Superior Court of Pennsylvania

October 4, 2022, Decided; October 4, 2022, Filed

No. 1398 WDA 2021

Reporter

2022 Pa. Super. Unpub. LEXIS 2350 *; 2022 WL 4904418

NICHOLAS MEAT, LLC v. PITTSBURGH LOGISTICS SYSTEMS, INC., D/B/A PLS LOGISTICS SERVICES, Appellant

Notice: NON-PRECEDENTIAL DECISION — SEE SUPERIOR COURT I.O.P. 65.37

Prior History:  [*1] Appeal from the Judgment Entered October 28, 2021. In the Court of Common Pleas of Butler County Civil Division at No(s): 2017-10872.

Meat v. Pittsburgh Logistics Sys., 2021 Pa. Dist. & Cnty. Dec. LEXIS 4374 (Oct. 27, 2021)

Core Terms

carrier, broker, preempted, cargo, terms, Load, trial court, breach of contract claim, transportation, insurance certificate, Trucking, shipper, motor carrier, contractual, liability insurance, summary judgment, breached, shipment, federal law, state law, Memorandum, arrange, damages, freight, summary judgment motion, parties’ agreement, district court, third-party, preemption, quotation

Judges: BEFORE: McLAUGHLIN, J., McCAFFERY, J., and PELLEGRINI, J.^* MEMORANDUM BY McCAFFERY, J.

Opinion by: McCAFFERY

Opinion

MEMORANDUM BY McCAFFERY, J.:

Pittsburgh Logistics Systems, Inc., d/b/a PLS Logistics Services (PLS) appeals from the judgment entered in the Butler County Court of Common Pleas after the trial court granted summary judgment in favor of Nicholas Meat, LLC (Nicholas Meat) in this breach of contract action. On appeal, PLS argues the trial court erred by granting relief based upon contractual terms that were not part of the parties’ agreement, and by concluding Nicholas Meat’s claim was not preempted by federal law. For the reasons below, we affirm.

The relevant facts underlying this breach of contract action are aptly summarized by the trial court as follows:

This action arises out of a freight-brokerage relationship between Plaintiff, [Nicholas Meat,] and Defendant, [PLS]. PLS is a freight broker that serves as an intermediary between shippers that need to transport goods and motor carriers with the capacity to move goods.¹

In or around May 2015, Nicholas Meat and PLS [*2]  began discussing the formation of a business relationship for PLS to arrange the shipment of Nicholas Meat’s products on a transactional basis. To facilitate the formation of a business relationship, Nicholas Meat filled out the PLS Commercial Credit Application and executed the PLS Credit Application & Setup Form. Item 8 of the Terms and Conditions on the PLS Credit Application & Setup Form stated:

[Nicholas Meat] understands motor carriers under contract with PLS are required to maintain cargo loss and damage liability insurance in the amount of $100,000.00 per shipment. Load[s] valued in excess of $100,000.00 will not be tendered without advanced written notification to allow PLS and the contracted carrier the opportunity to arrange for increased insurance limits. Failure to provide written notice will result in your loads not being insured to the extent the value exceeds $100,000.00.

Additionally, PLS completed Nicholas Meat’s New Carrier Information Form. PLS also provided to Nicholas Meat a Certificate of Insurance reflecting PLS’s insurance coverages. PLS’s Certificate of Insurance listed contingent cargo liability coverage of $250,000 per occurrence. Nicholas Meat approved PLS [*3]  as a freight broker and proceeded to hire PLS to arrange shipments of Nicholas Meat goods on a transactional basis beginning in June 2015.

Before awarding shipments to a carrier, PLS collects certain information from the carrier and requires the carrier to agree to certain terms and conditions, a process known as carrier onboarding. At PLS, in 2015, carrier onboarding was handled by PLS carrier management personnel located in Ukraine. PLS required carriers to complete and submit a “Carrier Setup Packet,” which in part included forms setting forth the carrier’s contact information, accounts payable information, and equipment information. PLS’s carrier management personnel did not routinely verify the contact information provided by a prospective carrier. In addition to the Carrier Information Packet, PLS also required prospective carriers to submit other documents, including a Certificate of Insurance, government-issued motor carrier permit, W-9 form, and cab card. PLS’s carrier management personnel reviewed each certificate of insurance provided by prospective carriers to ensure that the limits of insurance coverage were correct and to make sure there were no other exceptions on the [*4]  insurance certificate. PLS carrier management personnel did not routinely contact the insurance agent or broker listed on a prospective carrier’s Certificate of Insurance. Once a prospective carrier was approved by PLS, the carrier would gain access to PLS Pro, PLS’s electronic transportation management system. Once a carrier was made active in PLS Pro, the carrier could view upcoming shipments and could be selected to transport shipments for PLS’s shipper-customers, without additional vetting.

On October 27, 2015, a person or entity holding itself out as GA Trucking (the “Carrier”) submitted its Carrier Setup Packet and related documents, including a certificate of insurance to PLS. PLS did not verify that the Carrier’s contact information or certificate of insurance was legitimate. In November 2015, PLS awarded a shipment to the Carrier for another customer.

In November 2015, Nicholas Meat asked PLS to arrange to ship two loads of boneless beef trimmings from Nicholas Meat’s facility in Loganton, Pennsylvania on November 21, 2015 for delivery to Cargill Meat Solutions in Milwaukee, Wisconsin on November 23, 2015 (the “Cargill Load”). The Cargill Load consisted of two separate loads [*5]  for which Nicholas Meat was to be paid $53,353.33 and $54,846.77 upon delivery to its customer, Meyer Natural Foods. At a total value of $108,200.10, Nicholas Meat required the carrier of the Cargill Load to have $150,000.00 in cargo liability insurance coverage. The shipment arrangements made between PLS and Nicholas Meat regarding the Cargill Load are documented, in part, through email between the parties and evidenced by PLS’s Award Confirmation.

The Cargill Load was not delivered to its destination, and it was discovered that the GA Trucking’s identity had been stolen. The truck used to pick up the Cargill Load was found abandoned and empty on November 24, 2015. The contents of the Cargill Load were never found. It was determined that the Certificate of Insurance presented to PLS by the Carrier (purporting to be GA Trucking) contained a fabricated insurance agent with a non-existent email address and the phone number of a random, unrelated residence. The insurance policy reflected on the Carrier’s Certificate of Insurance did not exist. The real GA Trucking did not carry cargo insurance.

Trial Ct. Memorandum Op., 10/27/21, at 5-7 (emphases added).

In October of 2016, Nicholas Meat filed a civil action against PLS in Clinton County, Pennsylvania. The lawsuit was subsequently transferred to Butler County. On November 26, 2019, Nicholas Meat filed a first amended complaint asserting claims for breach of contract, promissory estoppel, negligence, negligent misrepresentation, and vicarious liability. With regard to its breach of contract claim, Nicholas Meat asserted that, pursuant to the “Terms and Conditions” of their agreement, “motor carriers under contract with PLS were required to maintain cargo loss and damage liability insurance in the amount of $100,000.00[,]” or more if Nicholas Meat provided the requisite advance notification. Nicholas Meat’s First Amended Complaint, 11/26/19, at 28-29; see also id. at Exhibit 1, PLS Credit Application & Setup Form, 5/27/15, Terms & Conditions (PLS Terms & Conditions) at ¶ 8. Nicholas Meat provided the requisite advance notification [*7]  with respect to the Cargill Load, which required the carrier to have $150,000.00 in insurance. See Nicholas Meat’s First Amended Complaint at 29. However, “PLS breached its own Terms and Conditions . . . because it did not in fact require that the Carrier selected to transport the Cargill Load maintain the necessary cargo loss and damage liability insurance.” Id. Further, Nicholas Meat asserted that as a result of PLS’s breach, it incurred “significant damages[.]” Id.

PLS filed preliminary objections in December of 2019, followed by amended preliminary objections in March of 2020. Relevant herein, it asserted, inter alia, that Nicholas Meat’s claims were preempted by federal law, in particular the Carmack Amendment² to the Interstate Commerce Act.³ See PLS’s Amended Preliminary Objections, 3/18/20, at 5-7. On July 13, 2020, the trial court overruled PLS’s federal preemption preliminary objection.⁴ Order, 7/13/20, at 1 (unpaginated).

On September 11, 2020, Nicholas Meat filed a motion for summary judgment. It argued that PLS breached the terms of Item 8 in the parties’ agreement by failing to ensure the motor carrier it hired “‘maintain[ed]’ adequate and legitimate cargo liability [*8]  insurance[.]” Nicholas Meat’s Motion for Summary Judgment, 8/11/21, at 41. It also asserted that PLS violated “the implied duty of good faith and fair dealing.” Id. at 46. Alternatively, Nicholas Meat argued it was entitled to relief on its claims for negligence — PLS negligently hired and supervised the carrier, and negligently misrepresented its carrier vetting process — or promissory estoppel based upon the promises PLS made “to Nicholas Meat in order to induce Nicholas Meat to business with it.” Id. at 50, 53-54, 56.

PLS filed a competing motion for summary judgment on September 2, 2021. First, it insisted Nicholas Meat’s claims were preempted by federal law, including the Interstate Commerce Commission Termination Act (ICCTA), 49 U.S.C. § 14501(b), the Federal Aviation Administration Authorization Act (FAAAA), 49 U.S.C. § 14501(c), as well as the Carmack Amendment. PLS’s Motion for Summary Judgment, 9/2/21, at 10-11. Further, PLS argued that it did not breach any terms of the parties’ agreement, but rather, it “did require that its contracted third-party motor carriers maintained $100,000 in cargo loss and damage liability insurance[,]” and, specifically, required GA Trucking to certify that it carried $150,000 of coverage for the Cargill Load. Id. at 14-15. PLS also repeated its contention [*9]  that the tort claims were barred by the “gist of the action” doctrine,⁵ and argued that Nicholas Meat failed to prove its claim for promissory estoppel. See id. at 9, 21.

The trial court conducted oral argument on October 15, 2021. Thereafter, on October 27th, the court entered an order: (1) granting Nicholas Meat’s motion for summary judgment with respect to its breach of contract claim; (2) denying PLS’s motion with respect to its federal preemption argument; and (3) granting PLS’s motion for summary judgment with respect to the negligence claims. See Order, 10/27/21, at 1-2 (unpaginated). The next day, the trial court entered judgment in favor of Nicholas Meat in the amount of $108,200.10, plus prejudgment interest from November 24, 2015. This timely appeal by PLS followed.⁶,⁷

PLS presents two issues for our review:

Whether the [trial] court erred in its October 27, 2021 order of court, as explained in its accompanying Memorandum, by:

a. creating contractual terms that were not part of the agreement between [PLS] and [Nicholas Meat; and]

b. holding [Nicholas Meat’s] breach of contract claim was not preempted by federal law.

PLS’s Brief at 10 (some capitalization [*10]  omitted).

Our review of an order granting summary judgment is guided by the following:

When a party seeks summary judgment, a court shall enter judgment whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense that could be established by additional discovery. A motion for summary judgment is based on an evidentiary record that entitles the moving party to a judgment as a matter of law. In considering the merits of a motion for summary judgment, a court views the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Finally, the court may grant summary judgment only when the right to such a judgment is clear and free from doubt. An appellate court may reverse the granting of a motion for summary judgment if there has been an error of law or an abuse of discretion. . . .

Gallagher v. GEICO Indem. Co., 650 Pa. 600, 201 A.3d 131, 136-37 (Pa. 2019) (citations & quotation marks omitted).

In its first issue, PLS argues the trial court erred or abused its discretion when it granted summary judgment to Nicholas Meat on the breach of contract claim.

A breach of contract claim consists of the three [*11]  elements: “[(1)] the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages.” Burlington Coat Factory of Pennsylvania, LLC v. Grace Const. Mgmt. Co., LLC, 2015 PA Super 227, 126 A.3d 1010, 1018 (Pa. Super. 2015) (en banc) (citation omitted). When interpreting the meaning of a contract, the fundamental rule “is to acertain and give effect to the intent of the parties.” Binswanger of Pennsylvania, Inc. v. TSG Real Est. LLC, 655 Pa. 166, 217 A.3d 256, 262 (Pa. 2019). Our Supreme Court has explained:

[T]he intent of the parties to a contract is to be regarded as embodied in the writing itself, and, as such, the entire agreement must be taken into account in determining contractual intent.

Indeed, a reviewing court does not assume that contractual language is chosen carelessly, nor does it assume that the parties were ignorant of the meaning of the language they employed; thus, when a writing is clear and unequivocal, its meaning must be determined only by its terms. Related thereto, [b]efore a court will interpret a provision in a statute or in a contract in such a way as to lead to an absurdity or make the statute or contract ineffective to accomplish its purpose, it will endeavor to find an interpretation which will effectuate the reasonable result intended.

Id. (citations & quotation marks omitted).

This Court has also “accepted the principle [*12]  . . . that [e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and enforcement.”⁸ Stamerro v. Stamerro, 2005 PA Super 424, 889 A.2d 1251, 1259 (Pa. Super. 2005) (citation & quotation marks omitted). Instances of bad faith include the “lack of diligence and slacking off,” as well as “willful rendering of imperfect performance[.]” Id. (citation omitted). However, the implied duty of good faith “cannot trump the express provisions in the contract[;]” instead it is utilized by the court to “harmonize the reasonable expectation of the parties with the intent of the contractors and the terms in their contract.” Id. (citation omitted).

With this background in mind, we consider PLS’s argument on appeal. PLS insists that the essential terms of its contract with Nicholas Meat were the following: (1) PLS would arrange for Nicholas Meat’s freight to be transported by a third-party carrier; (2) the third-party carrier would be required to maintain cargo loss and damage liability insurance in the amount of $100,000, or a higher specified value if Nicholas Meat provided written notice in advance; (3) because Nicholas Meat did so, PLS would require the carrier of the Cargill Load to have $150,000 in insurance; and (4) Nicholas [*13]  Meat would pay PLS within 30 days of receiving an invoice. See PLS’s Brief at 24-25. However, it contends Nicholas Meat requested the trial court read into the contract additional, non-existent terms, requiring PLS to vet its third-party carriers by contacting the carrier’s insurers “to confirm the legitimacy of the insurance information [the carrier] provided to PLS[;]” and “reimburse [Nicholas Meat] for cargo loss in the event the insurers for the carrier and/or PLS do not[.]” Id. at 25-26 (record citations omitted). PLS contends the trial court accepted these additional terms and improperly granted relief on that basis. See id. at 26-27.

Moreover, PLS insists it did not breach the terms of the parties’ agreement because it is “undisputed that PLS did require [the third-party carrier,] GA Trucking, or who they believed to be GA Trucking, to carry $150,000 in cargo coverage, as evidenced by the GA Trucking Certificate of Liability submitted to PLS.” PLS’s Brief at 27-28 (emphasis added). PLS asserts that “[n]owhere in the contract was there an obligation for PLS to take further action[,]” and “[a]t most, an obligation to take reasonable steps for verification creates questions of fact” [*14]  precluding summary judgment. Id. at 33. For support, it cites Marx Companies, LLC v. W. Trans Logistics, Inc., 2015 U.S. Dist. LEXIS 6432, 2015 WL 260914 (D.N.J. 2015), an unpublished federal district court decision, which it claims is “almost analogous . . . to this matter.” Id. at 28. Furthermore, PLS contends that Nicholas Meat’s damages did not result from any contractual breach, but rather, its own “failure to file a claim under PLS’s contingent cargo policy, which listed Nicholas Meat as a loss payee.” Id. at 34.

The trial court addressed Nicholas Meat’s breach of contract claim as follows:

There is no dispute that a contract existed between PLS and Nicholas Meat which provided for PLS, as a transportation broker, to arrange for Nicholas Meat’s freight to be transported by a third[-]party motor carrier. An essential term of the contract was that PLS would require the motor carrier it selected for the Cargill Load to carry $150,000.00 in cargo loss and damage liability insurance. PLS assumed a contractual obligation to ensure that the motor carrier selected had the specified insurance. Inherent within this obligation was a duty to take reasonable steps to verify that the cargo liability insurance information provided by the carrier was legitimate. PLS breached the terms of the contract [*15]  by arranging for the Cargill Load to be transported by a third[-]party motor carrier without any cargo loss and damage liability insurance. If the Cargill Load had been successfully delivered, Nicholas Meat would have been paid $108,200.10 by its customer. Therefore, as a result of PLS’s breach of a duty imposed by the contract, Nicholas Meat suffered damages in the amount of $108,200.10.

Trial Ct. Memorandum Op. at 8-9.

We agree with the trial court’s interpretation of the parties’ agreement, and its conclusion that PLS breached that agreement, resulting in Nicholas Meat’s damages. The agreement provided, inter alia, that PLS would require its third-party carriers to “maintain cargo loss and damage liability insurance in the amount of $100,000.00 per shipment[,]” or more as requested by its clients. See PLS Terms & Conditions at ¶ 8. PLS would have us conclude that it fulfilled its duty simply by asking the third-party carrier if it had the requisite insurance and collecting a copy of a purported insurance certificate. According to PLS, the fact that the carrier — which was an imposter posing as GA Trucking — presented a fabricated insurance certificate, does not mean that it failed [*16]  to perform its contractual obligations; rather, PLS emphasizes that it, too, was defrauded. See PLS’s Brief at 27-28.

Contrary to PLS’s argument, the trial court did not add contractual terms to the agreement. Pursuant to the clear terms of the parties’ agreement, PLS owed a duty to Nicholas Meat to require its carriers maintain the requisite cargo insurance. Here, the carrier that PLS arranged to transport the Cargill Load did not have any cargo insurance. Thus, PLS breached a duty owed to Nicholas Meat under the agreement.

PLS further argues that the court’s determination that it did not take “reasonable steps” to verify the insurance information provided by its carriers, created a question of fact, precluding summary judgment. See PLS’s Brief at 33. We disagree. Had PLS taken any steps to verify the insurance policy information provided by GA Trucking, we might agree that a genuine issue of material fact existed precluding summary judgment; the question of how much verification is sufficient would be for the jury. Here, however, PLS concedes it did nothing — rather, PLS merely accepted, at face value, the fabricated insurance certificate from GA Trucking, which falsely claimed it [*17]  had the appropriate amount of cargo insurance. Thus, we agree with the determination of the trial court that PLS’s good faith obligation under its own Terms and Conditions required more. That is not to say we are adding more terms to the contract. Instead, as noted above, “[e]very contract imposes upon each party a duty of good faith and fair dealing[,]” which the court may consider so long as the implied duty does not “trump the express provisions in the contract[.]” Stamerro, 889 A.2d at 1259 (citation omitted). Here, the express terms of the agreement provided that PLS would require its carriers to have a certain amount of cargo insurance. Clearly, this requirement implied that PLS — as a broker — would verify the information provided by prospective carriers.

We also conclude PLS’s reliance on Marx is misplaced. First, Marx is a decision issued by a New Jersey federal district court; thus, it is not binding on this Court. See Huber v. Etkin, 2012 PA Super 254, 58 A.3d 772, 779 n.7 (Pa. Super. 2012) (en banc) (federal district court decisions are “not binding authority” but may be cited for persuasive value). Second, we conclude the decision is distinguishable on its facts.

In Marx, as in the present case, the plaintiff contracted with a shipping broker to assist in transporting two truckloads [*18]  of frozen beef. See Marx, 2015 U.S. Dist. LEXIS 6432, 2015 WL 260914 at *1. The contract provided, in relevant part, that the broker “was a responsible third party that had an extensive nationwide network of reliable carriers.” Id. (record citation & quotation marks omitted). The broker “arranged for transportation with Dew—Right Transportation, Inc. (‘DRT’), a company with which it had no prior business dealings but which it believed held the appropriate Department of Transportation credentials.” 2015 U.S. Dist. LEXIS 6432, [WL] at *2. However, the goods were never delivered, and the plaintiff believed they were stolen by DRT. See id. The plaintiff subsequently sued the broker claiming it breached two “implied duties” — i.e, that it would (a) act according to the standard for a professional freight broker, and (b) retain only reliable carriers — and the “express promise” in their agreement that the broker was a “responsible third party that had an extensive nationwide network of reliable carriers.” Id. (record citations omitted). The plaintiff argued the broker breached its duties “by retaining a carrier about which [the broker] had no information and by retaining a carrier that was not insured.” Id. (record citation & quotation marks omitted).

In dismissing the plaintiff’s [*19]  complaint, the district court first construed the argument concerning the “implied duties” as a negligence claim, and determined it was preempted by the FAAAA.⁹ See Marx, 2015 U.S. Dist. LEXIS 6432, 2015 WL 260914 at **2 n.2, 3-4. Moreover, with regard to the plaintiff’s breach of contract claim, the court agreed with the broker that “the contractual promise that was allegedly violated [was] not found in the parties’ written agreement.” 2015 U.S. Dist. LEXIS 6432, [WL] at *4. Indeed, on appeal, the plaintiff argued solely that the “promise at issue was ‘implied.'” Id. Because the complaint did not contain any allegation that the broker breached an implied promise, and, in any event, such a claim would be “outside the confines of the express contractual agreement between the parties[,]” the district court concluded that the plaintiff “failed to plead a plausible claim” and dismissed the complaint. 2015 U.S. Dist. LEXIS 6432, [WL] at **4-5.

Here, unlike in Marx, the trial court found PLS breached a specific term of the parties’ agreement — namely, that it would require its carriers to have a certain amount of cargo insurance. Nicholas Meat’s claim does not rest upon PLS’s breach of an implied agreement, as in Marx. Indeed, the relevant provision of the Marx contract provided only that the broker was a “responsible third party that had [*20]  an extensive network of reliable carriers.” See Marx, 2015 U.S. Dist. LEXIS 6432, 2015 WL 260914 at *1. The broker’s use of a new, untested carrier in that case did not establish a breach of that clause in the agreement. Thus, Marx provides PLS with no basis for relief.

Lastly, we note PLS asserts, alternatively, that even if we conclude it breached the terms of the parties’ agreement, “Nicholas Meat’s alleged damages were not a direct result of any contractual breach . . ., but [instead due to] Nicholas Meat’s failure to file a claim under PLS’s contingent cargo policy, which listed Nicholas Meat as a loss payee.” PLS’s Brief at 34. The trial court concluded that “Nicholas Meat was not required to attempt recovery through PLS’s insurance policy.” Trial Ct. Memorandum Op. at 16. PLS provides no record citation or authority to the contrary. Rather its “argument” is confined to a single sentence in its brief, and, therefore, waived for our review. See Pa.R.A.P. 2119(a) (requiring argument in brief to include “such discussion and citation to authorities as are deemed pertinent”). Thus, PLS’s first claim fails.

Next, PLS argues that Nicholas Meat’s breach of contract claim was preempted by federal law, specifically the Carmack Amendment, the ICCTA, and the FAAAA. PLS’s Brief at [*21]  35. PLS maintains that the trial court erred when it rejected his claim by analyzing the statutes separately. Id. at 36. Rather, PLS insists “it is the interplay of the statutes together that results in Nicholas Meat[‘]s claim . . . being preempted.” Id.

When considering whether a federal statue preempts state law, we are guided by the following:

Congress has the undisputed power to preempt state law in areas of federal concern. Such preemption does not need to be explicit in a statute invalidating a state law. If the area in question is one of traditional state concern, it should be presumed that Congress did not intend to supersede state authority absent a clear and manifest legislative purpose to the contrary.

Congress’ intent to preempt state law may be express or implied and found in any of three ways:

First, state law may be preempted where the United States Congress enacts a provision which expressly preempts the state enactment. Likewise, preemption may be found where Congress has legislated in a field so comprehensively that it has implicitly expressed an intention to occupy the given field to the exclusion of state law. Finally, a state enactment will be preempted where a state [*22]  law conflicts with a federal law. Such a conflict may be found in two instances, when it is impossible to comply with both federal and state law, or where the state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”

Stone Crushed Partnership v. Kassab Archbold Jackson & O’Brien, 589 Pa. 296, 908 A.2d 875, 880-81 (Pa. 2006) (citations omitted & emphasis added).

The three statutory provisions at issue herein involve the federal government’s regulation of transportation. With regard to the Carmack Amendment, the Third Circuit Appeals Court has explained:¹⁰

The Carmack Amendment‘s operation is relatively straightforward. The general rule is that an interstate carrier is strictly liable for damages up to “the actual loss or injury to the property caused by (A) the receiving carrier, (B) the delivering carrier, or (C) [certain intermediary carriers].” 49 U.S.C. § 14706(a)(1). A shipper and carrier can agree to limit the carrier’s liability “to a value established by written or electronic declaration of the shipper or by written agreement between the carrier and shipper if that value would be reasonable under the circumstances” in order for the shipper to obtain a reduced rate. Id. [at] § 14706(c)(1)(A). Shippers may bring a federal private cause of action directly under the Carmack Amendment against a carrier for damages. Id. [*23]  [at] § 14706(d).

Certain Underwriters at Int. at Lloyds of London v. United Parcel Serv. of Am., Inc., 762 F.3d 332, 335 (3d Cir. 2014) (footnote omitted).

The ICCTA, codified at 49 U.S.C. § 14501(b)(1) provides, in relevant part:

[N]o State . . . shall enact or enforce any law, rule, regulation, standard, or other provision having the force and effect of law relating to intrastate rates, intrastate routes, or intrastate services of any freight forwarder or broker.

49 U.S.C. § 14501(b)(1) (emphasis added). Subsection (c)(1) codifies a similar provision found in the FAAAA:

[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) (emphasis added).

Here, PLS argues the Carmack Amendment “impliedly preempts state law claims by shippers, such as Nicholas Meat, against brokers, such as PLS, while the ICCTA . . . and FAAAA . . . explicitly preempt any such claims by prohibiting state regulation of intrastate services of any . . . broker . . . related to a price, route or service of any . . . broker[.]” PLS’s Brief at 46 (quotation marks omitted). PLS relies, primarily, on the following three federal court decisions, which it insists support federal preemption of Nicholas [*24]  Meat’s breach of contract claim: AMG Resources Corp. v. Wooster Motor Ways, Inc., 796 Fed. Appx. 96, 2020 WL 110230 (3d Cir. 2020), Alpine Fresh, Inc. v. Jala Trucking Corp., 181 F.Supp.3d 250 (D.N.J. 2016), and Ameriswiss Technology, LLC v. Midway Line of Illinois, Inc., 888 F.Supp.2d 197 (D.N.H. 2012).

In its opinion, the trial court provided an extensive analysis supporting its conclusion that the Carmack Amendment does not bar state law claims against brokers. See Trial Ct. Memorandum Op. at 11-14 (determining (1) text of Carmack Amendment explicitly applies only to carriers and not to brokers; (2) AMG is distinguishable on its facts because (a) the shipper “raised both state-law claims and a claim under the Carmack Amendment against two entities, a carrier and a broker [which] shared an address and had common ownership[;]” and (b) the AMG Court did not distinguish between the carrier and broker in its analysis; (3) the Carmack Amendment contains a savings clause that preserves “remedies existing under another law[;]” so that, (4) “the Carmack Amendment should not be read to displace all actions against entities . . . for which it does not provide liability”). We agree with the court’s analysis, and rest upon its well-reasoned basis. Thus, we conclude Nicholas Meat’s breach of contract claim is not preempted by the Carmack Amendment.

Nevertheless, as the trial court acknowledges in its opinion, the above-cited provisions of the ICCTA and FAAAA do — by their very terms — apply to freight brokers, such as PLS. See Trial Ct. Memorandum Op. at 14. [*25]  See also 49 U.S.C. § 14501(b)(1), (c)(1). However, the court concluded, and we agree, that “there is a widespread consensus among courts analyzing these provisions that . . . they do not preempt breach of contract claims against freight brokers.” Trial Ct. Memorandum Op. at 14-15 (emphasis added) (citing cases). See Louis M. Marson Jr., Inc. v. Alliance Shippers, Inc., 438 F. Supp. 3d 326, 335 (E.D. Pa. 2020) (“[T]he FAAAA and ICCTA do not preempt routine breach of contract claims.”) (citation omitted).

The two decisions upon which PLS relies do not compel a different result. In Alpine Fresh, a shipper filed a complaint seeking damages from both a broker and motor carrier when its shipment of produce was rejected at the point of delivery because the internal temperature of the truck was incorrect. See Alpine Fresh, 181 F.Supp.3d at 253. The shipper asserted claims for breach of contract, breach of bailment, and negligence. The broker filed a motion to dismiss the breach of bailment and negligence claims, arguing those claims were preempted by federal law, namely, the Carmack Amendment, the ICCTA, and the FAAAA. See id. at 254. The federal district court agreed and dismissed those counts in the complaint. See id. at 257. Significantly, however, the broker did not challenge — and the district court did not address — whether the shipper’s breach of contract claim against the broker was also [*26]  preempted by federal law. Thus, Alpine Fresh does not support PLS’s claim here.

The same is true of the decision in Ameriswiss. In that case, a shipper contracted with a broker to transport machinery. See Ameriswiss, 888 F.Supp.2d at 200. The broker, in turn, hired a carrier. Id. During transportation of the machinery, the carrier was involved in an accident, and the machinery was destroyed. Id. The shipper subsequently filed a lawsuit against both the broker and carrier, asserting claims for negligence and breach of contract against the broker, and a Carmack Amendment claim against the carrier. Id. The broker moved for summary judgment on both claims, arguing that the negligence claim was preempted by federal law, and the breach of contract claim failed as a matter of law. See id. at 201. The district court agreed. It concluded that the negligence claim was either “subject to implied preemption under the Carmack Amendment [or] expressly preempted by the ICCTA.” Id. at 205. However, the court found the breach of contract claim failed on its merits. See id. at 209-10. Thus, like Alpine Fresh, the decision in Ameriswiss does not support PLS’s claim.

Accordingly, we agree with the trial court’s determination that Nicholas Meat’s breach of contract claim is not preempted by the Carmack Amendment, which applies only to claims against carriers, nor [*27]  by the ICCTA or FAAAA, which do not preempt common law breach of contract claims. Consequently, PLS’s second issue merits no relief.

We direct that a copy of the trial court’s October 27, 2021, opinion be filed along with this memorandum and attached to any future filings in this case.

Judgment affirmed.

Judgment Entered.

Date: 10/04/2022

End of Document

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^* Retired Senior Judge assigned to the Superior Court.

¹ Our Supreme Court has explained:

Freight brokers do not directly ship [*6]  or transport freight; rather, they function as intermediaries which facilitate the shipment of goods. They are the “connecting link between shippers and carriers, uniting shippers who have cargo to deliver with carriers who have available motor transportation.”

S & H Transp., Inc. v. City of York, 653 Pa. 467, 210 A.3d 1028, 1030-31 (Pa. 2019) (citations omitted).

² The Carmack Amendment provides, in relevant part, that a carrier must issue a bill of lading for property it receives for transportation, and that the carrier is then liable for the loss or injury to the property “caused by (A) the receiving carrier, (B) the delivering carrier, or (C) another carrier over whose line or route the property is transported” to the person entitled to recover under the bill of lading. See 49 U.S.C. § 14706(a)(1).

³ 49 U.S.C. §§ 101-80504.

⁴ In the July 13th order, the trial court also: (1) overruled PLS’s preliminary objection asserting Nicholas Meat’s negligence claims were barred by the gist of the action doctrine, but did so without prejudice to PLS to raise the issue in a motion for summary judgment; and (2) sustained PLS’s preliminary objection to Nicholas Meat’s claim for punitive damages, striking those paragraphs from the complaint. See Order, 7/13/20, at 1 (unpaginated).

⁵ “Under the ‘gist of the action’ doctrine, an alleged tort claim against a party to a contract is barred when the ‘gist’ of the cause of action, although sounding in tort, is in actuality a claim for breach of contractual obligations.” Patel v. Kandola Real Est., LP, 2021 PA Super 219, 271 A.3d 421, 431 (Pa. Super. 2021) (citation omitted).

⁶ PLS complied with the trial court’s directive to file a Pa.R.A.P. 1925(b) concise statement of errors complained of on appeal. The trial court filed a brief Rule 1925(a) opinion on December 30, 2021. Nicholas Meat did not appeal from the ruling of the trial court concerning its negligence claims.

⁷ Upon initial review of this appeal, this Court observed that the trial court’s October 27th order did not dispose of Count V in Nicholas Meat’s complaint, which asserted a cause of action for promissory estoppel. Accordingly, on January 28, 2022, this Court issued PLS a rule to show cause why the order on appeal was final. See Order, 1/28/22. PLS filed a timely response, asserting that the promissory estoppel cause of action was pled as an alternative to the breach of contract claim, and because the court granted relief on the contract claim, the promissory estoppel claim is now moot. See PLS’s Letter Response, 2/11/22, at 1-3 (unpaginated). This Court discharged the rule to show cause by order dated February 18, 2022.

Upon our review, we agree that the trial court’s October 27, 2022, order effectively disposed of “all claims and of all parties.” See Pa.R.A.P. 341(b)(1). “The doctrine of promissory estoppel allows a party, under certain circumstances, to enforce a promise even though that promise is not supported by consideration.” Shoemaker v. Commonwealth Bank, 700 A.2d 1003, 1006 (Pa. Super. 1997). As the trial court explained in its opinion, “[d]ue to [its] determination that PLS breached a contractual obligation, the issue of promissory estoppel [need] not be addressed.” Trial Ct. Memorandum Op. at 16 (emphasis added). Nicholas Meat pled a claim of promissory estoppel as an alternative to its breach of contract claim. The court’s ruling granting Nicholas Meat relief on its contract claim renders the estoppel claim moot. Thus, we agree the court’s October 27th order is a final, appealable order.

⁸ Additionally, “[t]he General Assembly intentionally imposed an affirmative good faith requirement upon parties to commercial contracts” in the Uniform Commercial Code. Hanaway v. Parksburg Group, LP, 641 Pa. 367, 168 A.3d 146, 157 (Pa. 2017). See 13 Pa.C.S. § 1304 (“Every contract or duty within this title imposes an obligation of good faith in its performance and enforcement.”).

⁹ We will address PLS’s federal preemption argument infra.

¹⁰ As we noted supra, while federal court decisions are not binding on this Court, they may have persuasive value, particularly, here, where our research has uncovered no Pennsylvania decisions on this matter. See Huber, 58 A.3d at 779 n.7.

United States District Court for the Eastern District of Missouri, Eastern Division

October 17, 2022, Decided; October 17, 2022, Filed

Case No. 4:20-cv-00670-AGF

Reporter

2022 U.S. Dist. LEXIS 189000 *; 2022 WL 9922419

THOMAS CARTER, Plaintiff, vs. KHAYRULLAEV, et. al., Defendants.

Prior History: Carter v. Khayrullaev, 2021 U.S. Dist. LEXIS 167780, 2021 WL 4033009 (E.D. Mo., Sept. 3, 2021)

Core Terms

carrier, scores, preemption, contractor, preempt, tractor-trailer, rating, summary judgment, hired, negligent entrustment, Transportation, entrusted, policies, parties, brokering, common-law, courts, select, load, independent contractor, unsafe driving, joint venture, motor carrier, regulation, asserts, driving, motor vehicle, interstate, proximate, vicarious

Counsel:  [*1] For Thomas Carter, individually, Thomas Carter, on behalf of the estate of Margaret Carter, Plaintiffs: Neil J. Bruntrager, LEAD ATTORNEY, BRUNTRAGER AND BILLINGS PC – St Louis, St. Louis, MO.

For Zukhriddin Khayrullaev, Defendant: James C. Meyers, John L. Mullen, LEAD ATTORNEYS, FRANKE SCHULTZ PC – Kansas City, Kansas City, MO.

For MGI Express, LLC, American Power Transportation, Defendants: James C. Meyers, John L. Mullen, LEAD ATTORNEYS, FRANKE SCHULTZ PC – Kansas City, Kansas City, MO; Tim E. Dollar, LEAD ATTORNEY, DOLLAR BURNS LC, Kansas City, MO.

For Landstar Ranger, Inc., Defendant: Daniel E. Wilke, LEAD ATTORNEY, WILKE AND WILKE PC, St. Louis, MO; James A. Wilke, Kent William Zschoche, LEAD ATTORNEYS, WILKE AND WILKE, P.C., St. Louis, MO; Joseph R. Swift, BAKER STERCHI LLC – St Louis, St. Louis, MO.

Judges: AUDREY G. FLEISSIG, UNITED STATES DISTRICT JUDGE.

Opinion by: AUDREY G. FLEISSIG

Opinion

MEMORANDUM AND ORDER

Plaintiff Thomas Carter brings this case on behalf of himself, individually, and on behalf of the estate of Margaret Carter, who died when a commercial motor vehicle collided with her car on September 17, 2017. (Doc. No. 1, Exh. 3). General Electric (“GE”) arranged for Defendant Landstar Ranger, Inc. [*2]  (“Landstar”) to transport a bake oven. Landstar hired Defendant American Power Transportation (“APT”) to carry the commercial load. APT contracted with Defendant MGI Express, LLC (“MGI”) to lease one of MGI’s trucks to haul the load. (Doc. No. 81 at 2). MGI then hired Defendant Zukriddin Khayrullaev to drive the commercial vehicle. Id. at 1. On the day of the collision, Khayrullaev was driving westbound on Interstate 44 when he lost control of the tractor trailer of MGI’s vehicle, entered the eastbound lane of the interstate, and struck Ms. Carter’s vehicle. Id.

Plaintiff brings five claims against Defendants related to this incident. At issue in this order are Count II, for negligence and negligence per se against APT, MGI, and Landstar; and Count V, for negligent entrustment against Landstar. (Doc. No. 1, Exh. 3). Landstar has moved for summary judgment on Count II, asserting that there are no grounds for vicarious liability, and on Count V of Plaintiff’s complaint, asserting preemption and that the facts do not support the claim that Landstar negligently selected APT. (Doc. No. 67). For the reasons outlined below, the Court will grant in part and deny in part the motion.

BACKGROUND [*3] 

Construing in the light most favorable to Plaintiff, the record supports the following facts. On September 17, 2017, Khayrullaev lost control of a tractor-trailer attached to a commercial motor vehicle he drove on behalf of APT. (Doc. No. 81 at 1). When Khayrullaev lost control, he crossed over the yellow dividing line on the portion of Interstate 44 on which he was driving and struck Ms. Carter’s vehicle. Id. Ms. Carter died as a result of the accident.

Landstar entered into a Transportation Brokerage Agreement (the “Agreement”) with APT approximately four years prior to the accident. (Doc. No. 81 at 3). The Agreement provides that APT is “wholly responsible for the contemplated transportation and for all costs and expenses of such transportation.” Id. at 4. These costs include furnishing all necessary equipment, and utilizing “only competent, able, and legally licensed and qualified personnel.” Id. However, Landstar’s Load Confirmation Form (the “Form”) is also incorporated into the Agreement by reference. Id. The Form requires that APT drivers: (i) download the Landstar Connect Tracking System, (ii) be in contact with Landstar for “check calls” at all hours, (iii) use a certain type [*4]  of truck, (iv) secure their load in a particular manner, (v) pick up the load at a specific time, and (vi) wear a Landstar uniform. Id.

At the time Landstar and APT entered into the Agreement, Landstar’s policies included a 2011 “Landstar Uniform Policy for Qualification of Third-party Motor Carriers.” (Doc. No. 81 at 29). These policies required that Landstar examine a company applying to be a carrier for a safety rating from the Department of Transportation. Id. at 30. If the company was not rated, Landstar would then examine the company’s Behavior Analysis Safety Improvement Categories scores (“BASIC”) scores. Id. If the company fell within a sixty-five to eighty range in the categories of unsafe driving or fatigued driving, or if the driver fell within the eighty to ninety-five range in the categories of driver fitness, controlled substance use, and vehicle maintenance, Landstar would not approve the carrier. Id. If a company lacked both a rating and safety information, Landstar could not approve the company as a carrier. Id. at 31. When Landstar first approved APT as a carrier in 2013, APT was a new carrier and lacked a safety rating from the DOT, and no Landstar employee conducted [*5]  an analysis to determine APT’s BASIC scores. (Doc. No. 67, Exh. E at 70:3; 71:5-23).

Landstar also required that all “outside” carriers, like APT, engage in an annual requalification or review. (Doc. No. 81 at 31). This review examined safety ratings and BASIC scores. Id. However, between 2014 and 2017, no Landstar employee conducted a review for APT. Id. at 31-32.

As of 2014, Landstar reviewed its carriers’ BASIC scores through a vendor called SaferWatch. (Doc. No. 68 at 14). The SaferWatch data for APT reveals that the company had an unsafe driving score in excess of the threshold ceiling in March 2015, on October 12th and 26th, 2016, and in March 2017. Id. at 32-33. However, Landstar neither reviewed APT’s scores nor disqualified APT for unsafe driving, as otherwise required by Landstar’s policies. Id.

ARGUMENTS OF THE PARTIES

Only two claims in Plaintiff’s complaint relate to Landstar: (i) Count II, for negligence and negligence per se; and (ii) Count V, for negligent entrustment. (Doc. No. 1, Exh. 3). As to Count II, Landstar also asserts that it cannot be held vicariously liable for Khayrullaev’s negligence because it did not engage in a joint venture with APT, and also, because [*6]  it did not exercise sufficient control over Khayrullaev’s work to establish a master-servant relationship between the two of them. (Doc. No. 68 at 9). Plaintiff concedes the argument with respect to any joint venture.

As to Count V, Landstar alleges that Missouri negligence law is expressly preempted by 49 U.S.C. § 14501(c)(1), which Congress intended to deregulate interstate shipping. (Doc. No. 68 at 4). Plaintiff claims in response that 49 U.S.C. § 14501(c)(2)(A) carves out an exception for states to regulate the safety of portions of the interstate in their territory, and that this exception applies to protect Missouri negligence laws. (Doc. No. 82 at 4). Landstar also claims that it did not negligently entrust Khayrullaev with the tractor-trailer at issue in the accident. (Doc. No. 68 at 14). APT and MGI provided Khayrullaev with the tractor-trailer, and Landstar is only liable for that decision to the extent that it is liable for APT’s actions. Id. Landstar therefore argues that it did not negligently select or hire APT, and that, in the alternative, its negligent selection of APT as a carrier did not proximately cause the accident. Plaintiff responds that Landstar negligently selected a carrier whose driving record fell below [*7]  Landstar’s threshold requirements, and that this selection contributed to the cause of the collision. (Doc. No. 82 at 12-15).

DISCUSSION

I. Summary Judgment Standard

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “[T]he burden of demonstrating there are no genuine issues of material fact rests on the moving party, and we review the evidence and the inferences which reasonably may be drawn from the evidence in the light most favorable to the nonmoving party.” Allard v. Baldwin, 779 F.3d 768, 771 (8th Cir. 2015). To avoid summary judgment, the nonmovant has the “burden of presenting evidence sufficiently supporting the disputed material facts that a reasonable jury could return a verdict in their favor.” Gregory v. City of Rogers, Ark., 974 F.2d 1006, 1010 (8th Cir. 1992). “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986) (internal quotation marks omitted).

II. Federal Preemption

Landstar first asserts that Plaintiff’s claim for negligent entrustment is preempted by 49 U.S.C. § 14501(c)(1) (the “FAAA”). (Doc. No. 68 at 4). The doctrine of preemption “derives from the Constitution’s Supremacy clause, which states that laws of the [*8]  United States made pursuant to the Constitution are the ‘supreme Law of the Land.'” Wuebker v. Wilbur-Ellis Co., 418 F.3d 883, 886 (8th Cir. 2005) (quoting U.S. Const. Art. VI., cl. 2). This case raises an issue of express preemption, which occurs when a federal law explicitly prohibits state regulation in a certain field. See Mo. Brd. Of Examiners v. Hearing Help Express, Inc., 447 F.3d 1033, 1035 (8th Cir. 2006). Congress enacted the FAAA in order to preempt state trucking regulations, thus avoiding a “patchwork of state service-determining laws, rules, and regulations” which would place a heavy economic burden on the trucking industry. Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 264, 133 S. Ct. 1769, 185 L. Ed. 2d 909 (2013) (citing Rowe v. N.H. Motor Transp. Ass’n, 552 U.S. 364, 373, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008)). The relevant portion of the FAAA provides:

[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).

The Supreme Court has broadly interpreted the phrase “relating to” in the FAAA as “encompassing all state laws having any connection with or reference to the carrier’s rates, routes, or services.” See Data Mfg., Inc. v. United Parcel Service, Inc., 557 F.3d 849, 852 (8th Cir. 2009) (internal citation omitted). This preemption includes not only laws established by statute, but also those established by common-law, such as negligent brokering. See Uhrhan v. B&B Cargo, Inc., No. [*9]  4:17-cv-02720-JAR, 2020 U.S. Dist. LEXIS 139572, 2020 WL 4501104, at *3 (E.D. Mo. Aug. 5, 2020) (internal citations omitted). However, Congress intended only to preempt state economic regulation of air and motor carriers of property, not state safety regulations. Id. (citing Tow Operators Working to Protect Their Right to Operate on the Streets of Kansas City v. City of Kansas City, 338 F.3d 873, 874 (8th Cir. 2003)). Congress therefore included in the FAAA a provision limiting the statute’s preemptive scope:

Paragraph (1) shall not restrict the safety 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) (the “safety exception”).

Only one circuit court has addressed the question of whether the FAAA preempts common-law negligence claims. In Miller v. C.H. Robinson Worldwide, Inc., the Ninth Circuit held that negligent brokering or entrustment claims are not preempted by the FAAA. 976 F.3d 1016, 1023 (9th Cir. 2020), abrogated on other grounds by R.J. Reynolds Tobacco Company v. County of Los Angeles, 29 F.4th 542, 553n.6 (9th Cir. 2022) (noting that the parties in Miller failed to consider cases holding that no presumption of preemption applies when evaluating an express preemption clause). While [*10]  the Court found that a claim of negligent selection of a carrier was “related” to broker services under the meaning of the preemption clause, id. at 1024, it also fell under the safety exception. Id. at 1030-1031. See also California Trucking Association v. Bonta, 996 F.3d 644, 663 (9th Cir. 2021) (holding that while the FAAA did not preempt common-law negligence claims, it did preempt generally applicable statutory labor laws). The Supreme Court has not addressed this issue, and district courts which have considered the question are split “on both the outcome and the rationale.” Uhrhan, 2020 U.S. Dist. LEXIS 139572, 2020 WL 4501104, at *2 (internal quotations and marks omitted).

In two cases, courts in the Eastern District of Missouri have found that the FAAA does not preempt common-law negligent brokering claims because such claims fall within the safety exception. See Mendoza v. BSB Transport, Inc., Case No. 4:20 CV 270 CDP, 2020 U.S. Dist. LEXIS 198548, 2020 WL 6270743, at *3 (E.D. Mo. Oct. 26, 2020) (internal citations omitted); Uhrhan, 2020 U.S. Dist. LEXIS 139572, 2020 WL 4501104, at *5; accord, Wolf v. AIT Worldwide Logistics, Inc., No. 1:17-cv-30-HCA, 2021 U.S. Dist. LEXIS 248950, 2021 WL 6144685, at *10 (S.D. Iowa Sep. 27, 2021). Additionally, although the Circuit has not directly addressed the FAAA, the Eighth Circuit has considered the Airline Deregulation Act of 1978, on which the FAAA was based, and found that the statute did not preempt state common-law negligence claims. See Watson v. Air Methods Corporation, 870 F.3d 812, 818 (8th Cir. 2017). See generally Rowe v. New Hampshire Motor Transport Ass’n, 552 U.S. 364, 370, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008) (noting that Congress “copied the language of the air-carrier pre-emption provision of the Airline Deregulation Act of 1978” when crafting the [*11]  FAAA). Landstar urges the Court to find these cases wrongly decided. (Doc. No. 69 at 7). The Court declines to do so.

The touchstone of federal preemption analysis is Congressional intent. See Cipollone v. Ligget Group, Inc., 505 U.S. 504, 544, 112 S. Ct. 2608, 120 L. Ed. 2d 407 (1992) (Blackmun, J., concurring). Courts discern Congressional intent from the language of the preemption statute, as well as from the structure and purpose of the statute as a whole. See Medtronic, Inc. v. Lohr, 518 U.S. 470, 486, 116 S. Ct. 2240, 135 L. Ed. 2d 700 (1996). Where, as here, a statute contains an express preemption clause, Courts do not invoke any presumption against preemption, but instead examine the plain wording of the clause, “which necessarily contains the best evidence of Congress'[s] pre-emptive intent.” Puerto Rico v. Franklin California Tax-Free Trust, 579 U.S. 115, 125, 136 S. Ct. 1938, 195 L. Ed. 2d 298 (2016) (internal quotations and marks omitted). However, courts are not to find that Congress has preempted the States’ historic police powers “unless that was the clear and manifest purpose of Congress.” City of Columbus v. Ours Garage and Wrecker Srvc., Inc., 536 U.S. 424, 438, 122 S. Ct. 2226, 153 L. Ed. 2d 430 (2002). The Supreme Court has directed lower courts to broadly interpret the safety exception. Id. at 437 (considering whether the safety exception excluded laws passed pursuant to the powers of political subdivisions of a state).

Landstar argues that permitting each state to impose unique restrictions on how a company in the trucking business selects its partners would establish [*12]  a high burden on carriers to comply with the vast variety of state laws. (Doc. No. 69 at 5). While this may be true of statutory laws, common-law claims, like negligence, “regulate claims by imposing broad standards of conduct, not by compelling individuals to engage in…any specific conduct.” Miller, 976 F.3d at 1025 (internal citations omitted). The duty carriers must exercise in order to avoid common-law claims for negligence against them is therefore merely the broad duty to exercise ordinary care. Id.

Negligence claims against brokers that arise out of motor vehicle accidents do not directly regulate the vehicles, but instead generally “promote safety on the road.” Miller, 976 F.3d at 1025 (internal citations omitted). The ability to regulate road safety falls squarely within the states’ historic police powers and clearly “concerns motor vehicles and their safe operation.” Uhrhan, 2020 U.S. Dist. LEXIS 139572, 2020 WL 4501104, at *5 (internal citations omitted). Accordingly, the Court finds that Plaintiff’s claim for negligent selection of APT is not preempted by the FAAA, as it falls squarely within the statute’s safety exception to its preemption clause.

III. Negligent Entrustment

Count V of Plaintiff’s complaint alleges that Landstar negligently entrusted Khayrullaev with operating [*13]  the tractor-trailer involved in the accident at issue. (Doc. No. 1, Exh. 3 at 20). In order to succeed on a claim for negligent entrustment, Plaintiff must show: (i) that Khayrullaev was incompetent, (ii) that whoever entrusted Khayrullaev with the tractor-trailer knew or had reason to know of the incompetence; (iii) that there was an entrustment of chattel, in this case, the tractor-trailer; and (iv) that the negligent entrustment concurred with Khayrullaev’s negligence to cause the harm to Plaintiff. See McHaffie v. Bunch, 891 S.W.2d 822, 825 (Mo. 1995). There is no evidence, however, that Landstar entrusted Khayrullaev with the tractor-trailer: MGI owned the tractor-trailer, and APT hired Khayrullaev and organized his tasks involving the tractor-trailer. (Doc. No. 89 at 9). Landstar is therefore responsible for negligent entrustment only to the extent that it is liable for APT’s decision to entrust Khayruallev with the tractor-trailer. Plaintiff thus faces a dual burden on this motion for summary judgment. He must demonstrate (i) that Landstar is liable for APT’s decision, and (ii) that APT’s entrustment decision was negligent. The parties focus only on the first prong of this analysis.

An employer is liable for its independent [*14]  contractor’s negligent conduct if the employer fails to exercise reasonable care in hiring a competent independent contractor. See LeBlanc v. Research Belton Hosp., 278 S.W. 3d 201, 206 (Mo. Ct. App. 2008) (quoting Lee v. Pulitzer Publ’g Co., 81 S.W.3d 625, 634 (Mo. Ct. App. 2002) (further internal citations omitted). An employer has a duty to hire a “skilled and competent contractor.” Lonero v. Dillick, 208 S.W.3d 323, 329 (Mo. Ct. App. 2006) (citing Sullivan v. St. Louis Station Assocs., 770 S.W.2d 352, 356 (Mo. Ct. App. 1989)). A competent and careful contractor has “the knowledge, skill, experience, and available equipment which a reasonable person would realize that a contractor must have in order to do the work which he or she is employed to do without creating unreasonable risk of injury to others, and who also possesses the personal characteristics which are equally necessary.” Lee, 81 S.W.3d at 635 (citing Restatement (Second) of Torts § 411 (1965)).

The requirements for establishing the negligent hiring of an independent contractor are similar to those for establishing negligent entrustment. Plaintiff must show that (i) Landstar knew or should have known that APT was incompetent to carry its load, and (ii) that this negligence proximately caused Plaintiff’s injuries. See Riley v. A.K. Logistics, Inc., Case No. 1:15-cv-00069-JAR, 2017 U.S. Dist. LEXIS 88814, 2017 WL 2501138, at *2 (E.D. Mo. Jun. 9, 2017) (citing Gibson v. Brewer, 952 S.W.2d 239, 246 (Mo. 1997)) (further internal citation omitted). A contractor’s negligence does not create a presumption that the employer was negligent in selecting that contractor. See Sullivan, 770 S.W.2d at 356 (internal [*15]  citations omitted). Furthermore, if the contractor hired was actually competent, the employer is not liable for that contractor’s negligence, regardless of the care it took in selecting the contractor. See Lonero, 208 S.W.3d at 329 (citing Sullivan, 770 S.W.2d at 356).

The parties disagree as to the extent to which APT’s Behavior Analysis and Safety Improvement Categories (“BASIC scores”) demonstrate its competency. (Doc. No. 97 at 8). The Federal Motor Carrier Safety Administration (“FMCSA”) uses BASIC scores to rate motor carriers in a variety of categories, including crashes, driver fitness, hours of service, and unsafe driving. See Riley, 2017 U.S. Dist. LEXIS 88814, 2017 WL 2501138, at *1. The scores rank motor carriers’ safety performance against that of other carriers, thus producing a percentile score in each category based on how a carrier has performed in comparison to its peers. Id. However, the FMCSA warns that BASIC scores do not provide ultimate conclusions about a carrier’s overall safety. Id. Landstar explains that BASIC scores often fluctuate, even when a carrier does not have an “event,” such as an accident, which would otherwise impact the score. (Doc. No. 97 at 8). Nevertheless, Landstar has made BASIC scores an integral part of its own determination of whether or not a [*16]  carrier is sufficiently competent to work with Landstar.

Further, a defendant’s failure to follow its own policies is relevant to the question of negligent selection when it relates to a defendant’s established duties. See Pugh v. Fang JunQing, Case No. 4:16-CV-1881 RLW, 2018 U.S. Dist. LEXIS 45275, 2018 WL 1406589, at *5 (E.D. Mo. Mar. 20, 2018) (citing Burroughs v. Mackie Moving Sys. Corp., No. 4:07CV1944MLM, 2010 U.S. Dist. LEXIS 28154, 2010 WL 1254630, at *5 (E.D. Mo. Mar. 24, 2010) and Manzella v. Gilbert-Magill Co., 965 S.W.2d 221, 229 (Mo. Ct. App. 1998)). Here, the established duty is to select a competent and careful carrier. See Riley, 2017 U.S. Dist. LEXIS 88814, 2017 WL 2501138, at *5. Landstar’s policies strongly relate to that duty. Its 2011 policies in effect at the time it selected APT as a carrier required examining the company for a safety rating from the Department of Transportation prior to executing a brokering agreement with that company. (Doc. No. 67, Exh. E at 18:6-7). Its policies also provided that it will not execute a brokering agreement with a company that is rated “conditional” or “unsatisfactory.” Id. at 18:8-10. If the company is not rated, Landstar will examine the company’s safety scores, including its BASIC scores. Id. at 70:15-22. However, if a company lacked both a rating and safety information, Landstar could not approve the company as a carrier. Id. at 69:3-10. When Landstar first approved APT as a carrier in 2013, APT lacked a safety rating from the DOT because it was a new company, [*17]  and no Landstar employee conducted an analysis to determine APT’s BASIC scores. Id. at 70:3; 71:5-23.

Additionally, as stated above, as of 2014, Landstar reviewed its carriers’ BASIC scores through SaferWatch. (Doc. No. 68 at 14). In March of 2015, APT received an “unsafe” driving score of eighty-five, which would have disqualified the company from carrier consideration under Landstar’s policies. (Doc. No. 82 at 13). APT again received disqualifying scores for unsafe driving on October 12, 2016, October 26, 2016, and March 21, 2017. Id. However, Plaintiff has presented evidence that Landstar neither reviewed APT’s scores nor disqualified APT for unsafe driving, as otherwise required by Landstar’s policies. Id. Viewing the facts most favorably to Plaintiff, there is at least a genuine question as to whether Landstar selected APT negligently.

Landstar did not raise the issue of proximate causation in its motion for summary judgment; however, Plaintiff asserted that there is a causal connection between Landstar’s negligent selection of APT in its response brief. Landstar contested that assertion only in its reply brief. (Doc. No. 97 at 11). The Court typically will not consider arguments [*18]  raised only in a reply brief. Nevertheless, even if properly asserted, again construing the facts most favorably to Plaintiff, Landstar has not established that it is entitled to a judgment as a matter of law on this issue.

The test for proximate causation is whether an injury is the “natural and probable consequence of the defendant’s negligence.” Reed v. Kelly, 37 S.W.3d 274, 277 (Mo. Ct. App. 2000) (citing Stanley v. City of Independence, 995 S.W.2d 485, 488 (Mo. banc 1999)). The employer of a negligently selected contractor is subject to liability for harm resulting from the failure to select a competent contractor, but only for the harm that is caused by that negligent selection. See Tharp v. St. Luke’s Surgicenter-Lee’s Summit, LLC, 587 S.W.3d 647, 657 (Mo. banc 2019) (citing Restatement (Second) of Torts § 411, cmt. b). If the contractor’s incompetence consists of a lack of skill or experience, then the employer is subject to liability for harm resulting from that lack of skill or experience. The employer is not subject to liability for harm resulting solely from the contractor’s inattention or negligence. Id. Here, Plaintiff has offered sufficient evidence to raise a question for the jury regarding whether Landstar’s failure to select a driver with higher BASIC scores is a proximate cause of the collision at issue in this case. As neither party addresses whether APT negligently entrusted Khayrullaev with the tractor-trailer, [*19]  this finding is sufficient to deny summary judgment on this issue.

IV. Joint Venture

Count II of Plaintiff’s complaint alleges that Landstar “jointly” acted with APT and MGI. (Doc. No. 1, Exh. 3 at 11). Landstar argues that the record does not support any assertion that it entered into a joint venture with either APT or MGI. (Doc. No. 69 at 7). In response, Plaintiff asserts that he is pursuing only two claims against Landstar: (i) negligence and negligence per se (Count II); and (ii) negligent entrustment (Count V). (Doc. No. 82 at 6). Plaintiff has represented that he will not pursue a claim against Landstar on the basis of any joint venture. Id. The Court will therefore grant Landstar’s motion for summary judgment as to any claims against it on the basis of a joint venture.

V. Agency

Count II of Plaintiff’s complaint is premised on Landstar’s vicarious liability for Khayrullaev’s negligence under the theory of respondeat superior. (Doc. No. 1, Exh. 3 at 11). An employer is liable for the misconduct of an employee or agent under the doctrine of respondeat superior when that employee or agent acts within the scope and course of the employment or agency to cause the damages at issue.  [*20] See McHaffie, 891 S.W.2d at 825 (internal citations omitted). However, employers generally do not bear vicarious liability for the acts of their independent contractors. Kaplan v. U.S. Bank, N.A., 166 S.W.3d 60, 66 (Mo. Ct. App. 2003) (internal citations omitted). Whether an individual is an agent or an independent contractor is typically a question of fact. However, when the facts are undisputed and the Court can draw only one reasonable conclusion from those facts, the question may be decided as a matter of law. See Huggins v. FedEx Ground Package Sys. Inc., 592 F.3d 853, 857 (8th Cir. 2010) (applying Missouri law).

Courts apply ten factors to distinguish between employees and independent contractors, including: (i) the extent of control the employer exercises over the details of the work; (ii) whether the employee is engaged in a distinct occupation or business; (iii) whether that work is typically done under the direction of an employer or by a specialist without supervision; (iv) the skill required for the occupation; (v) whether the employer provided the instrumentalities, tools, and place of work for the employee; (vi) the length of employment; (vii) the method of payment, whether by the time spent on the job or per job; (viii) whether the work is part of the regular business of the employer; (ix) whether the parties believe they are creating [*21]  the relationship of a master and a servant; and (x) whether the principal is or is not in the business. See Keller v. Mo. Baptist Hosp. of Sullivan, 800 S.W.2d 35, 38 (Mo. Ct. App. 1990) (internal quotations and marks omitted). The “pivotal factor” is the right to control the employee’s work. Leach v. Bd. of Police Comm’rs of Kansas City, 118 S.W.3d 646, 649 (Mo. Ct. App. 2003). “If there is no right to control, there is no liability because no master-servant relationship exists.” Hougland v. Pulitzer Publ. Co., 939 S.W.2d 31, 33 (Mo. Ct. App. 1997) (internal citations omitted).

Landstar asserts that neither APT nor Khayrullaev were its agents or employees. (Doc. No. 68 at 9). In so arguing, it relies on its contract with APT, which describes APT as an independent contractor with the ability to hire its own employees. Id. Furthermore, Landstar points out that the Load Confirmation which GE emailed to APT directly included a number of GE’s requirements, while the contract between APT and Landstar made no similar requirements. Id. at 10.

The parties agree that APT hired Khayrullaev. (Doc. No. 81 at 9). Additionally, the Agreement provides that APT is “wholly responsible” for the transportation, including the equipment, its maintenance, and the people who operate the equipment. (Doc. No. 81 at 4). Nevertheless, there is some indication that Landstar retained the right to control some aspects of Khayrullaev’s work in [*22]  the Form incorporated into the Agreement. The parties do not discuss whether the terms outlined in the Agreement or in the Form are binding on APT, Khayrullaev, and Landstar; thus, the Court makes the reasonable inference in favor of Plaintiff that the Form operated to bind the parties through incorporation into the Agreement. Viewing the facts in the light most favorably to Plaintiff, the Court finds that questions of fact exist regarding Landstar’s control over how Khayrullaev completed his work on behalf of APT. Cf. Olson v. Pennzoil Co., 943 F.2d 881, 883-884 (8th Cir. 1991) (internal citations omitted)(finding no vicarious liability when Penzoil merely contracted to have the work done in the customary manner and was concerned only with the final product). Accordingly, summary judgment is denied on this issue.

CONCLUSION

For the reasons set forth above,

IT IS HEREBY ORDERED that Defendants’ motion for summary judgment is GRANTED in part and DENIED in part. (Doc. No. 67). The motion is GRANTED as to any claim against Landstar premised on joint liability. It is otherwise DENIED.

IT IS FURTHER ORDERED that the parties shall meet and confer with respect to the trial setting and, no later than 14 days from the date of this Memorandum and Order, [*23]  file a joint notice advising the Court of their proposed schedule for trial or otherwise advising the Court as to the status of the case.

/s/ Audrey G. Fleissig

AUDREY G. FLEISSIG

UNITED STATES DISTRICT JUDGE

Dated this 17th day of October, 2022.

End of Document