December 2022

Wardingley v. Ecovyst Catalyst Techs., LLC

United States District Court for the Northern District of Indiana, Hammond Division

November 4, 2022, Decided; November 4, 2022, Filed

Cause No. 2:22-CV-115-PPS-JEM

Reporter

2022 U.S. Dist. LEXIS 201265 *; 2022 WL 16714139

MADISON WARDINGLEY, Plaintiff, v. ECOVYST CATALYST TECHNOLOGIES, LLC, et al., Defendants.

Core Terms

brokers, Logistics, preempted, motor carrier, trucking, freight, preemption, routes, Safe, courts, regulation, negligence claim, prices, preemption provision, state law, transport, containers, carrier, driver, cases, rates, collecting, common law claim, negligence law, motor vehicle, interstate, cargo

Counsel: [*1] For Madison Wardingley, Plaintiff: Brady J Rife, Paul T Belch, LEAD ATTORNEYS, Stephenson Rife – She/IN/2150, Shelbyville, IN; M Michael Stephenson, McNeely Law LLP – She/IN/2177, Shelbyville, IN.

For Safe Trans, LLC, Tresor Hodari, Defendants: Christopher R Whitten, LEAD ATTORNEY, Whitten Law Office LLC – Ind/IN, Indianapolis, IN; Michael T Terwilliger, LEAD ATTORNEY, Whitten Law Office – Val/IN, Valparaiso, IN.

For Coyote Logistics, LLC, Defendant: Corban J Cavanaugh, LEAD ATTORNEY, Lewis Brisbois Bisgaard & Smith LLP – Hi/IN, Highland, IN; Scott C Bentivenga, LEAD ATTORNEY, Lewis Brisbois Bisgaard & Smith LLP – Chi/IL, Chicago, IL.

For Ecovyst Catalyst Technologies, LLC, Defendant: Joseph E Hopkins PHV, LEAD ATTORNEY, PRO HAC VICE, Pellis Law Group LLP – Nya/NY, Nyack, NY; Joseph L Pellis PHV, II, Michael A Kozik PHV, LEAD ATTORNEYS, PRO HAC VICE, Pellis Law Group LLP – Lis/IL, Lisle, IL; Renea E Hooper, LEAD ATTORNEY, Scopelitis Garvin Light Hanson & Feary PC – Ind/IN, Indianapolis, IN.

For Ecovyst Catalyst Technologies, LLC, Cross Claimant: Joseph E Hopkins PHV, LEAD ATTORNEY, Pellis Law Group LLP – Nya/NY, Nyack, NY; Joseph L Pellis PHV, II, Michael A Kozik PHV, LEAD ATTORNEYS, PRO [*2] HAC VICE, Pellis Law Group LLP – Lis/IL, Lisle, IL; Renea E Hooper, LEAD ATTORNEY, Scopelitis Garvin Light Hanson & Feary PC – Ind/IN, Indianapolis, IN.

For Safe Trans, LLC, Cross Defendant: Christopher R Whitten, LEAD ATTORNEY, Whitten Law Office LLC – Ind/IN, Indianapolis, IN; Michael T Terwilliger, LEAD ATTORNEY, Whitten Law Office – Val/IN, Valparaiso, IN.

Judges: PHILIP P. SIMON, UNITED STATES DISTRICT JUDGE.

Opinion by: PHILIP P. SIMON

Opinion

OPINION AND ORDER

This matter arises from a motor vehicle collision on Interstate 80 near Gary, Indiana. Plaintiff Madison Wardingley claims that she was seriously injured when the vehicle in which she was a passenger collided with heavy steel containers that fell from a truck operated by Safe Trans, LLC, a commercial motor carrier. The containers, in turn, were owned by Defendant Ecovyst Catalyst Technologies, LLC. As is typical in the trucking industry, Defendant Coyote Logistics, LLC, a third-party logistics company and freight broker, arranged for Safe Trans to haul the containers on Ecovyst’s behalf. Wardingley claims each defendant was negligent and their negligence caused her to be seriously injured. [DE 10 at 4-8.]

Coyote Logistics seeks dismissal arguing that the [*3] claims asserted against it, which sound in negligent selection of Safe Trans and vicarious liability for the alleged negligence of Safe Trans and its driver, are preempted by the Federal Aviation Administration Authorization Act (FAAAA). [DE 39; DE 40 at 2.] Because I find that Wardingley’s claims against Coyote Logistics do not effect pricing, rates or services in the trucking industry, they are not preempted by the FAAAA. Coyote Logistics’ motion to dismiss will be denied.

Factual Background

The following facts are drawn from Wardingley’s First Amended Complaint, which I accept as true for present purposes. On the evening of July 31, 2021, Wardingley was riding as a passenger in a vehicle on Interstate 80 outside Gary, Indiana, when a semi tractor-trailer owned by Safe Trans ran off the road and struck a barrier wall. [DE 10, ¶¶ 9-12.] A load of steel containers owned by Ecovyst fell off of the truck, landing in the path of the vehicle in which Wardingley was a passenger, and she was injured in the ensuing crash. Id., ¶¶ 13-15. While the tuck driver claims that the load shifted and caused him to run off the road, resulting in the collision with the barrier wall, Wardingley claims that [*4] the driver had never before hauled cargo as a commercial motor vehicle driver and the crash was a result of negligence. See id., ¶¶ 12, 16.

Coyote Logistics identified and selected Safe Trans as the carrier to transport the Ecovyst containers. Id., ¶ 37. While Coyote Logistics was obligated to choose a safe motor carrier with appropriate skill and experience carrying cargo like the Ecovyst containers, Wardingley asserts that it failed to exercise due care in its selection of Safe Trans and its driver. Id., ¶¶ 38-39. Had Coyote Logistics exercised due diligence in evaluating the skill, experience, and safety record of Safe Trans prior to selecting the company to transport the goods, it would have found that the company or its driver were not sufficiently experienced to transport the Ecovyst containers and had previously violated safety rules by improperly securing cargo. Id., ¶ 39.

Discussion

Under Federal Rule of Civil Procedure 8(a), a complaint is required to contain “a short and plain statement showing that [the plaintiff] is entitled to relief.” Fed. R. Civ. P. 8(a). Federal Rule of Civil Procedure 12(b)(6) permits a party to move for dismissal if the complaint fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). At this stage, I accept the complaint’s allegations as true [*5] and draw all reasonable inferences in Wardingley’s favor. Bradley Hotel Corp. v. Aspen Specialty Ins. Co., 19 F.4th 1002, 1006 (7th Cir. 2021). However, to avoid dismissal under Rule 12(b)(6), her claim for relief must be “plausible on its face.” Proft v. Raoul, 944 F.3d 686, 690 (7th Cir. 2019) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)).

Facial plausibility requires a plaintiff to plead sufficient “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Taha v. Int’l Brotherhood of Teamsters, Local 781, 947 F.3d 464, 469 (7th Cir. 2020) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009)). The Seventh Circuit has explained that a plaintiff must plead facts that “suggest a right to relief that is beyond the speculative level,” which requires alleging “enough details about the subject-matter of the case to present a story that holds together.” Sevugan v. Direct Energy Servs., LLC, 931 F.3d 610, 614 (7th Cir. 2019); Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010). “[S]heer speculation, bald assertions, and unsupported conclusory statements” in the complaint fail to meet this burden. Taha, 947 F.3d at 469.

Preemption is an affirmative defense, S.C. Johnson & Son, Inc. v. Transp. Corp. of Am., 697 F.3d 544, 547 (7th Cir. 2012), and the party raising it bears the burden of proof, Johnson v. Diakon Logistics, No. 16-CV-06776, 2018 U.S. Dist. LEXIS 52149, 2018 WL 1519157, at *3 (N.D. Ill. Mar. 28, 2018) (citing Fifth Third Bank ex rel. Tr. Officer v. CSX Corp., 415 F.3d 741, 745 (7th Cir. 2005)). The Seventh Circuit, observing that “plaintiffs have no duty to anticipate affirmative defenses,” has held that in most cases, the “more appropriate” procedure to raise the affirmative defense of FAAAA preemption is to file an answer pleading preemption as an affirmative defense and then move for judgment on the pleadings under Rule 12(c). S.C. Johnson & Son, Inc., 697 F.3d at 547; Johnson, 2018 U.S. Dist. LEXIS 52149, 2018 WL 1519157, at *3 (citations omitted). [*6] But practically speaking, such motions are evaluated under the same standard applicable to motions to dismiss under Rule 12(b)(6). See Adams v. City of Indianapolis, 742 F.3d 720, 727-28 (7th Cir. 2014). And because I have before me all that is “needed in order to be able to rule on the defense,” the procedural defect is “of no consequence,” Carr v. Tillery, 591 F.3d 909, 913 (7th Cir. 2010), so I will turn to the substance of the parties’ briefing notwithstanding the hiccup in the procedural posture.

Coyote Logistics contends that Wardingley’s state law claims must be dismissed because they are preempted by the FAAAA. The FAAAA was designed by Congress to untangle a web of state laws and regulations affecting the trucking industry and create a more uniform (and federal) paradigm. See Rowe v. N.H. Motor Transp. Ass’n, 552 U.S. 364, 368, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008); City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 440, 122 S. Ct. 2226, 153 L. Ed. 2d 430 (2002) (noting that intrastate regulation of trucking services had “unreasonably burdened free trade, interstate commerce, and American consumers”). As the Seventh Circuit has stated, “Congress enacted the FAAAA’s preemption provision in 1994 with the aim of eliminating the patchwork of state regulation of motor carriers that persisted fourteen years after it had first attempted to deregulate the trucking industry.” Nationwide Freight Sys., Inc. v. Illinois Commerce Comm’n, 784 F.3d 367, 373 (7th Cir 2015) (citations omitted).

The Act’s general preemption provision prohibits a state from enacting or enforcing a:

[L]aw, regulation, [*7] 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). For starters, reasonable people may wonder whether state tort claims are even implicated by this preemption provision. They are. So held the Supreme Court in Northwest, Inc. v. Ginsberg, 572 U.S. 273, 284, 134 S. Ct. 1422, 188 L. Ed. 2d 538 (2014).¹ See also Non Typical, Inc. v. Transglobal Logistics Grp. Inc., Nos. 10-C-1058 & 10-C-0156, 2012 U.S. Dist. LEXIS 73452, 2012 WL 1910076, at *2 (E.D. Wis. May 28, 2012) (collecting cases).

The statute’s plain terms cover any state laws (including common law claims) related to prices, routes, or services of a motor carrier, motor private carrier, broker, or freight forwarder. And the term “transportation” for purposes of the FAAAA is broadly defined as services related to the movement of persons or property, including “arranging for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, packing, unpacking, and interchange of passengers and property.” 49 U.S.C. § 13102(23). Thus, my task is to determine whether run-of-the-mill Indiana state negligence claims like the one brought here are “related to a price, route, or service” of Coyote Logistics as a commercial freight broker.

The parties acknowledge that neither [*8] the Seventh Circuit nor the Supreme Court has precisely delineated the scope of FAAAA preemption with respect to personal injury negligence claims asserted against freight brokers. Review of the relevant case law uncovers a range of interpretive approaches adopted by the lower courts. Indeed, “district courts are sharply divided” on the question whether “personal injury claims alleging negligence by brokers in selecting motor carriers” are preempted by the FAAAA. Loyd v. Salazar, 416 F. Supp. 3d 1290, 1296-98 (W.D. Okla. 2019) (collecting cases). I am guided, but not bound, by the persuasive weight of decisions evaluating whether similar tort claims against motor carriers and commercial freight brokers are preempted by the FAAAA. These decisions fall into two general camps.

On one hand, I was surprised to see that a line of cases has concluded that the FAAAA’s “related to” language broadly preempts state laws that have an economic impact on prices, routes, and services of covered entities in the trucking industry. From this angle, several courts have dismissed state common law claims, including claims against brokers for the negligent selection of motor carriers, as preempted by the Act. See, e.g., [*9] Gillum v. High Standard, LLC, No. SA-19-CV-1378-XR, 2020 U.S. Dist. LEXIS 14820, 2020 WL 444371, at *3-5 (S.D. Tex. Jan. 27, 2020); Loyd, 416 F. Supp. 3d at 1298; Creagan v. Wal-Mart Transp., LLC, 354 F. Supp. 3d 808, 813 (N.D. Ohio 2018); Volkova v. C.H. Robinson Co., No. 16 C 1883, 2018 U.S. Dist. LEXIS 19877, 2018 WL 741441, at *4 (N.D. Ill. Feb. 7, 2018); Georgia Nut Co. v. C.H. Robinson Co., No. 17 C 3018, 2017 U.S. Dist. LEXIS 177269, 2017 WL 4864857, at *3-4 (N.D. Ill. Oct. 26, 2017).

On the other hand, several courts have held that state tort laws are too far removed from carriers’ and brokers’ prices, routes, and services to be expressly preempted by the FAAAA. See, e.g., Ciotola v. Star Transp. & Trucking, LLC, 481 F. Supp. 3d 375, 387-88 (M.D. Pa. 2020); Nyswaner v. C.H. Robinson Worldwide, Inc., 353 F. Supp. 3d 892, 896 (D. Ariz. 2019); Scott v. Milosevic, 372 F. Supp. 3d 758, 769-70 (N.D. Iowa 2019); Gilley v. C.H. Robinson Worldwide, Inc., No. 1:18-00538, 2019 U.S. Dist. LEXIS 52549, 2019 WL 1410902, at *5-6 (S.D.W. Va. 2019); Mann v. C.H. Robinson Worldwide, Inc., Nos. 16 C 102, 16 C 104 & 16 C 140, 2017 U.S. Dist. LEXIS 117503, 2017 WL 3191516, at *7-8 (W.D. Va. July 27, 2017). Other courts, too, have rejected federal preemption of plaintiffs’ tort claims based on language in a separate subsection of the FAAAA that expressly carves out state safety regulations from the preemptive scope of the Act (the so-called “safety exception”). See, e.g., Miller v. C.H. Robinson Worldwide, Inc., 976 F.3d 1016, 1026-31 (9th Cir. 2020), cert. denied, 142 S. Ct. 2866, 213 L. Ed. 2d 1090, 2022 WL 2295168 (June 27, 2022); Crouch v. Taylor Logistics Co., 563 F. Supp. 3d 868, 876 (S.D. Ill. 2021); Montgomery v. Caribe Transp. II, LLC, No. 19-CV-1300-SMY, 2021 U.S. Dist. LEXIS 170782, 2021 WL 4129327, at *2-3 (S.D. Ill. Sept. 9, 2021); accord Finley v. Dyer, No. 3:18-CV-78-DMB-JMV, 2018 U.S. Dist. LEXIS 182482, 2018 WL 5284616, at *6 (N.D. Miss. Oct. 24, 2018).

Coyote Logistics urges me to adopt the former approach. For her part, Wardingley raises both sets of countervailing arguments against preemption — state negligence law falls outside the scope of the general preemption provision, and in any case falls within the safety exception. I will consider both in turn.

1. The FAAAA Does Not Preempt Wardingley’s Negligence Claims

The lion’s share of the parties’ briefing parses seven words: “related to a price, route, or service.” 49 U.S.C. § 14501(c)(1). Before diving into whether (and what types of) state laws—or state tort claims—are “related to brokers’ prices, routes, or services,” it is useful to consider some generally acknowledged [*10] principles about the FAAAA.

The Seventh Circuit has endorsed a broad construction of the phrase “related to” as preempting any “laws or actions having some type of connection with or reference to a [broker’s] rates, routes, or services, whether direct or indirect.” Nationwide Freight, 784 F.3d at 373 (emphasis added). However, in keeping with Supreme Court guidance that “the breadth of the words ‘related to’ does not mean the sky is the limit,” state laws with only “a tenuous, remote, or peripheral” relationship to rates, routes, or services are not preempted. Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 260-61, 133 S. Ct. 1769, 185 L. Ed. 2d 909 (2013); Nationwide Freight, 784 F.3d at 373. Put succinctly, to trigger FAAAA preemption in this circuit, (1) “a state must have enacted or attempted to enforce a law,” and (2) that law must relate to a broker’s “rates, routes, or services ‘either by expressly referring to them, or by having a significant economic effect on them.” Nationwide Freight, 784 F.3d at 373-74 (quoting Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1432 (7th Cir. 1996)).

As previously noted, I can set aside the first issue because state common-law actions qualify as “other provision[s] having the force and effect of law” under the FAAAA. Northwest, Inc., 572 U.S. at 284; United Airlines, Inc. v. Mesa Airlines, Inc., 219 F.3d 605, 607 (7th Cir. 2000); Non Typical, Inc., 2012 U.S. Dist. LEXIS 73452, 2012 WL 1910076, at *2 (collecting cases). Therefore, the second issue—whether the state law relates to rates, routes or services—is where the rubber meets the road. As the Supreme Court put it, “[s]ome state actions [*11] may affect [rates] in too tenuous, remote, or peripheral a manner to have pre-emptive effect.” Morales v. Trans World Airlines, Inc., 504 U.S. 374, 388, 390, 112 S. Ct. 2031, 119 L. Ed. 2d 157 (1992). The Seventh Circuit has construed this language to entail that a court “must decide whether the state law at issue falls on the affirmative or negative side of the preemption line.” S.C. Johnson & Son, Inc., 697 F.3d at 550. This isn’t a particularly helpful description of how I am to go about answering the question. And indeed, I suppose the lack of guidance from higher courts on the issue of whether state negligence claims are preempted is what has led to the depth of the disagreement by various judges around the country on the preemption issue.

Here’s my best analysis of the issue: Evaluating a statute’s preemptive effect is ultimately an exercise “guided by the rule that the purpose of Congress is the ultimate touchstone in every preemption case.” Altria Grp., Inc. v. Good, 555 U.S. 70, 76, 129 S. Ct. 538, 172 L. Ed. 2d 398 (2008) (internal quotations and citation omitted). I am “mindful of the adage that Congress does not cavalierly preempt state law causes of action.” Montalvo v. Spirit Airlines, 508 F.3d 464, 471 (9th Cir. 2007). As the Supreme Court explained long ago, where “Congress has neither provided nor suggested any substitute for the traditional state court procedure for collecting damages for injuries caused by tortious conduct,” that adage is of particular [*12] import. United Constr. Workers v. Laburnum Constr. Corp., 347 U.S. 656, 663-64, 74 S. Ct. 833, 98 L. Ed. 1025 (1954).

Let’s not beat around the bush: the upshot, if Coyote Logistics is right about the preemption issue, is that Ms. Wardingley will be left holding the bag and the tortfeasor will go about his merry way free to harm someone else. In other words, the injured party is deprived of its property without recourse or compensation, and the tortfeasor is granted “immunity from liability for their tortious conduct.” Id. Frankly, it’s a little hard to swallow the proposition that Congress intended such a result by displacing all state negligence claims against trucking companies through the passage of the FAAAA just because an adverse verdict against a trucking (or brokerage) company could conceivably effect cartage prices in some remote way.

Coyote Logistics claims I shouldn’t be so skeptical. They tell me that the negligence claims asserted against it “go to the heart of its business” and services—arranging for the transportation of property by carriers like Safe Trans as a federally licensed freight broker—and Wardingley’s allegations reveal that she seeks “to use Indiana tort law to determine and control [its] services as a broker.” [DE 40 at 11.] Complying with a reasonable duty of [*13] care in its selection of motor carriers to safely and securely transport cargo across the country, Coyote Logistics argues, will require it to incur “additional burden and expense of complying with the patchwork of tort laws of the fifty states, which is exactly what Congress intended to avoid in enacting the preemption provision.” Id.

From one angle, Coyote Logistics’ argument has a superficial appeal. It is reasonable to think that imposing a duty of reasonable care in the selection of motor carriers entails meaningful economic effects on their services. Freight brokers may have to undertake additional measures to vet carriers, and these measures, in turn, will presumably raise their costs of production (and potentially their prices). But from an economic point of view, the argument cuts both ways. An equally reasonable view is that negligence in the selection of motor carriers itself “operates as a privately-imposed transaction cost on the affected sale.” Cf. S.C. Johnson & Son, Inc., 697 F.3d at 559 (citations omitted) (holding that enforcement of state anti-bribery (and more generally anti-corruption) laws is too tenuously related to the regulation of the rates, routes, and services in the trucking industry to fall within [*14] the FAAAA’s preemption rule). Put differently, state regulation of commercial freight brokers’ negligence in the selection of motor carriers “is an attempt to lift this ‘tax’ from the shoulders of its consumers”—making “market pricing mechanisms work more efficiently—not less.” Id. (emphasis added). It would thus seem odd to bar enforcement of such laws based on concerns about a spiral of competing state regulations increasing transaction costs in the trucking industry.

As the citations set out above show [see supra at 6-8], a considerable amount of ink has been spilled over whether personal injury plaintiffs like Wardingley may proceed with negligence claims against freight brokers. On balance, I find more persuasive the line of recent decisions finding that such claims fall outside the FAAAA’s preemption provision.² Simply put, I remain dubious that Congress, in its mission to unencumber the interstate trucking industry from a patchwork of state tariffs, price controls, and similar economic regulations, also aimed to completely unyoke trucking companies and freight brokers from commonsense standards of care enforced through private tort actions. See Dilts v. Penske Logistics, LLC, 769 F.3d 637, 644-45 (9th Cir. 2014). It goes without saying that the [*15] law of negligence is not specific to the trucking industry. Indiana’s common-law duty of ordinary care does not mention or target a freight broker’s prices, routes, or services. Accord Ciotola, 481 F. Supp. 3d at 388 (evaluating Pennsylvania negligence law). It applies across industries and walks of life. And, where the law of negligence applies, it’s easy enough to comply—just act reasonably.

Notably, a number of courts have long held that personal injury claims stemming from negligence are not preempted by the identical preemption provision applicable to the airline industry. See Scott, 372 F. Supp. 3d at 769 (citing Charas v. Trans World Airlines, Inc., 160 F.3d 1259, 1266 (9th Cir. 1998); Hodges v. Delta Airlines, Inc., 44 F.3d 334 (5th Cir. 1995) (en banc); see also Smith v. Am. W. Airlines, Inc., 44 F.3d 344, 346 (5th Cir. 1995) (en banc) (“Neither the language nor history of the ADA implies that Congress was attempting to displace state personal injury tort law concerning the safety of the airline business.”). This reasoning has equal application to covered entities in the trucking industry. See Scott, 372 F. Supp. 3d at 769. Lending from earlier ADA cases, several courts have concluded that personal injury negligence claims are not barred by the FAAAA. See, e.g., Ciotola, 481 F. Supp. 3d at 390 (holding that “although Pennsylvania’s tort law may have some negative financial consequences for a broker or carrier, it is not preempted by the FAAAA. Pennsylvania’s tort law is a part of the [*16] backdrop of laws that all businesses must follow”); Owens v. Anthony, No. 2-11-0033, 2011 U.S. Dist. LEXIS 139961, 2011 WL 6056409, at *3 (M.D. Tenn. Dec. 6, 2011) (collecting and applying ADA precedents to FAAAA’s identical language).

In sum, based on the foregoing authorities, I find that the FAAAA does not preempt Wardingley’s personal injury negligence claims against Coyote Logistics sounding in vicarious liability and negligent selection of Safe Trans and its driver.

2. Wardingley’s Claims Fall Within the FAAAA’s Safety Exception

Wardingley’s claims are not preempted under the FAAAA for an independent reason—they fall within what courts have referred to as the “safety exception.” Notwithstanding the general provisions in § 14501(c)(1), the Act:

[S]hall 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) (emphasis added). In recent years, following the Ninth Circuit’s analysis in Miller v. C.H. Robinson Worldwide, Inc., several lower courts have interpreted this language [*17] to spare state common law claims asserted against freight brokers from FAAAA preemption. 976 F.3d at 1026-31; see, e.g., Crouch, 563 F. Supp. 3d at 876; Montgomery, 2021 U.S. Dist. LEXIS 170782, 2021 WL 4129327, at *2-3; Finley, 2018 U.S. Dist. LEXIS 182482, 2018 WL 5284616, at *5.

In Miller, the plaintiff claimed that a freight broker negligently hired an unsafe motor carrier, who caused an accident resulting in the plaintiff’s bodily injury. 976 F.3d at 1020. The court determined that selection of a motor carrier strikes at the core function of a broker and while state negligence laws do not specifically dictate brokers’ services, they nevertheless impose “an obligation on brokers at the point at which they arrange for transportation by [a] motor carrier,” and thus “related to” brokers’ services. Id. at 1024-25. At the same time, the court found that the claims were saved by the safety exception, since under the Act states retain power to “regulate safety through common-law tort claims.” Id. at 1026. The balance of lower court decisions following Miller, including those of a handful of lower courts in the Seventh Circuit, have adopted the second prong of Miller. [See DE 45 at 12-13 & n.2 (collecting cases).]

I find the second prong of Miller‘s analysis persuasive and consistent with the legislative intent underlying the FAAAA: namely, to preempt price and service regulations dictating the economics of the interstate [*18] tucking and freight brokering markets, not safety, the traditional ambit of state governments. States have a safety interest in private tort actions, like Wardingley’s here, which serve to regulate the safety of roadways. As the Ninth Circuit correctly observed, the FAAAA’s legislative history is devoid of any suggestion that “Congress intended to eliminate this important component of the States’ power over safety.” See 976 F.3d at 1022-23, 1026; accord City of Columbus, 536 U.S. at 439 (“Congress’ clear purpose in § 14501(c)(2)(A) is to ensure that its preemption of States’ economic authority over motor carriers of property, § 14501(c)(1), ‘not restrict’ the preexisting and traditional state police power over safety.”).

Coyote Logistics retorts that the language of the safety exception is “much more narrow” than elucidated in Miller, and simply does not apply to common law claims against freight brokers. [See DE 49 at 8.] Admittedly, the plain language of the exception does not mention common law tort claims or brokers’ services in selecting motor carriers, whereas the words “law” and “broker” are expressly included in the general preemption provision. Compare 49 U.S.C. § 14501(c)(2)(A), with § 14501(c)(1). The exception says that it applies to “the safety regulatory authority of a State with respect to motor vehicles,” [*19] and Coyote Logistics notes that brokers are not directly responsible for loading, operating, or maintaining motor vehicles. Coyote Logistics also relies on case law suggesting that the phrase “regulatory authority” does not “permit a private right of action” or extend to state common law claims. [DE 40 at 16-17 (citing Gillum, 2020 U.S. Dist. LEXIS 14820, 2020 WL 444371, at *12).] These arguments all press a reasonable, alternative interpretation of the scope of the phrase “the safety regulatory authority of a State with respect to motor vehicles.” Ultimately, however, I am guided by Miller‘s persuasive reading of the FAAAA’s legislative history, see 976 F.3d at 1022-23, 1026-27, along with the Seventh Circuit’s admonition that state law should be completely preempted “only where Congress clearly intended to replace state law with federal law and create a federal forum,” In re Repository Techs., Inc., 601 F.3d 710, 723 (7th Cir. 2010). Thus, for this independent reason, Wardingley’s claims are not preempted by the FAAAA.

Conclusion

For the foregoing reasons, Defendant Coyote Logistics, LLC’s Motion to Dismiss Count III of Plaintiff’s First Amended Complaint [DE 39] is DENIED.

SO ORDERED.

ENTERED: November 4, 2022.

/s/ Philip P. Simon

PHILIP P. SIMON, JUDGE

UNITED STATES DISTRICT COURT

End of Document

¹Case law interpreting an identical preemption provision codified in the Airline Deregulation Act (ADA) lends weight to my analysis of the FAAAA. “[T]he Supreme Court has generally taken the position that the statutes deregulating the airline industry and those deregulating the trucking industry should be construed consistently with one another.” S.C. Johnson & Son, Inc., 697 F.3d at 548; see also id. at 549-52 (construing key Supreme Court authorities). See generally Rowe, 552 U.S. at 367-70.

²To be sure, others have viewed the issue differently. At the same time, this view draws substantial support from the decisions of several lower courts considering similar arguments.

Estate of Ross v. Eldridge

United States District Court for the Southern District of Mississippi, Northern Division

November 21, 2022, Decided; November 21, 2022, Filed

CIVIL ACTION NO. 3:22-CV-660-DPJ-FKB

Reporter

2022 U.S. Dist. LEXIS 210302 *

ESTATE OF NATALIE N. ROSS, ET AL., PLAINTIFFS v. THOMAS W. ELDRIDGE AND XPO LOGISTICS FREIGHT, DEFENDANTS

Core Terms

bad faith, discovery, removal, email, state court, abandonment, parties, circuit court, non-diverse, diversity, waived, right to remove

Counsel: [*1] For Estate of Natalie N. Ross, Clara Ross, Joanna Ross, Lauren A. Dalton, Carolyn Ross, and Corry Jones, as Natural Father and Next Friend of Prince N. Ross, a Minor, Plaintiff: Dennis C. Sweet, III, LEAD ATTORNEY, SWEET & ASSOCIATES, PA, Jackson, MS.

For XPO Logistics Freight, Defendant: Thomas R. Julian, LEAD ATTORNEY, Jason H. Strong, DANIEL, COKER, HORTON & BELL – Jackson, Jackson, MS.

Judges: Daniel P. Jordan III, CHIEF UNITED STATES DISTRICT JUDGE.

Opinion by: Daniel P. Jordan III

Opinion

ORDER

This case, arising from a fatal automobile accident, is before the Court on Plaintiffs’ Motion to Remand [2]. Defendant XPO Logistics Freight (XPO) responded in opposition, and Plaintiffs advised the Court that they do not intend to reply. The Court, having considered the submissions of the parties, finds that Plaintiffs’ motion to remand [2] should be denied.

I. Facts and Procedural History

On December 20, 2018, Natalie Ross’s minivan collided with a tractor trailer owned by XPO and driven by Thomas Eldridge. Ross suffered injuries that led to her death, and the passengers in the minivan also sustained significant injuries. On January 9, 2020, Plaintiffs filed this suit in the Circuit Court of Warren County, Mississippi, [*2] naming XPO and Eldridge as defendants. Summonses were issued for Eldridge and XPO, but Eldridge was never served.

Over the next two-plus years, the case proceeded in state court. Approximately two weeks before trial was to begin, counsel for XPO and Plaintiffs appeared in circuit court to argue several motions. Notice [1] at 2. According to XPO,

During arguments, Plaintiffs’ counsel made representations to the circuit court that demonstrate Plaintiffs have abandoned their claims against Eldridge. In this regard, in explaining to the circuit court that Plaintiffs’ [sic] obtained discovery responses from XPO but not from Eldridge, Plaintiffs’ counsel stated, “[W]e didn’t sue Eldridge. We have a suit against XPO.” Exh. B at 29. Given the context–a hearing before the circuit court less than two weeks before the scheduled trial date–Plaintiffs’ counsel’s statement was an unequivocal and voluntary representation to the court that Plaintiffs are not pursuing claims against Eldridge and that Plaintiffs’ claims are only against XPO. On November 9, 2022, XPO obtained a copy of the transcript of the hearing reflecting Plaintiffs’ abandonment of the claims against Eldridge, which is “other paper” [*3] under 28 U.S.C. § 1446(b)(3).

Id. at 2-3. Based on Plaintiffs’ abandonment of claims against Eldridge, XPO insists he is improperly joined and diversity jurisdiction is satisfied. It therefore removed the case on November 11, 2022.

Plaintiffs immediately responded by filing a motion to remand arguing: (1) XPO waived its right to remove by filing a motion for summary judgment, setting multiple trial dates, and engaging in significant discovery in state court; (2) XPO removed the case more than 1 year after the date of commencement in violation of § 1446(c)(1); and (3) XPO removed the case more than 30 days after it “should have determined” the case was removable by virtue of a March 2022 email from XPO’s counsel. Mem. [3] at 5. As stated, XPO responded in opposition, and Plaintiffs declined to file a reply. The motion to remand is considered fully briefed, and the Court is prepared to rule.

II. Analysis

The notice of removal, motion to remand, and response tee up three issues for the Court to consider: (1) when the case became removable; (2) whether Plaintiffs acted in bad faith; and (3) whether XPO waived its right to remove.

A. When Did the Case Become Removable?

XPO basis its removal on diversity jurisdiction, which requires [*4] that the parties are citizens of different states and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332. It is undisputed that diversity of citizenship was lacking at the time the suit was commenced. Plaintiffs are citizens of Mississippi, Eldridge is a citizen of Mississippi, and XPO is a Delaware corporation. Compl. [1-1] at 2-3. But XPO asserts that “Plaintiffs’ abandonment of their claims against Eldridge is a voluntary act that allows XPO to remove this case based on improper joinder.” Notice [1] at 3.

Title 28 U.S.C. § 1446(b)(3) contemplates this scenario–where a case that was not removable at commencement becomes removable.

[I]f the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.

“[T]he information supporting removal in a copy of an amended pleading, motion, order or other paper must be unequivocally clear and certain to start the time limit running . . . .” Bosky v. Kroger Tex., LP, 288 F.3d 208, 211 (5th Cir. 2002) (internal quotation marks omitted). The parties appear to agree that the “other [*5] paper” avenue is applicable here–though they disagree as to what the operative “other paper” was and, accordingly, when the 30-day clock began to run. 28 U.S.C. § 1446(b)(3).

1. March 25, 2022 Email

Plaintiffs filed suit on January 9, 2020, and summonses were issued for Eldridge and XPO that same day. State Ct. R. [1-1] at 18-23. XPO was served; Eldridge was not. During trial preparation in 2022, “Plaintiffs’ counsel received discovery from XPO which he felt was inadequate, with no discovery responses being received as to Eldridge.” Mem. [3] at 3. Plaintiffs’ counsel emailed a “good faith” letter to counsel opposite highlighting the need “to provide adequate discovery responses.” Id.; see Uniform Civil Rules of Circuit and County Court Practice R. 4.03(C) (“No motion to compel shall be heard unless the moving party shall incorporate in the motion a certificate that movant has conferred in good faith with the opposing attorney in an effort to resolve the dispute and has been unable to do so.”).¹ Counsel for XPO responded:

From: Steven Griffin [mailto:sgriffin@danielcoker.com]

Sent: Friday, March 25, 2022 5:06 PM

To: Phyllis Washington

Cc: dennis.sweet@sweetandassociates.net

Subject: RE: Ross, et al v. Eldrldge, et al

Your recent good faith letter pertains to interrogatories and [*6] requests for production purportedly served on Thomas Eldridge. However, Mr. Eldridge has never been served with process, has not entered an appearance in this case, and is not properly before the court.

Thanks,

Steven

Email [3-4] at 2. According to the email exchange provided to the Court, Plaintiffs’ counsel did not reply.

Plaintiffs insist that this March 25, 2022 Email shows “XPO knew and asserted that Eldridge was not a proper party in this action and that no claims could be maintained against him.” Mem. [3] at 7. Thus, they reason that XPO should have ascertained that the case had become removable. Id.

This argument is not compelling for two reasons. First, the mere fact that Eldridge had not been served did not render the case removeable.

A non-resident defendant cannot remove an action if the citizenship of any co-defendant, joined by the plaintiff in good faith, destroys complete diversity, regardless of service or non-service upon the co-defendant. Whenever federal jurisdiction in a removal case depends on the complete diversity, the existence of diversity is determined from the fact of citizenship of the parties named and not from the fact of service.

New York Life Ins. Co. v. Deshotel, 142 F.3d 873, 883 (5th Cir. 1998) (remanding case to district [*7] court with directions to remand case to state court and noting “Broussard’s non-diverse citizenship cannot be ignored simply because he was an unserved defendant”). Second, “the ‘other paper’ conversion requires a voluntary act by the plaintiff.” S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 494 (5th Cir. 1996) (emphasis in original) (holding that affidavit created by defendant was not “other paper”). Here, while counsel for XPO pointed out that Eldridge had not been served, had not entered an appearance, and was not properly before the court, Plaintiffs were silent.² The March 25, 2002 email response by counsel for XPO does not constitute “other paper.” 28 U.S.C. § 1446(b)(3).

2. November 3, 2022 Court Appearance and Subsequent Transcript

On November 3, 2022, counsel for XPO and Plaintiffs appeared in circuit court for a hearing on XPO’s motion for summary judgment. Mem. [3] at 3. In the context of discussing discovery responses, Plaintiffs’ counsel stated: “I just want to–we didn’t sue Eldridge. We have a suit against XPO. XPO answered discovery, Your Honor.” Tr. [1-2] at 29.

Following this statement in court, XPO obtained the transcript and removed the case two days later. Resp. [5] at 2 (noting the transcript was received on November 9 and XPO removed the case on November [*8] 11). XPO insists this transcript memorializes Plaintiffs’ expressed intention to abandon their claims against Eldridge and constitutes “other paper” triggering removal. Id. at 3; see Ramirez v. Michelin N. Am., Inc., No. C-07-228, 2007 U.S. Dist. LEXIS 52244, 2007 WL 2126635, at *3 (S.D. Tex. July 19, 2007) (“In order to demonstrate improper joinder based on ‘voluntary abandonment’ of a claim, there need not be a formal dismissal of the non-diverse party, but the defendant must show ‘a definite or unequivocal expression of intent to discontinue the action against the resident party.'” (quoting Naef v. Masonite Corp., 923 F. Supp. 1504, 1510 (S.D. Ala. 1996)); Rawlings v. Prater, 981 F. Supp. 988, 989 (S.D. Miss. 1997) (agreeing that “the case became removable as soon as defendant received the documents evidencing plaintiff’s unequivocal and unconditional voluntary abandonment of her claim” and that a formal dismissal “as a matter of record” is not required). The Court agrees; XPO’s removal complied with § 1446(b)(3).³

B. Did Plaintiffs Act in Bad Faith?

Title 28 U.S.C. § 1446(c)(1) states: “A case may not be removed under subsection (b)(3) on the basis of jurisdiction conferred by section 1332 more than 1 year after commencement of the action, unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.” XPO insists “Plaintiffs have exhibited bad faith by asserting claims against Eldridge with no intention of pursuing them.” [*9] Resp. [5] at 5. Specifically, Plaintiffs named Eldridge as a defendant and had a summons issued but never served him. Plaintiffs insist they made “diligent efforts” to serve Eldridge, Mem. [3] at 6, but, as XPO points out, they have not offered any evidence to support that claim, Resp. [5] at 5.

By contrast, XPO submitted an affidavit from Eldridge explaining that he has lived at the same address in Brandon, Mississippi, for over ten years. Aff. [5-1] at 1. He confirms that he never received a summons and complaint in this action but was served with a trial subpoena on November 13, 2022, directing him to appear at trial. Id. at 1-2. Eldridge attached a copy of the Trial Subpoena, issued by Plaintiffs’ counsel, to his affidavit. Id. at 3-4. This evidence is unrebutted.

While case law applying § 1446(c)(1)‘s exception to the 1-year rule is somewhat scant, courts often look to “the way plaintiffs pursued the claims against the non-diverse defendant.” Roberson v. Respironics, Inc., No. 4:20-CV-174-DMB-JMV, 2021 U.S. Dist. LEXIS 101540, 2021 WL 2179265, at *3 (N.D. Miss. May 28, 2021); see Flores v. Intex Recreation Corp., No. 2:20-CV-73, 2020 U.S. Dist. LEXIS 205881, 2020 WL 6385679, at *2 (S.D. Tex. July 2, 2020). (“[T]he Fifth Circuit has not settled on a clear standard for determining ‘bad faith’ under § 1446(c).”). For example, in Hoyt v. Lane Construction Corp., the Fifth Circuit affirmed a finding of bad faith where the plaintiffs pursued their claim against [*10] the non-diverse defendant “half-heartedly.” 927 F.3d 287, 292 (5th Cir. 2019); see Flores, 2020 U.S. Dist. LEXIS 205881, 2020 WL 6385679, at *3 (finding bad faith and noting plaintiffs “only half-heartedly” pursued their claim, including neglecting to seek default judgment for failure to answer). And at least one district-court judge within the Fifth Circuit, in two separate cases, has found the plaintiff’s failure to serve the non-diverse defendant with process, combined with a lack of effort to pursue a claim against the non-diverse defendant, supported a finding of bad faith. David-Lange v. Safeco Ins. Co. of Ind., No. 1:21-CV-080-C, 2021 U.S. Dist. LEXIS 221115, 2021 WL 5278721, at *3-4 (N.D. Tex. June 9, 2021) (denying motion to remand and finding that the bad-faith exception applied); Walters v. Ford Motor Co., No. 1:19-CV-040-C, 2019 U.S. Dist. LEXIS 243042, 2019 WL 13194608, at *2 (N.D. Tex. May 15, 2019) (same).

Admittedly, there is not much evidence before the Court on Plaintiffs’ bad faith. It is, however, clear that Plaintiffs named Eldridge as a defendant but never served him (even when they took his deposition in February 2022). They also made no effort to perfect service when they received the March 2022 email stating that he had never been served. Then, on the eve of trial, Plaintiffs successfully accomplished service of a trial subpoena. These facts suggest Plaintiffs considered Eldridge a witness but were not pursuing a claim against him. In the end, Plaintiffs have presented no evidence of their “diligent efforts” [*11] and have offered no explanation for their failure to serve Eldridge at commencement of the lawsuit or anytime thereafter. Mem. [3] at 6. XPO has demonstrated bad faith.

C. Did XPO Waive its Right to Remove?

The Fifth Circuit has stated that a defendant may waive its right to removal “by proceeding to defend the action in state court or otherwise invoking the processes of that court.” Brown v. Demco, Inc., 792 F.2d 478, 481 (5th Cir. 1986). Plaintiffs contend XPO waived its right to remove the case by availing itself of state court, to include filing a motion for summary judgment, “setting multiple trial dates, and engaging in extensive pre-trial discovery.” Mem. [3] at 5.

But as XPO points out, “[a]ny actions taken in state court before it became ascertainable that the case was removable cannot logically be indicative of a decision by the Defendants to continue in state court rather than federal court.” Fortenberry v. Prine, No. 2:14-CV-56-KSMTP, 2014 U.S. Dist. LEXIS 90155, 2014 WL 2993668, at *6 (S.D. Miss. July 2, 2014) (quoting John H. Carney & Assocs. v. State Farm Lloyds, 376 F. Supp. 2d 697, 703 (N.D. Tex. 2005)); see Orrill v. Mortg. Elec. Registration Sys., Inc., No. 06-10012, 2007 U.S. Dist. LEXIS 101261, 2007 WL 756610, at *1 (E.D. La. Mar. 8, 2007) (“A defendant does not waive its right to remove through actions taken before the case becomes removable.”); see also Resp. [5] at 9. Indeed, § 1446 specifically anticipates cases which are not removable at commencement but later become removeable, as well as cases that are properly removed more than 1-year after filing, provided [*12] the plaintiff acted in bad faith. It is illogical to expect a state-court defendant in a non-removable case to sit on its hands in hopes that the case becomes removable sometime later.⁴

IV. Conclusion

The Court has considered all arguments raised by the parties; those not addressed would not have changed the result. For the reasons described, the Court finds Plaintiffs’ motion to remand should be denied.

The parties are instructed to contact United States Magistrate Judge F. Keith Ball by November 29, 2023, to set an in-person case-management conference. Because this case was on the verge of trial when removed, the case-management conference shall include a settlement conference; representatives from both parties with settlement authority shall attend. In addition, there appears to be no need for further discovery or motion practice, so, unless Judge Ball concludes otherwise, the case should be expeditiously set for pretrial conference and trial. Finally, Defendant Thomas W. Eldridge is hereby dismissed for failure to serve process.

SO ORDERED AND ADJUDGED this the 21st day of November, 2022.

/s/ Daniel P. Jordan III

CHIEF UNITED STATES DISTRICT JUDGE

End of Document

¹Plaintiffs submitted a copy of the email exchange [3-4] but did not include a copy of the goodfaith letter that was purportedly sent as an attachment.

²Though not explored by the parties, at that point, Plaintiffs arguably could have requested additional time to serve Eldridge and attempted to press their claims against him.

³XPO based both its Notice of Removal and its Response to Plaintiffs’ Motion to Remand on this in-court statement. Plaintiffs did not address the in-court statement in their Motion to Remand and did not file a reply, leaving XPO’s characterization unchallenged.

⁴The Court has reviewed the cases Plaintiffs cite in support of this argument; none consider waiver in a similar context. See Mims v. Deepwater Corrosion Servs., Inc., 90 F. Supp. 3d 679, 702 (S.D. Tex. 2015) (remanding case that was removeable at commencement where defendants failed to remove within 30 days of service); DT Apt. Group, LP v. CWCapital, LLC, No. 3:12-CV-437-D, 2012 U.S. Dist. LEXIS 62046, 2012 WL 1555450 (N.D. Tex. May 3, 2012) (denying remand and rejecting argument that removing defendant waived its right of removal by intervening in state-court action prior to being added as a defendant); Zbranek v. Hofheinz, 727 F. Supp. 324, 325 (E.D. Tex. 1989) (remanding case and rejecting claim that “a copy of an annotation from ALR Fed.” qualified as “other paper”); see also Rosenthal v. Coates, 148 U.S. 142, 13 S. Ct. 576, 37 L. Ed. 399 (1893) (affirming remand where removing party had “gone through the state trial and appellate courts” and “his rights have been finally declared by the supreme court of the state”); Schell v. Food Machinery Corp., 87 F.2d 385, 389 (5th Cir. 1937) (concluding diversity of citizenship was lacking); Yusefzadeh v. Nelson, Mullins, Riley & Scarborough, LLP, 365 F.3d 1244, 1246 (11th Cir. 2004) (reversing district court decision to remand noting “[t]he filing of a motion to dismiss in and of itself does not necessarily constitute a waiver of the defendant’s right to proceed in the federal forum” (quoting Hill v. State Farm Mut. Auto. Ins. Co., 72 F. Supp. 2d 1353, 1354 (M.D. Fla. 1999)).