22 F.4th 450, 454 (5th Cir. 2022). Thus, when interpreting an insurance policy, courts must first look to the language in the policy, “because it is ‘presume[d] parties intend what the words of their contract say.’ ” Id., quoting Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 126 (Tex. 2010). The court “must give ‘effect to each word, clause, and sentence, and avoid making any provision within the policy inoperative.’ ” Terry Black’s Barbecue, 22 F.4th at 455, quoting State Farm Lloyds v. Page, 315 S.W.3d 525, 527 (Tex. 2010). Under Texas law, cancellation is an affirmative defense which must be proved by the insurer at trial. Republic W. Ins. Co. v. Rockmore, 2005 U.S. Dist. LEXIS 327, 2005 WL 57284, at *6 (N.D. Tex. Jan. 10, 2005), citing Shaller v. Commercial Standard Insurance Co., 158 Tex. 143, 309 S.W.2d 59, 66 (Tex. 1958); Anchor Casualty Co. v. Crisp, 346 S.W.2d 364, 367 (Tex.Civ.App.-Amarillo 1961). Therefore, in order to obtain summary judgment, Progressive must conclusively establish that it complied with the requirements for sending a cancellation notice and that its stated reason for cancellation was proper. Rockmore, 2005 U.S. Dist. LEXIS 327, 2005 WL 57284, at *6.

Tex. Ins. Code § 551.103 requires that “[n]ot later than the 10th day before the date on which the cancellation of a liability insurance or commercial property insurance policy takes effect, an insurer must deliver or mail written notice of the cancellation to the first-named [*9] insured under the policy at the address shown on the policy.” Tex. Ins. Code Ann. § 551.103 (West). Tex. Ins. Code § 551.104(b) states that an insurer may cancel any policy if: “(1) the named insured does not pay any portion of the premium when due; (2) the insured submits a fraudulent claim; or (3) the department determines that continuation of the policy would result in a violation of this code or any other law governing the business of insurance in this state.” Tex. Ins. Code Ann. § 551.104(b) (West).

B. Cancellation of the Policy

As an initial matter, the Court notes that the defendants are alleged to be solidarily liable for Plaintiff’s damages, and Kyan Trucking has not asserted a cross claim against Progressive for defense and indemnity. Nevertheless, Progressive argues in the instant Motion that it has no duty to defend or indemnify Kyan Trucking or Sosa. Progressive also argues that it has no obligation to pay for the Plaintiff’s damages, except to the extent Plaintiff proves the MCS-90 Endorsement attached to the Policy was in effect and triggered by the accident.

In its Motion, Progressive argues and provides evidence that it cancelled the Policy, effective July 13, 2022, the day before the subject accident occurred on July 14, 2022. Progressive contends that [*10] it complied with the requirements of the Policy and Texas law to cancel the Policy by sending a “Notice of Cancellation, Nonrenewal or Declination of Insurance” (“Notice of Cancellation”) to the first named insured, Kyan Trucking, at its last known address — the Holly Forest Drive address — more than one month before the effective cancellation date.

In support of its argument, Progressive submits the unsworn affidavit of David J. Hale, a Business Systems Consultant at Progressive with knowledge of the records regularly kept in the course of Progressive’s business. Mr. Hale attaches to his affidavit a copy of the “Notice of Cancellation, Nonrenewal or Declination of Insurance” which states that Kyan Trucking’s Policy “will cease” on July 13, 2022, at 12:01 a.m. Mr. Hale confirms in another Unsworn Declaration, filed with Progressive’s Reply brief, that on November 8, 2021, Progressive received notice of a new address for Kyan Trucking, which prompted Progressive to issue a new Declarations Page acknowledging the change of address. [Doc. 46-1, pp. 1-2, ¶ D(3); 46-1, p. 12]. Mr. Hale also attaches a copy of a Certificate of Mailing from the United States Postal Service, which is postmarked [*11] June 9, 2022, and which evidences the mailing of the Notice of Cancellation to Kyan Trucking at the Holly Forest Drive address. [Doc. 43-2, p. 100].

Mr. Hale also attaches a Texas Department of Motor Vehicles (“DMV”) form, which indicates the Texas DMV received notice of the cancellation of the Form F Endorsement on June 10, 2022, with an effective cancellation date of July 15, 2022. [Doc. 43-3, p. 101]. Kyan Trucking’s address on that notice is listed as the Weimar address. Finally, Mr. Hale attaches a “Federal Motor Carrier Safety Administration Acceptance Report” (“FMCSA”), which shows that Progressive cancelled the MCS-90 Endorsement to the Policy, effective July 15, 2022, which was transmitted to, and accepted by, the FMCSA on June 10, 2022. Therefore, Progressive argues that the Policy was not in effect at the time of the subject accident, and it therefore has no liability for any damages caused by the subject accident.

In response, Plaintiff argues that summary judgment cannot be granted because there are questions of fact with respect to two main issues. First, Plaintiff argues that Progressive has offered no evidence that the Holly Forest Drive address was the last known address [*12] for Kyan Trucking, contending that the Weimar address was used on Kyan Trucking’s insurance application and is the address listed in the cancellation confirmations from both the Texas DMV and the FMCSA. Plaintiff argues that these “multiple addresses” for Kyan Trucking create an issue of fact as to whether Progressive strictly complied with the Policy’s cancellation requirements. Second, Plaintiff argues that the cancellation confirmation documentation from both the Texas DMV and the FMCSA reflect an effective date of cancellation of the Policy as July 15, 2022, while the Notice of Cancellation that Progressive provided to Kyan Trucking shows that cancellation was effective on July 13, 2022. Plaintiff argues that these conflicting dates create a question of fact as to the effective date of the cancellation of the Policy.

Plaintiff’s arguments are without merit. With respect to the last known address for Kyan Trucking, Progressive provides evidence that Kyan Trucking’s Policy Declarations Page was changed on November 8, 2021 (effective November 7, 2021) to reflect a new mailing address for Kyan Trucking at the Holly Forest Drive address. [Doc. 46-1, pp. 1-2, ¶ D(3); 46-1, p. 12]. Plaintiff [*13] has not controverted this fact, and therefore, there is no question of fact as to the proper mailing address for Kyan Trucking. Furthermore, the Court does not credit Plaintiff’s argument that the “July 15, 2022” termination date in the Form F Endorsement and the FMCSA’s acceptance of cancellation creates a genuine dispute of fact. Confirmations to third parties (Texas DMV and FMCSA) that Policy endorsements were cancelled — and the effective dates of those cancellations — are immaterial to whether the Policy itself was properly cancelled between Progressive and its insured, Kyan Trucking.

Considering the foregoing, the Court finds that Progressive complied with all of the requirements of cancellation under the Policy and Texas law, and that Kyan Trucking was therefore not covered under the Progressive Policy on July 14, 2022. Because the Progressive policy was not in effect at the time of the accident, Kyan Trucking is not an insured under the Progressive for the claims asserted.

Conclusion

Accordingly,

IT IS HEREBY ORDERED that the MOTION FOR SUMMARY JUDGMENT [Doc. 43] filed by Progressive County Mutual Insurance Company is GRANTED. Specifically, the Court finds that Kyan Trucking is [*14] not an insured under the Progressive insurance policy in connection with the subject accident, and that Progressive therefore has no duty to defend Kyan Trucking or defendant Yannier Casas Sosa.

THUS, DONE AND SIGNED in Chambers on this 30th day of May 2024.

/s/ David C. Joseph

DAVID C. JOSEPH

UNITED STATES DISTRICT JUDGE

End of Document

¹Specifically, Plaintiff alleges that Sosa was operating a truck pulling a utility trailer, when the trailer struck the Plaintiff’s vehicle. [Doc. 1-4, ¶¶ 3-5].

²The MCS-90 endorsement makes an insurer liable to third parties for any liability resulting from the negligent use of any motor vehicle by the insured, even if the vehicle is not covered under the insurance policy. Republic W. Ins. Co. v. Rockmore, 2005 U.S. Dist. LEXIS 327, 2005 WL 57284, at *9 (N.D. Tex. Jan. 10, 2005), citing T.H.E. Insurance Co. v. Larsen Intermodal Services, Inc., 242 F.3d 667, 672 (5th Cir. 2001). Some courts, including the Fifth Circuit, have described the obligation placed upon the insurer by the MCS-90 endorsement as one of suretyship. T.H.E. Insurance, 242 F.3d at 672, quoting Canal Insurance Co. v. Carolina Casualty Insurance Co., 59 F.3d 281, 283 (1st Cir. 1995) (“[W]e consider the ICC endorsement to be, in effect, suretyship by the insurance carrier to protect the public — a safety net … [I]t simply covers the public when other coverage is lacking.”). Furthermore, the majority of federal courts have held that the MCS-90 does not affect the obligations between the insurer and its insured or between joint insurers. See, e.g., Carolina Casualty. Ins. Co. v. Underwriters Ins. Co., 569 F.2d 304, 313 (5th Cir. 1978); California Casualty Ins. Co. v. Ins. Co. of N. America, 595 F.2d 128 (3rd Cir. 1999); California Casualty Ins. Co. v. Transport Indem. Co., 533 F. Supp. 22 (D.S.C. 1981), aff’d 676 F.2d 690 (4th Cir. 1982); Travelers Ins. Co. v. Transport Ins. Co., 787 F.2d 1133 (7th Cir. 1986); Grinnell Mut. Reinsurance Co. v. Empire Fire & Marine Ins. Co., 722 F.2d 1400 (8th Cir. 1983); and Harco National Ins. Co. v. Bobac Trucking, Inc., 1995 U.S. Dist. LEXIS 21722, 1995 WL 482330,*5 (N.D. Cal. 1995), aff’d 107 F.3d 733 (9th Cir. 1997) (“[t]he endorsement is intended for the protection of the public only, and does not affect the obligations between the insurer and the insured or between joint insurers”).

Here, Progressive does not seek summary judgment on the issue of whether the MCS-90 Endorsement attached to the Policy was in effect on the date of the accident or applicable to the claims at issue. Nor does Kyan Trucking or the Plaintiff argue or provide evidence that the MCS-90 Endorsement was operative at the time of the subject accident or triggered by the facts alleged. Accordingly, the existence of the MCS-90 Endorsement does not preclude summary judgment on Progressive’s Motion.

³A “Form F” Endorsement is the counterpart under Texas state law to the MCS-90 Endorsement. T.H.E. Ins. Co. v. Larsen Intermodal Servs., Inc., 242 F.3d 667, 671 n.1 (5th Cir. 2001).

⁴Plaintiff alleges she had an uninsured motorist policy with State Farm.

⁵The Policy provides: “Any disputes as to the coverages provided or the provisions of this policy shall be governed by the law of the state listed on your application as your business location.” [Doc. 43-2, p. 61]. In this case, the address listed on the application for insurance is in Weimar, Texas. Plaintiff does not dispute that Texas law applies to the issue of cancellation of the Policy.