United States District Court,

C.D. Illinois,

Peoria Division.

STARR INDEMNITY & LIABILITY CO., as subrogee of Channel Prime Alliance, a division of Ravago Holdings America, Inc., Plaintiff,

v.

LUCKEY LOGISTICS, INC. and Affton Trucking Company, Inc. Defendants.

Case No. 1:16–cv–01377–JBM–JEH

|

Entered 06/06/2017

|

Filed 06/07/2017

Attorneys and Law Firms

George M. Velcich, James Arthur Ulwick, Steven B. Belgrade, Belgrade & O’Donnelll, Chicago, IL, for Plaintiff.

Brad William Keller, Heyl Royster Voelker & Allen, Peoria, IL, Brian E. McGovern, McCarthy Leonard Kaemmerer et al, Chesterfield, MO, for Defendants.

 

 

ORDER & OPINION

JOE BILLY McDADE, United States Senior District Judge

*1 The matter is before the Court on Defendant Affton Trucking Company’s Motion to Dismiss for Improper Venue Pursuant to Federal Rule of Civil Procedure 12(b)(3). (Doc. 20). For the reasons explained below, the Motion is granted and the case is transferred to the District of Nebraska.

 

 

1. BACKGROUND

Plaintiff2 entered into an agreement with Defendants to transfer four different loads of polypropylene resin between December 19, 2014 and January 29, 2015. (Doc. 19 at 2). Defendant Affton transported the first shipment from Kansas City, Kansas to Broken Bow, Nebraska. (Doc. 19 at 3). Defendant Luckey transported the second, third, and fourth loads from Des Moines, Iowa to Broken Bow, Nebraska. (Doc. 19 at 3). A bill of lading was generated by the respective transporting Defendant for each of the four deliveries. (Doc. 19 at 3). The cargo was accepted with no exceptions noted and the polypropylene resin from all four loads was placed in one silo in Broken Bow, Nebraska. (Doc. 19 at 3–4). One, or possibly more, of the trucks used to carry the polypropylene had previously carried polyethylene. (Doc. 19 at 4). The polyethylene contaminated the polypropylene in the truck and then when the four trucks’ loads were placed in the silo, all of the polypropylene in the silo became contaminated. (Doc. 19 at 4). This was not discovered until the Broken Bow facility attempted to use the polypropylene and experienced difficulties. (Doc. 19 at 4).

 

On October 4, 2016, Plaintiff filed a Complaint in this Court against Defendants seeking recovery under the Carmack Amendment, 41 U.S.C. § 14706. (Doc. 1). On February 17, 2017, Defendant Affton filed a Motion to Dismiss or Transfer Venue. (Doc. 15). On March 3, 2017, Plaintiff sought leave to file an Amended Complaint, which was granted and Plaintiff filed an Amended Complaint. (Doc. 17). On March 8, 2017, Defendant Affton filed a Motion to Dismiss for Improper Venue pursuant to Federal Rule of Civil Procedure 12(b)(3). (Doc. 20).3

 

 

1. LEGAL STANDARDS

*2 On a motion to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3), the burden lies with the plaintiff to show that the venue is proper. Emjayco ex rel. Troy v. Morgan Stanley, 901 F. Supp. 1397, 1400 (C.D. Ill. 1995) (citations omitted). The plaintiff must show that venue is proper as to all defendants and all claims. Id. (citations omitted). The allegations in a plaintiff’s complaint are to be taken as true, unless controverted by the defendant’s affidavits; and any conflict is to be resolved in the plaintiff’s favor. Id. (citing Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). To survive a motion to dismiss for improper venue, a plaintiff must allege or establish facts to support venue in its chosen district. Id. The Court “may examine facts outside the complaint in order to determine whether venue is proper.” Faur v. Sirius Int’l Ins. Corp., 391 F. Supp. 2d 650, 657 (N.D. Ill. 2005).

 

 

III. DISCUSSION

Plaintiff has failed to allege enough facts to support that the Central District of Illinois is a proper venue for Defendant Affton. Therefore, the best remedy is to transfer the case to the District of Nebraska, which is a proper venue for both Defendants. To come to this conclusion, the Court first examines the Carmack Amendment’s special venue provision to determine if it provides proper venue over Defendant Affton. Because it does not, the Court then examines whether the Carmack Amendment’s special venue provision is restrictive or permissive. Because the Court determines that Carmack Amendment’s special venue provision is permissive, the Court then examines the general venue statute to determine if it provides proper venue over Defendant Affton. After determining that the Central District of Illinois is not a proper venue, the Court examines the availability remedies and whether there is a district that would be proper for both defendants.

 

 

1. CARMACK AMENDMENT SPECIAL VENUE PROVISION AND DISCUSSION

Plaintiff has failed to establish proper venue for Defendant Affton under the Carmack Amendment. The Carmack Amendment contains a special venue provision. It reads:

“(d) Civil actions.

(1) Against delivering carrier. A civil action under this section may be brought against a delivering carrier in a district court of the United States or in a State court. Trial, if the action is brought in a district court of the United States is in a judicial district, and if in a State court, is in a State through which the defendant carrier operates.

(2) Against carrier responsible for loss. A civil action under this section may be brought against the carrier alleged to have caused the loss or damage, in the judicial district in which such loss or damage is alleged to have occurred.”

49 U.S.C. § 14706 (2016) (emphasis added). Therefore, venue may be found against a “delivering carrier” or a “carrier responsible for the loss.” Plaintiff has not alleged enough facts to satisfy either subsection.

 

Plaintiff’s statement on the Court’s jurisdiction over Defendant Affton simply states:

“Upon information and belief, AFFTON TRUCKING COMPANY, INC. (“Affton”) is a transportation company headquartered in St. Louis, Missouri and regularly conducts business in Illinois, such that the exercise of this Court’s jurisdiction over it would not offend the traditional notions of fair play and substantial justice.”

(Doc. 19 at 2).

 

As to Defendant Affton, venue would be proper as a delivering carrier if the action is brought in a federal judicial district through which Defendant Affton operates. 49 U.S.C. § 14706(d)(1). However, Plaintiff has not alleged that Defendant Affton operates in the Central District of Illinois. Plaintiff has merely alleged that Defendant Affton operates in the states of Illinois, which is insufficient to establish proper venue. See, e.g., Cargo–Master, Inc. v. Coast Midwest Transp., No. 3:97–CV–1637–G, 1998 U.S. Dist. LEXIS 12707, at *4 (N.D. Tex. 1998) (“An allegation that defendant operates within the state says nothing about its operations within this district… ”); Ponce De Leon Hosp. Corp. v. Avalon Logistics, Inc., 117 F. Supp. 3d 124, 130 (D.P.R. 2015) (finding proper venue under § 14706(d)(1) because it was well established that the defendants operated routes which “actually transports property” through the District of Puerto Rico).

 

*3 Venue would be proper for the carrier responsible for the loss if the action is brought in the judicial district in which such loss or damage has occurred. 49 U.S.C. § 14706(d)(2). However, Affton shipped one truckload of polypropylene resin from Kansas City, Kansas to Broken Bow, Nebraska. Therefore, the alleged damage did not take place in the Central District of Illinois. Because of this, Plaintiff has not alleged sufficient facts to show that the Central District of Illinois is a proper venue for Defendant Affton under either of the Carmack Amendment’s special venue subsections.

 

 

1. CARMACK AMENDMENT’S SPECIAL VENUE PROVISION IS PERMISSIVE

Although Plaintiff was unable to establish proper venue under the Carmack Amendment’s special venue provision, Plaintiff may still establish proper venue under the general venue statute, if the Carmack Amendment’s special venue provision is permissive and not restrictive. Congress has established both “general venue” statutes, e.g. 28 U.S.C. § 1391, and “special venue” statutes, which explicitly cover venue for a particular type of action, e.g. 49 U.S.C. § 14706(d). When the special venue provisions are permissive, they may be supplemented by the more expansive provisions of the general venue statutes. See Pure Oil Co. v. Suarez, 384 U.S. 202, 207 (1966). “Situations in which courts find that Congress intended to restrict venue under a special provision so as to preclude the application of the general venue statute are rare.” Halliburton Energy Servs., Inc. v. NL Indus., No. H–05–4160, 2006 U.S. Dist. LEXIS 50853, at *22 (S.D. Tex. July 25, 2006). Therefore, the Court must determine whether the special venue statute is permissive or restrictive in nature.

 

When a special venue statute is restrictive, the action may only be brought in a district permitted by the special venue statute. Pacer Global Logistic, Inc. v. AMTRAK, 272 F. Supp. 2d 784, 790 (E.D. Wis. 2003). The analysis of a special venue provision must be specific to that particular statute, because Congress has intended some cases, but not all, to be restrictive. Cortez Byrd Chips, Inc. v. Bill Harbert Constr. Co., 529 U.S. 193, 204 (2000).

 

Based on the language of the text, the Court finds that the Carmack’s special venue provision is permissive. The Court notes that the language of the provision is “may,” which is a permissive term. It does not use restrictive terms like “shall” or “only,” which would indicate restriction or exclusivity. See, e.g., Landstar Ranger, Inc. v. Global Experience Specialists, Inc., No. 5:14–cv–193–RLV–DCK, 2016 U.S. Dist. LEXIS 87434, at *6 (W.D.N.C. July 6, 2016) (finding the Carmack Amendment’s special venue provision to be permissive because “the statute uses the singular and discretionary term ‘may,’ rather than ‘shall’ or ‘must,’ or even ‘may’ modified by the limiting ‘only.’ ”) (citations omitted).

 

If Congress wished to restrict venue to the special provision, it could have done so and has done so in other portions of the Carmack Amendment. In a separate provision of the Carmack Amendment, pertaining to rail carriers, the special venue provision states that “a civil action under this section may only be brought….” 49 U.S.C. § 11706. Before 1980, plaintiffs were able to bring their Carmack claims against rail carriers in any judicial district where the carrier operated. Sompo Japan Ins. Co. of Am. v. Yang Ming Marine Transp. Corp., 578 F. Supp. 2d 584, 595 (S.D.N.Y. 2008), abrogated on other grounds by Sompo Japan Ins. Co. of Am. v. Yang Ming Marine Transp. Corp., 578 F. Supp. 2d 584 (S.D.N.Y. 2008) (“Sompo II”). In 1980, Congress amended the railway special provision because it was “virtually uncontrollable and frequently inconvenient.” Id. (citing H.R. Rep. No. 96–1430, at 102 (1980), reprinted in 1980 U.S.C.C.A.N. 4410). As a result, Congress changed the language of § 11706(d)(2)(A) to state “a civil action under this section may only be brought.” Therefore, it is evident that Congress intended to restrict Carmack Amendment claims against railways to the venues designated in its specific venue provision. See id. (collecting cases finding the § 11706 special venue provision to be a restrictive provision).

 

*4 However, Congress has not amended the § 14706 provision to include any similarly restrictive language. Therefore, the Court finds that Congress has not intended for § 14706 to be a restrictive special venue provision. Because § 14706 is a permissive special venue statute, Plaintiff may establish proper venue under either it or the general venue provision of 28 U.S.C. § 1391.

 

 

1. GENERAL VENUE PROVISION AND DISCUSSION

Therefore, Plaintiff may establish proper venue for Defendant Affton under the general venue provision; however Plaintiff has failed to do so. The general venue provision reads:

“(b) Venue in general. A civil action may be brought in—

(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located;

(2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or

(3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court’s personal jurisdiction with respect to such action.”

28 U.S.C. § 1391. The general venue statutes defines “residency” as

“For purposes of venue under this chapter, in a State which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State….”

28 U.S.C. § 1391(d). Because Illinois has three federal judicial districts, a corporation must have contacts with the Central District of Illinois sufficient to subject it to personal jurisdiction if it were its own state in order for venue to be proper.

 

Venue would be proper in a judicial district in which a substantial part of the events took place. 28 U.S.C. § 1391(b)(2). However, for Defendant Affton’s delivery, that would be in either the District of Kansas or the District of Nebraska, not the Central District of Illinois. Therefore, venue is not proper under § 1391(b)(2). See, e.g., Hoeller v. Barrington, 619 Fed.Appx. 534, 535 (7th Cir. 2015) (affirming a dismissal for improper venue from the Eastern District of Wisconsin because all of the harm occurred in the Northern District of Illinois, therefore venue could not be proper under § 1391(b)(2)); Green v. Beth, No. 15–cv–540–bbc, 2017 U.S. Dist. LEXIS 13693, at *2 (W.D. Wis. Feb. 1, 2017) (transferring a case from the Western District of Wisconsin to the Eastern District of Wisconsin because none of the events occurred in the Western District of Wisconsin); Howard v. Rodgers, No. 16–cv–158–jdp, 2017 U.S. Dist. LEXIS 11591, at *4–5 (W.D. Wis. Jan. 26, 2017) (transferring a case from the Western District of Wisconsin to the District of Kansas because none of the events occurred in the Western District of Wisconsin). Additionally, because venue may be brought in the Districts of Kansas or Nebraska, there is a judicial district where the action may otherwise be brought; therefore, venue cannot be proper in the Central District of Illinois under § 1391(b)(3). See, e.g., Taylor v. Armstrong, 38 Fed.Appx. 337, 339 (7th Cir. 2002) (“Subsection 1391(b)(3) would allow venue in Indiana … only if ‘there is no district in which the action may otherwise be brought’; because this action may be prosecuted in Connecticut, this option is unavailable.”).

 

*5 Venue would be proper in a judicial district in which any defendant is located, if all defendants are residents of the States. 28 U.S.C. § 1391(b)(1). Defendant Luckey is headquartered in the Central District of Illinois; therefore, the Central District of Illinois would be proper venue if all of the defendants are residents of Illinois. However, Plaintiff has not alleged enough facts to show that Defendant Affton is a resident of any district of Illinois.4

 

Because Defendant Affton is a corporation and Illinois has multiple judicial districts, Defendant Affton’s “residency” is determined by whether its contacts with the Central District of Illinois would be sufficient to subject it to personal jurisdiction if the district was a separate state. 28 U.S.C. § 1391(d). However, Plaintiff has not alleged that Defendant Affton has any specific contacts with the Central District of Illinois. Nor has Plaintiff alleged that Defendant Affton has any specific contacts with the Northern or Southern Districts, which could also support residency in Illinois under § 1391(d) and proper venue in the Central district pursuant to § 1391(b)(1). Rather Plaintiff has only alleged generally that Defendant Affton conducts business in the state of Illinois; which is not sufficient to establish that Defendant Affton is a resident under § 1391(d). See KM Enters., Inc. v. Global Traffic Techs., Inc., 725 F.3d 718, 733 (7th Cir. 2013) (“Section 1391(d) requires analysis of a defendant’s contacts with the specific district; if these are insufficient, then venue is not proper, regardless of the defendant’s contacts elsewhere in the state.”).

 

Therefore, the Court finds that the Central District of Illinois is not a proper venue for the Defendant Affton under either the Carmack Amendment’s special venue provision or the general venue provision.

 

Plaintiff argues that it should be sufficient for venue purposes that the Central District of Illinois is a proper venue for Defendant Luckey, because “Carmack’s purpose is to relieve cargo owners of the burden of searching out a particular negligent carrier from among the often numerous carriers handling interstate shipment of goods.” Kawasaki Kisen Kaisha Ltd. V. Regal–Beloit Corp., 561 U.S. 89, 98 (2010) (quoting Reider v. Thompson, 339 U.S. 113, 119 (1950)). However, the Carmack Amendment’s purpose is not sufficient to establish a rule that a court must only find proper venue for one defendant.

 

The general rule is that venue must be proper for each defendant and each claim. Emjayco, 901 F. Supp. at 1400. Plaintiff has provided no legal support for the argument that if venue is found proper for one Carmack Amendment defendant, that it is proper for all. Furthermore, Plaintiff’s argument that the Carmack Amendment’s purpose is sufficient to support that rule is unpersuasive here. Plaintiff is correct in asserting that the purpose of the Carmack Amendment is to prevent cargo owners from having to search out a particular carrier amongst many carriers; however, that occurs when Shippers A, B, and C all provide transportation in delivering the goods from the first place to the second. Then, the Carmack Amendment provides that there should be just one bill of lading and the plaintiff should not have to “search out” the particular carrier. However, here we have four single deliveries that were made by two different delivery companies; the companies were not responsible for separate portions of one delivery process, but rather four distinct deliveries, which produced four separate bills of lading. Therefore, the facts here are distinguishable and Plaintiff’s argument is insufficient to provide proper venue.

 

*6 Furthermore, Plaintiff’s concern that “[a]doption of Affton’s argument would force claimants to bring suits in multiple jurisdictions for the same claim” is unwarranted. As will be discussed in more detail below, the District of Nebraska serves as a proper venue for both Plaintiff’s claims against Defendant Affton and Defendant Luckey. Therefore, there is a single location where Plaintiff would be able to properly bring one suit against both Defendants.

 

 

1. REMEDYING THE IMPROPER VENUE

Because the Court finds that the Central District of Illinois is the improper venue for Defendant Affton, the Court must now address the proper remedy. When a district court is an improper venue, the Court “shall dismiss, or if it be in the interest of justice, transfer such a case to any district or division in which it could have been brought.” 28 U.S.C. § 1406(a). Therefore, when venue is proper as to one defendant but not another, the Court has three options: 1) it may dismiss the action; 2) it may transfer the entire case to another district where venue is proper for all defendants, or 3) sever the claims in the case and retain jurisdiction over those defendants for whom venue is proper. See, e.g., Alltech, Inc. v. Carter, No. 5:08–cv–00325–KKC, 2010 WL 988987, at *4 (E.D. Ken. Mar. 15, 2010).

 

Defendant Affton argues that the claim should be dismissed because Plaintiff failed to meet its burden to establish proper venue. However, dismissal for improper venue is generally disfavored when the case could be transferred to a proper district. See Nanz Trustee, Inc. v. Amer. Nat’l Bank & Trust Co., 423 F. Supp. 930, 932 (E.D. Wis. 1977) (“Dismissal of an action for improper venue is a severe penalty….Dismissal therefore should be reserved for that action where its institution in an improper forum smacks of harassment or evidences some other element of bad faith on the plaintiff’s part.”) (quoting Moore’s Federal Practice para. 0.146[5] (2d ed. 1976) at 1666); Van Gelder v. Taylor, 621 F. Supp. 613, 621–22 (N.D. Ill. 1985) (“Normally, if venue is not proper in the district court where the action is initiated, transfer to a proper district or division is preferred over dismissal.”) (citations omitted). Furthermore, because the alleged events took place between December 19, 2014 and January 29, 2015, there is a possibility that if the claims were dismissed, any claim Plaintiff refiled in a proper venue would be untimely.5 See also Granger v. Rauch, 388 Fed.Appx. 537, 541 (7th Cir. 2010) (collecting cases which hold that transfer from an improper venue is preferable to dismissal to protect against timeliness and statute of limitations issues). Therefore, the Court finds that it is not in the interest of justice to dismiss the claim.

 

 

1. THE DISTRICT OF NEBRASKA IS A PROPER VENUE FOR BOTH DEFENDANTS

*7 Because venue is proper for all Defendants in the District of Nebraska, the Court finds that the best remedy is to transfer the entire case there.6 In order to transfer it, the District of Nebraska must be a district where the case could have originally been brought. The Court finds that the District of Nebraska has subject matter jurisdiction because this is a civil action arising under the laws of the United States, as outlined in 28 U.S.C. § 1331, because Plaintiff seeks relief under 49 U.S.C. § 14706. Additionally, the District of Nebraska has personal jurisdiction over both Defendant Affton and Defendant Luckey.

 

Furthermore, the Court finds that the District of Nebraska would have personal jurisdiction over both defendants. Nebraska’s long-arm statute provides jurisdiction over any person7 who “transact[s] any business in this state.” Neb. Rev. Stat. § 25–536 (2016). Both Defendants made deliveries into Nebraska, thereby transacting business within the state. Furthermore, Defendants’ deliveries are sufficient minimum contacts with Nebraska, such that a suit there would not offend traditional notions of fair play and substantial justice. Int’l Shoe Co. v. Wash., 326 U.S. 310 (1945).

 

The Court finds that venue is proper as to both Defendants in the District of Nebraska. Under the Carmack Amendment, venue is proper under the “delivery carrier” provision because both Defendants operate in Nebraska by making deliveries there. 49 U.S.C. § 14706(d)(1). See, e.g., Ponce De Leon, 117 F. Supp. 3d at 130 (finding proper venue under § 14706(d)(1) in districts where carriers “actually transport property”). Additionally, venue would also be proper under the “carrier responsible for loss” provision, because the damage to the all of polypropylene arguably occurred when all four shipments were unloaded into one silo, in Nebraska. So while the damage to one load of polypropylene occurred when it was placed in the tainted truck, the damage to the entirety of the polypropylene occurred when the four shipments were mixed, which occurred in Nebraska. 49 U.S.C. § 14706(d)(2). See also Ponce De Leon, 117 F. Supp. 3d at 130 (finding proper venue under § 14706(d)(2) in the district of the destination site). Lastly, venue is also proper to both Defendants under the general venue statute because the District of Nebraska is the judicial district where a substantial part of the events occurred. 28 U.S.C. § 1391(b).

 

Therefore, the Court finds that the claims could have originally been brought in the District of Nebraska. The Court finds that it is in the interest of justice to transfer the entire case to the District of Nebraska because the District of Nebraska is the only proper venue for both Defendants. See, e.g., Kinney v. Anchorlock Corp., 736 F. Supp. 818, 827 (N.D. Ill. 1990) (transferring a case under § 1406 to the “only jurisdictionally viable forum proposed”).

 

*8 Defendant Affton argues that the claims should be transferred to the District of Kansas, because Defendant Affton’s shipment of the polypropylene began in Kansas City, Kansas. However, as this opinion makes clear, the district court must have jurisdiction and proper venue over both defendants. There is no indication that the District of Kansas would have personal jurisdiction or be the proper venue for Defendant Luckey, who is headquartered in Illinois and shipped the polypropylene from Iowa to Nebraska.

 

Plaintiff asserts that the Court must weigh factors in considering whether to transfer venue, as explained in Jaramillo v. DineEquity, Inc., 664 F. Supp. 2d 908 (N.D. Ill. 2009). The Court notes that Jaramillo discusses the factors considered when determining a transfer of venue under 28 U.S.C. § 1404(a). Id. at 913. However, in order for a case to be transferred under § 1404(a), the venue must be proper in the transferring district—i.e. this Court. Because venue is not proper in this Court, § 1404 is not applicable. However, transfer under § 1406 is appropriate and it is in the interests of justice to transfer the case, which will preserve Plaintiff’s claims against possible timeliness issues and save Plaintiff an additional filing fee. See, e.g., Peek v. Golden Nugget Hotel & Casino, 806 F. Supp. 555, 560 (E.D. Penn. 1992).

 

Furthermore, applying the traditional considerations of the “interests of justice” factor support transferring the case to the District of Nebraska. First, the site of the silo and the contaminated polypropylene is in Broken Bow, Nebraska; therefore, the District of Nebraska is closer to the premise involved and has greater community relations to the issue than the Central District of Illinois. The District of Nebraska would also be closer for those witnesses involved in accepting the deliveries at the Broken Bow site and discovering the tainted polypropylene.

 

Plaintiff stated that they took the contaminated samples back for quarantine in Florida. Therefore, the evidence is over 1,000 miles from both the Central District of Illinois and the District of Nebraska and the District of Nebraska would not be a more inconvenient location for the evidence to be brought to. The Plaintiff does not believe there will be any unwilling witnesses, therefore the convenience of witnesses is not a consideration. Additionally, although Plaintiff’s choice of forum is usually given weight that cannot apply when Plaintiff does not pick a proper venue. Overall, the interest of justice clearly support transferring the case to the District of Nebraska.

 

Plaintiff also argues that the location of the damage is just as likely to have occurred in Illinois as it did in Kansas. The Court disagrees. The transportations were from Kansas City, Kansas to Broken Bow, Nebraska and from Des Moines, Iowa to Broken Bow, Nebraska. There are no facts alleged that the transportations ever passed through Illinois. Furthermore, given that Des Moines, Kansas City, and Broken Bow are all west of Illinois, the Court finds it highly unlikely that the transportations or the damage could have occurred in Illinois. Therefore, there is no indication that the damage could have occurred in Illinois or, more specifically, the Central District of Illinois. However, it is much more likely that the alleged damage occurred in the District of Nebraska, when the four truckloads were combined in Broken Bow.

 

The Court notes that Plaintiff’s response to Defendant Affton’s second motion to dismiss for improper venue requests that “if this court determines that there is an issue as to whether or not venue is proper under 49 U.S.C. § 14706(d)(2), Plaintiff requests that … the court allow Plaintiff to conduct limited discovery aimed solely at confirming that venue is proper….” (Doc. 21 at 8). However, the Court finds that discovery as to venue under 49 U.S.C. § 14706(d)(2) is unnecessary, because § 14706(d)(2) establishes proper venue in the judicial district where the damage is alleged to have occurred. However, as discussed previously, there are no facts alleged that any of the trucks were in Illinois or that the damage on the shipments between Iowa, Kansas, and Nebraska could have occurred in Illinois.

 

 

1. CONCLUSION

*9 For the forgoing reasons, the Central District of Illinois is an improper venue for Defendant Affton. Therefore, under 28 U.S.C. § 1406 and in the interest of justice, a transfer to the District of Nebraska is warranted because the District of Nebraska is a proper venue for both Defendants and Plaintiff may continue its claims against both.

 

IT IS THEREFORE ORDERED:

 

Defendant Affton Trucking Company’s Motion to Dismiss or Transfer (Doc. 20) is granted. This case is TRANSFERRED to the District of Nebraska. The Clerk is directed to transfer the case. Defendant’s Motion to Dismiss (Doc. 15) and Defendant’s Motion for Leave to File a Reply (Doc. 22) are DENIED AS MOOT.

 

All Citations

Slip Copy, 2017 WL 2466505

 

 

Footnotes

1

The Court notes that Plaintiff’s Motion to File an Amended Complaint (Doc. 17) states that “the correct identity of that Defendant is ‘Luckey Transfer, LLC.’ ” (Doc. 17 at 1).

2

Starr Indemnity is the insurer of Ravago and Channel Prime Alliance (“CPA”). CPA is a division of Ravago and both CPA and Ravago sell polymer resin and distribution. Starr satisfied the insurance claim made by CPA and Ravago and now seeks to inforce its subrogation rights against the parties responsible for the aforesaid loss. (Doc. 19 at 2).

3

After Defendant Affton filed its second Motion to Dismiss for Improper Venue, Plaintiff accused Defendant Affton of trying to “take a second bite at the apple” and “back-handedly attempting to file a sur-reply.” The Court would like to direct Plaintiff to Local Rule 7.1(E), which states:

“Whenever an amended pleading is filed, any motion attacking the original pleading will be deemed moot unless specifically revived by the moving party within 14 days after the amended pleading is served.”

Therefore, Defendant Affton was required to renew its motion to dismiss or the Court would find it moot. The Court would like to advise Plaintiff to consult the Local Rules before filing material with the Court.

4

The Court notes that Defendant Affton argues that because it is headquartered in St. Louis, Missouri, it is not a resident of Illinois. However, that disregards the definition of resident that the general statute provides. See 28 U.S.C. § 1391(c)–(d).

5

The Court notes that the time in which Plaintiff must file a claim is governed by the bill of lading. The Carmack Amendment only provides that “[a] carrier may not provide by rule, contract, or otherwise … a period of less than 2 years for bringing a civil action against it under this section.” 49 U.S.C. § 14706(e)(1). However, this limitations period is not a rigid standard, but rather sets forth a reasonable time limit for filing a claim. See Namatollahi v. Starving Students, Inc., No. 01–C–4310, 2002 U.S. Dist. LEXIS 16681, at *12–13 (N.D. Ill. Sept. 4, 2002) (citing Yamazen USA, Inc. v. Chi. & NW Transp. Co., 790 F.2d 621, 623 (7th Cir. 1986)). As the statute’s plain language indicates, the limitations are minimum time frames, not maximum. Id. Therefore, without the bills of lading, the Court cannot be certain of the timeliness of any future filing by Plaintiff; however, the Court notes that the alleged events took place more than two years ago, which would cause timeliness concerns if the bills of lading do not provide more time than the minimum years.

6

Although none of the parties requested a transfer to the District of Nebraska, a court, where venue is improper, may sua sponte transfer the case to a district where venue is proper, pursuant to 28 U.S.C. § 1406(a). See, e.g., Sasso USA, Inc. v. Zein Invs., LLC, No. 14–C–2057, 2014 U.S. Dist. LEXIS 135692, at *7 (N.D. Ill. Sept. 24, 2014) (“[w]here venue is improper, the court can sua sponte transfer the case to a district where venue is proper under 28 U.S.C. § 1406(a)”) (citations omitted); MB Fin. Bank, N.A. v. Walker, 741 F. Supp. 2d 912, 915 (N.D. Ill. 2010) (“moreover, a court may sua sponte transfer a case for improper venue”); Thomas v. Exxon Mobil Oil Corp., No. 2:06–CV–144–RL–PRC, 2007 U.S. Dist. LEXIS 9689, at *19–22 (N.D. Ind. Feb. 8, 2007) (collecting cases supporting a court’s ability sua sponte transfer a case under 28 U.S.C. § 1406(a)).

7

Both a corporation (Defendant Affton) and a limited liability company (Defendant Luckey) are considered a “person” under Nebraska law. Neb. Rev. Stat. § 25–535 (2016).

AIR EVAC EMS, INC., Plaintiff, v. TED CHEATHAM, et al., Defendants.

 

CIVIL ACTION NO. 2:16-cv-05224

 

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA, CHARLESTON DIVISION

 

2017 U.S. Dist. LEXIS 73478

 

 

May 15, 2017, Decided

May 15, 2017, Filed

 

 

COUNSEL:  [*1] For Air Evac EMS, Inc., Plaintiff: Carte P. Goodwin, LEAD ATTORNEY, FROST BROWN TODD, Charleston, WV; Charlotte Taylor, LEAD ATTORNEY, JONES DAY, Washington, DC; Joshua L. Fuchs, LEAD ATTORNEY, PRO HAC VICE, JONES DAY, Houston, TX; Meghan E. Greenfield, PRO HAC VICE, JONES DAY, Washington, DC.

 

For Ted Cheatham, in his capacity as Director of the Public Employees Insurance Agency, Mary Jane Pickens, Joshua Sword, James W. Dailey, II, Troy Giatras, Elaine A. Harris, William Ihlenfeld, Brian Donat, William Milam, and, Michael Smith, in their capacities as members of the Public Employees Insurance Agency’s Finance Board, Michael D. Riley, in his capacity as West Virginia Insurance Commissioner, Karen L. Bowling, in her capacity as the Secretary for the West Virginia Department of Health & Human Resources, Defendants: Katherine A. Schultz, Sean Michael Whelan, LEAD ATTORNEYS, OFFICE OF THE ATTORNEY GENERAL, Charleston, WV; Mary M. Downey, LEAD ATTORNEY, Charleston, WV.

 

JUDGES: THOMAS E. JOHNSTON, UNITED STATES DISTRICT JUDGE.

 

OPINION BY: THOMAS E. JOHNSTON

 

OPINION

 

MEMORANDUM OPINION AND ORDER

Pending before the Court is Defendants’ Motion to Dismiss the Amended Complaint. (ECF No. 36.) For the reasons discussed below, the [*2]  motion is DENIED.

 

1. BACKGROUND

Plaintiff Air Evac EMS, Inc. is a federally regulated air carrier providing air ambulance services in the State of West Virginia. Its air ambulances depart from a number of air bases throughout the State when requested by third-party medical professionals or first responders. Because air ambulance services are often provided in emergencies, Air Evac must accept patients without regard to insurance coverage or ability to pay. This includes patients covered by the Public Employees Insurance Agency (“PEIA”) insurance and West Virginia workers’ compensation insurance. This lawsuit concerns Air Evac’s ability to collect payment for services rendered to these patients.

On June 10, 2016, West Virginia House Bill 4315 went into effect. See W. Va. Code § 5-16-8a. Entitled “Air-ambulance fees,” the statute contains two subsections. The first applies to all air ambulance providers that do not contract with PEIA, including Air Evac. Id. § 5-16-8a(a). It caps the amount Air Evac can recover from PEIA for transporting patients covered by PEIA insurance, limiting Air Evac’s maximum reimbursement amount to the equivalent amount paid under the federal Medicare program. Id. Second, the statute eliminates [*3]  Air Evac’s ability to recover any payment from PEIA when it transports PEIA insurance plan participants who also participate in Air Evac’s subscription program. Id. § 5-16-8a(b).

A description of the subscription program is in order. Under the terms of Air Evac’s subscription program, a subscriber pays a fixed annual membership fee in exchange for the guarantee that if he or she requires air ambulance services during the year, and if Air Evac or its affiliates provide the requested transportation services, all air ambulance charges otherwise borne by the subscriber will be considered prepaid. (Am. Compl. ¶¶ 17-18.) Subscribers cannot call on Air Evac directly when services are needed, and there is no assurance of service. As in all cases, Air Evac has no way of knowing whether a patient is a participant in its subscription program prior to providing service. Thus, under the recently enacted statute, Air Evac must accept the membership fee as full payment when it provides emergency transportation services to a member covered by PEIA insurance. W. Va. Code § 5-16-8a(b). Air Evac cannot seek reimbursement of any kind from PEIA in this scenario. The annual membership fee under Air Evac’s program is less than $100. (Am. Compl. [*4]  ¶ 17.)

Aside from § 5-16-8a, the PEIA Finance Board has also capped the amount PEIA reimburses Air Evac for providing services to PEIA participants. See W. Va. R. tit. 151, Series 1, Attachment A. In the absence of the statute, the fee schedule would govern. (Am. Compl. ¶ 49.) Similarly, the Office of the Insurance Commissioner (“OIC”) has limited the amount it will reimburse for services rendered relating to injuries covered by West Virginia’s workers’ compensation scheme. The OIC is tasked with establishing and enforcing maximum reimbursement amounts to be paid to health care providers for service provided to workers’ compensation claimants. (Id. ¶ 4.) Under the OIC’s formula, Air Evac can recover only 135% of the reimbursement rate established by the federal Centers for Medicare and Medicaid Services. (Id. ¶ 58); W. Va. Code St. R. § 85-20-9. Air Evac has no contract with the workers’ compensation program.

The PEIA and OIC fee schedules have prevented Air Evac from recouping its full fees. Air Evac alleges that in 2015, it provided air ambulance services to PEIA insurance plan participants as well as to patients whose injuries were covered by workers’ compensation. Air Evac was paid a fraction of its billed charges for these [*5]  transports. (Am. Compl. ¶¶ 53, 60.)

This litigation relates to another West Virginia statutory provision, West Virginia Code § 16-29D-4. The law prevents health care providers, including Air Evac, from recovering an unpaid balance from PEIA members–a practice known as “balance billing.” (Id. ¶ 47.) The statute reads:

 

(a) Except in instances involving the delivery of health care services immediately needed to resolve an imminent life-threatening medical or surgical emergency, the agreement by a health care provider to deliver services to a beneficiary of any department or division of the state which participates in a plan or plans developed under section three of this article shall be considered to also include an agreement by that health care provider:

. . .

(2) To accept as payment in full for the delivery of such services the amount specified in plan or plans or as determined by the plan or plans. In such instances, the health care provider shall bill the division or department, or such other person specified in the plan or plans, directly for the services. The health care provider shall not bill the beneficiary or any other person on behalf of the beneficiary and, except for deductibles or other payments specified [*6]  in the applicable plan or plans, the beneficiary shall not be personally liable for any of the charges, including any balance claimed by the provider to be owed as being the difference between that provider’s charge or charges and the amount payable by the applicable department or divisions. . . .

 

 

4. Va. Code § 16-29D-4. Though the statute provides an exception for emergency medical services, Air Evac alleges that the State of West Virginia does not consider emergency transportation services to fall within the scope of that exception. Under the State’s interpretation, Air Evac may not “balance bill” PEIA patients, whether it rendered services in an emergency or not. Section 16-29D-4, like § 5-16-8a and the laws applicable to reimbursement under the workers’ compensation scheme, carries civil and criminal sanctions for violations of its terms. See W. Va. Code § 16-29D-8 (authorizing the Secretary of the DHHR to seek civil penalties from any provider who balances bills).

On June 9, 2016, the day before § 5-16-8a took effect, Air Evac filed suit against Ted Cheatham, the Director of the PEIA; Mary Jake Pickens, Joshua Sword, James W. Dailey II, Troy Giatras, Elaine A. Harris, William Ihlenfeld, Brian Donat, William Milam, and Michael Smith, members of the PEIA’s [*7]  Finance Board; and Michael D. Riley, West Virginia’s Insurance Commissioner. Air Evac later amended the Complaint to add Karen L. Bowling, then the Secretary for the West Virginia Department of Health and Human Resources (“DHHR”), as a defendant. (Am. Compl. ¶ 5.)

The Amended Complaint contains six claims for relief. Counts One and Two seek a declaration that the two subsections of § 5-16-8a are each preempted by the Airline Deregulation Act of 1978 (“ADA”) because they establish and limit the price of Air Evac’s services. The claims request injunctive relief against Defendants Cheatham and Riley. The third claim alleges that the regulation of Air Evac’s subscription agreements violates the Contracts Clause of the United States Constitution and seeks declaratory and injunctive relief. The fourth and fifth claims for relief similarly seek a declaration that the PEIA and OIC fee schedules are preempted by the ADA. The claims seek injunctive relief against the PEIA Finance Board (Count Four), and Defendant Riley (Count Five). The sixth claim for relief is pled in the alternative. In the event the Court does not invalidate § 5-16-8 and the fee schedules, Air Evac asks the Court to invalidate the prohibition on balancing billing as preempted by the ADA. [*8]

Defendants moved to dismiss the original Complaint on August 12, 2016.1 Air Evac filed an Amended Complaint on August 25, 2016, which Defendants answered with an Amended Motion to Dismiss on September 15, 2016. That motion has been fully briefed. On March 23, 2017, Air Evac filed a Notice of Supplemental Authority, to which Defendants responded on April 6, 2017.

 

1   In light of the filing of the Amended Complaint, the Court denied the original Motion to Dismiss as moot on October 17, 2016.

 

1. LEGAL STANDARDS

The Amended Motion to Dismiss implicates different standards of review. A motion to dismiss based on lack of subject matter jurisdiction falls under Federal Rule of Civil Procedure 12(b)(1), while a motion to dismiss for failure to state a claim is governed by Federal Rule of Civil Procedure 12(b)(6).

 

1. Rule 12(b)(1)

It is axiomatic that a court must find it has jurisdiction before determining the validity of any claims brought before it. Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999). A motion to dismiss an action under Rule 12(b)(1) raises the question of the federal court’s subject matter jurisdiction over the action. “Challenges to jurisdiction under Rule 12(b)(1) may be raised in two distinct ways: ‘facial attacks’ and ‘factual attacks.'” Adkins v. United States, 923 F. Supp. 2d 853, 856 (S.D. W. Va. 2013) (citing Thigpen v. United States, 800 F.2d 393, 401 n. 15 (4th Cir. 1986)). A “facial attack” questions whether “the allegations of the complaint are facially []sufficient to sustain the court’s jurisdiction.” Thigpen, 800 F.2d at 401 n. 15. In such a case, the court must accept the allegations as true and proceed to consider [*9]  the motion as it would a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Id. Defendants’ ripeness and sovereign immunity defenses are facial attacks to subject matter jurisdiction. “The burden of showing the existence of subject matter jurisdiction rests on the plaintiff.” Adkins, 923 F. Supp. 2d at 857 (citation omitted).

 

1. Rule 12(b)(6)

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a civil complaint. See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). “[I]t does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citation omitted). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)).

 

III. DISCUSSION

Defendants advance four main arguments in support of their Amended Motion to Dismiss. They contend, first, that Air Evac’s claims are not ripe for disposition and second, that the Eleventh Amendment bars the suit. The bulk of their brief centers on the third argument, namely that the ADA does not preempt the state statutes and regulations in question. Finally, Defendant assert that the Air Evac’s Contracts Clause challenge fails to state a claim because the laws advance a significant and legitimate public purpose enforced [*10]  by reasonable and necessary means.2

 

2   As should be immediately apparent, Defendants’ preemption and Contracts Clause arguments ask for judicial resolution of the ultimate legal questions at issue in this declaratory judgment action. The Court is unable to definitively resolve these questions on a motion meant merely to test the sufficiency of a plaintiff’s pleading.

 

1. Ripeness

The ripeness doctrine “prevent[s] the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements.” Abbott Labs. v. Gardner, 387 U.S. 136, 148, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967). Article III limits federal jurisdiction to live “cases and controversies,” Allen v. Wright, 468 U.S. 737, 750, 104 S. Ct. 3315, 82 L. Ed. 2d 556 (1984), and the doctrine preserves this requirement by “preventing judicial consideration of issues until a controversy is presented in ‘clean-cut and concrete form.'” Miller v. Brown, 462 F.3d 312, 318-19 (4th Cir. 2006) (quoting Rescue Army v. Mun. Court of L.A., 331 U.S. 549, 584, 67 S. Ct. 1409, 91 L. Ed. 1666 (1947)). Thus, at its essence, ripeness is a question of timing. Blanchette v. Connecticut Gen. Ins. Corps., 419 U.S. 801, 95 S. Ct. 9,  42 L. Ed. 2d 32 (1974). Here, the parties dispute whether Air Evac faces a genuine threat of sanctions under § 5-16-8a so as to create a matter ripe for pre-enforcement review.

To determine whether a case is ripe for pre-enforcement review, courts “balance the fitness of the issues for judicial decision with the hardship to the parties of withholding court consideration.” Miller, 462 F.3d at 319 (4th Cir. 2006) (citation omitted); see Nat’l Park Hosp. Ass’n v. Dep’t of the Interior, 538 U.S. 803, 808, 123 S. Ct. 2026, 155 L. Ed. 2d 1017 (2003) (setting forth fitness and hardship as the two predominant factors in determining ripeness). With respect to fitness, a claim is unfit for adjudication where the possibility of injury is remote and the issues presented abstract. Texas v. United States, 523 U.S. 296, 301, 118 S. Ct. 1257, 140 L. Ed. 2d 406 (1998) (“A claim is not ripe . . . if it rests upon ‘contingent future events that may not occur as anticipated, or indeed [*11]  may not occur at all.'” (quoting Thomas v. Union Carbide Agric. Products Co., 473 U.S. 568, 580-81, 105 S. Ct. 3325, 87 L. Ed. 2d 409 (1985))); Miller, 462 F.3d at 319 (to be ripe, an action in controversy must not be “dependent on future uncertainties.”).

A claim that presents purely legal issues is more likely to be found ripe. Pacific Gas and Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190, 201, 103 S. Ct. 1713, 75 L. Ed. 2d 752 (1983) (questions of preemption are “predominantly legal” and thus more appropriate for pre-enforcement adjudication); see also Susan B. Anthony List v. Driehaus, 134 S. Ct. 2334, 2347, 189 L. Ed. 2d 246 (2014) (finding the “fitness” factor “easily satisfied” where petitioners’ preenforcement challenge presented a purely legal issue that would not be clarified by further factual development). Air Evac attacks § 5-16-8a on grounds that the statute is preempted by the ADA and violates the Contracts Clause. Both arguments are purely legal in nature, a point Defendants do not dispute. Nor can the Court find that the issues Air Evac presents are in any way dependent on future uncertainties. HB 4315 is now law in West Virginia; its mandates have present and immediate effect.

Defendants center their ripeness challenge on the hardship prong of the analysis. With regard to interference with the subscription agreements, Defendants argue that Air Evac may never be harmed by the statutory requirement to treat a PEIA member’s subscription fee as payment in full. The possibility of injury is too remote, Defendants [*12]  reason, because the statute would only apply if a PEIA member has a subscription contract with Air Evac and Air Evac provides air ambulance services on the member’s behalf. Defendants gloss over this crucial fact: Air Evac does not know of a patient’s insured status, nor of his or her membership in Air Evac’s subscription program, prior to rendering service. In any event, Air Evac could not refuse service on this basis. Subsection (b) of § 5-16-8a requires Air Evac to factor into its business plan now the possibility that it will recover no more than a nominal membership fee when transporting members insured through PEIA. Air Evac must make the same calculus to accommodate West Virginia law’s prohibition of balancing billing. Air Evac has no advance warning and no means to assess the relevant financial risks before being called upon to provide service.

The Fourth Circuit has found a pre-enforcement challenge is ripe for adjudication under similar circumstances. Retail Indus. Leaders Ass’n v. Fielder, 475 F.3d 180 (4th Cir. 2007). In Retail Industry, the Fourth Circuit considered a legal challenge brought by retailer giant Wal-Mart to a Maryland healthcare spending law. The law required Wal-Mart to spend a specified percentage of profits on employee healthcare or else pay [*13]  the difference to the State. In assessing ripeness, the Fourth Circuit noted that although Wal-Mart’s injury remained somewhat speculative–a remote possibility existed that Wal-Mart’s expenditures would exceed the minimum threshold–Wal-Mart as “very likely to incur liability to the State under the Act’s minimum spending provision.” Id. at 188. Indeed, even if Wal-Mart never suffered actual injury, the retailer’s claims were ripe because “it must alter its internal accounting procedures and healthcare spending now to comply with the Act.” Id.

As in Retail Industries, the application of § 5-16-8a to Air Evac is certain, as is Air Evac’s inability to escape liability under the statute unless it complies with the altered billing requirements now. This is a present, concrete hardship that makes Air Evac’s pre-enforcement challenge appropriate for judicial resolution. The Court rejects Defendants’ ripeness challenge.

 

1. Eleventh Amendment

Next, Defendants claim Eleventh Amendment immunity. At issue is whether the Ex parte Young exception to sovereign immunity applies in this case.

“Sovereign immunity is the privilege of the sovereign not to be sued without its consent.” Virginia Office for Prot. and Advocacy v. Stewart, 563 U.S. 247, 253, 131 S. Ct. 1632, 179 L. Ed. 2d 675 (2011). Absent waiver or Congressional abrogation, the Eleventh Amendment protects a State from private [*14]  suit in federal court. See id. Ex parte Young serves as a limitation on the sovereign-immunity principle. 209 U.S. 123, 28 S. Ct. 441, 52 L. Ed. 714 (1908). The case permits suits against state officers for prospective relief where there is an ongoing violation of federal law. Id. at 159-60. The Supreme Court summarized the impact of Ex parte Young on Eleventh Amendment immunity as follows:

 

The Eleventh Amendment confirms the sovereign status of the States by shielding them from suits by individuals absent their consent. To ensure the enforcement of federal law, however, the Eleventh Amendment permits suits for prospective injunctive relief against state officials acting in violation of federal law. This standard allows courts to order prospective relief, as well as measures ancillary to appropriate prospective relief. Federal courts may not award retrospective relief, for instance, money damages or its equivalent, if the State invokes its immunity.

 

 

Frew ex rel. Frew v. Hawkins, 540 U.S. 431, 437, 124 S. Ct. 899, 157 L. Ed. 2d 855 (2004) (internal citations omitted). The Supreme Court has repeatedly emphasized that Ex parte Young requires only a “straightforward inquiry into whether the complaint alleges an ongoing violation of federal law and seeks relief properly characterized as prospective.” Verizon Maryland, Inc. v. Public Service Commission of Maryland, 535 U.S. 635, 645, 122 S. Ct. 1753, 152 L. Ed. 2d 871 (2002) (quoting Idaho v. Coeur d’Alene Tribe of Idaho, 521 U.S. 261, 296, 117 S. Ct. 2028, 138 L. Ed. 2d 438 (1997) (internal quotation marks omitted)).

Defendants submit three arguments [*15]  against Ex parte Young’s application in this case. They submit, first, that Air Evac has not alleged an ongoing violation of federal law with regard to the application of § 5-16-8a because Defendants have not threatened an enforcement action against Air Evac. Second, they claim that Air Evac’s prayer for declaratory relief is not prospective in nature because it seeks a declaration as to the past enforcement of the PEIA and OIC fee schedules. Third, Defendant take the position that Air Evac’s request for costs, fees, and expenses is barred by the Eleventh Amendment, particularly as the request relates to PEIA and the OIC’s past application of their fee schedules.

With regard to the first of these arguments, the Court begins by noting, “where prospective relief is sought against individual state officers in a federal forum based on a federal right, the Eleventh Amendment, in most cases, is not a bar.” Coeur d’Alene Tribe of Idaho, 521 U.S. at 276-77 (citation omitted). Air Evac’s prayer for injunctive relief against state officials–seeking to constrain them from enforcing state laws and regulation in contravention of federal law–appears to satisfy the “straightforward inquiry” endorsed by the Supreme Court. Verizon, 535 U.S. at 645. Even so, Defendants contend that Air Evac cannot avail itself [*16]  of the Ex parte Young exception because without alleging a threat of enforcement, Air Evac cannot show an “ongoing violation of federal law.” (Defs.’ Reply at 6.)

Defendants take too narrow a view of enforcement. “The requirement that the violation of federal law be ongoing is satisfied when a state officer’s enforcement of an allegedly unconstitutional state law is threatened, even if the threat is not yet imminent.” Waste Mgmt. Holdings, Inc. v. Gilmore, 252 F.3d 316, 330 (4th Cir. 2001) (citing Summit Med. Assocs., P.C. v. Pryor, 180 F.3d 1326, 1338-41 (11th Cir. 1999)). In Waste Management, the Fourth Circuit considered a lawsuit brought by Virginia landfill operators and transporters of municipal solid waste challenging the implementation of certain Virginia statutes. Collectively, the statutes capped the amount of municipal solid waste accepted by Virginia landfills and restricted the use of barges and trucks to transport the waste within that State. The restriction on waste transportation required the responsible utility board to implement regulations governing the transport of municipal solid waste in accordance with the statute. The plaintiffs brought suit following the enactment of the statutes in issue, challenging their validity under the dormant Commerce, Contract, and Equal Protection Clauses of the United States Constitution. Id. at 324. The State defendants raised an Eleventh Amendment challenge [*17]  to the plaintiffs’ action. Though there had been no threatened or actual proceeding to enforce the state laws against the plaintiffs, the Fourth Circuit focused on the relief sought in the plaintiff’s pleading. The plaintiffs sought injunctive relief against state officials, at least some of whom bore direct enforcement responsibility for the challenged statutes. This was sufficient for the Fourth Circuit to find, “The case before us is precisely the type of case to which the Ex parte Young doctrine applies.” Id. at 330.

As the Eleventh Circuit reasoned in Summit, a case cited favorably by the Fourth Circuit in Waste Management, the ongoing violation “requirement does not mean that the enforcement of the allegedly unconstitutional state statute actually must be in progress against the particular plaintiffs initiating suit.” 180 F.3d at 1338. The requirement merely serves to distinguish “between cases where the relief sought is prospective in nature . . . and cases where relief is retrospective.” Id. Nor can Defendants successfully argue that the threat of enforcement is not “imminent” because Air Evac has so far remained in compliance with the law. “The Ex parte Young doctrine does not demand that a plaintiff [*18]  first risk the sanctions of imminent prosecution or enforcement in order to test the validity of a state law.” Id.; see Waste Mgmt. Holdings, 252 F.3d at 330 (holding that a pre-enforcement challenge to Virginia law restricting the transportation of municipal solid waste was “precisely the type of case to which the Ex parte Young doctrine applies,” even without evidence that the State had threatened to enforce the laws by actual proceeding).

Rather, enforcement can be shown through a state-law scheme that imposes a “compulsion or constraint” in contravention of federal law. Air Evac EMS, Inc. v. Texas, 851 F.3d 507, 519 (5th Cir. 2017). In Air Evac EMS v. Texas, the Fifth Circuit considered two “critical features” of the Texas workers’ compensation framework similar to those at issue here: “a maximum-reimbursement system” and “a prohibition on ‘balance-billing.'” Id. As it does in this case, Air Evac challenged the Texas law as preempted by the ADA or, in the alternative, sought declaratory and injunctive relief against the balance-billing prohibition. The Texas district court dismissed the case on Eleventh Amendment grounds, reasoning that Air Evac’s claims failed under Ex parte Young because the air ambulance provider made no showing that “an enforcement proceeding concerning the balance-billing [*19]  prohibition is imminent, threatened, or even intended.” Air Evac EMS, Inc. v. Texas, 2016 U.S. Dist. LEXIS 106460, 2016 WL 4259552, at *8 (W.D. Tex. Aug. 11, 2016). The district court did not consider whether the maximum-reimbursement provision constituted “enforcement” because the Texas law contained an atypical feature whereby Air Evac did not directly submit its bill for services to the Texas Workers’ Compensation Commission. Instead, “Air Evac and other health care service providers submit their billed charges to the workers’ compensation insurers, who then reimburse the providers in accord with the maximum allowable reimbursement set by the Commission.” 2016 U.S. Dist. LEXIS 106460, [WL] at *8. The district court reasoned that the reimbursement limitations could not be “enforced” against Air Evac because “Air Evac is not the actor constrained by them.” Id.

It was on this basis that the Fifth Circuit reversed. The appellate court held that direct enforcement, such as where an attorney general threatens prosecution, is not required to satisfy Ex parte Young. Air Evac EMS, 851 F.3d at 519. It was sufficient that the State constrained Air Evac’s ability to collect more than the established reimbursement rate under the Texas workers’ compensation scheme, even if indirectly. The Fifth Circuit also took note of a feature of that scheme which allowed Texas healthcare providers [*20]  to dispute the rate of payment within the Texas Division of Workers’ Compensation. “Between their rate-setting authority and role in arbitrating fee disputes through the administrative process,” the Fifth Circuit held, “state defendants effectively ensure the maximum-reimbursement scheme is enforced from start to finish.” Id. It was irrelevant that Air Evac occupied a different place within that scheme. The Fifth Circuit observed that “state defendants obviously constrain Air Evac’s ability to collect more than the maximum-reimbursement rate under the [workers’ compensation] system.” Id. (emphasis in original).

Air Evac’s recent Notice of Supplemental Authority is based on the favorable ruling it won in the Fifth Circuit case. Defendants respond that the Texas scheme is too dissimilar to West Virginia’s to justify the adoption of the Fifth Circuit’s holding. In the Court’s view, however, the dissimilarities make the Ex parte Young exception more applicable, not less. Defendants point out that unlike in the Texas workers’ compensation scheme, the fee schedules established by PEIA and the OIC do not constrain or limit the amount private health insurance providers may pay to compensate [*21]  air ambulance carriers for transportation of their insured. Nor is PEIA or the OIC authorized to act as the arbiter of disputes relating to the rates that private health benefit and insurance providers pay to compensate air ambulances like Air Evac. These do indeed represent factual differences between Texas workers’ compensation laws and West Virginia’s. The Fifth Circuit underscored these facts, along with the pervasive nature of Texas’s scheme, to support its conclusion that the State exercised coercive authority over Air Evac even though Air Evac was not directly targeted by the scheme. As the Court understands the West Virginia regulations, Air Evac submits its request for compensation directly to PEIA or the OIC, as the case may be. It is directly constrained by the State’s caps on compensation. Though the Texas scheme may be more pervasive, that factor is less important here because the laws Air Evac challenges here are directly enforceable against it.

Defendants’ attempt to distinguish the Fifth Circuit case by arguing that the OIC and PEIA are not authorized to enforce their fees schedules through punitive measures is disingenuous at best. See, e.g., W. Va. Code § 61-3-24g(1) (punishing as a felony [*22]  the knowing and willful making of charges in excess of those the OIC fee schedule allows); § 16-29D-8 (authorizing the Secretary of the DHHR to penalize health care providers who balance-bill with civil and criminal sanctions). In any event, Ex parte Young does not apply only to those state laws enforceable through punitive sanctions. See Air Evac EMS, 851 F.3d at 519 (threat of civil and criminal prosecution not required for Ex parte Young to apply); Waste Mgmt., 252 F.3d at 329-30 (finding plaintiffs satisfied Ex parte Young without making mention of any penalty, criminal or civil, that could be assessed for violation of the relevant waste management laws). Defendants threaten to enforce the maximum-reimbursement scheme by suing Air Evac. (Defs’ Mem. in Support Mot. to Dismiss 17-18.) Threat of litigation is another method of enforcement. West Virginia has constrained Air Evac’s ability to recoup its full charges in a number of different ways, and Air Evac’s suit to enjoin State officials from enforcing these restrictions satisfies the requirements of Ex parte Young.

With that, the Court considers Defendants’ concern about Air Evac seeking a declaration about past agency action. The Fourth Circuit rejected a similar argument in South Carolina Wildlife Federation v. Limehouse, 549 F.3d 324 (4th Cir. 2008). There, an environmental [*23]  group brought suit against several South Carolina state agencies alleging violations of federal environmental laws in relation to the proposed construction of a bridge connector. Federal law required South Carolina to submit an environmental impact statement prior to beginning construction addressing the expected adverse environmental impact of the project. South Carolina submitted the statement as required and won the approval of federal authorities to initiate the construction of the bridge. The environmental group sued, seeking a declaration that the environmental impact statement and accompanying record of decision were improperly issued and requesting an injunction against future construction pending compliance with federal law. Id. at 328.

The Fourth Circuit held that case was a valid Ex parte Young action. Id. The court was not troubled by the fact that the environmental group sought a declaration concerning past conduct, that is, the approval of the environmental impact statement. After all, “[t]he declaratory relief SCWF seeks is simply the determination that past actions by the Defendants did not comply with [federal law].” Id. at 332. Such a declaration, if awarded, “adds no additional burden on [*24]  the Defendants other than the injunctive relief, and therefore does not threaten the sovereignty of the state.” Id. Such is the case here. Air Evac seeks a declaration that past conduct violated federal law and asks the Court to enjoin future violations. That relief would not impose any additional obligations on the State and does not run afoul of the Eleventh Amendment. See also Verizon, 535 U.S. at 646 (action seeking an injunction and declaration of past conduct could be brought under Ex parte Young because the prayer for declaratory relief added nothing in terms of liability exposure to the State).

This brings the Court to the availability of attorneys’ fees. The Eleventh Amendment does not preclude an award of attorneys’ fees against a state official in his or her official capacity. See Hutto v. Finney, 437 U.S. 678, 699-700, 98 S. Ct. 2565, 57 L. Ed. 2d 522 (1978). While fee shifting is impermissible “[a]bsent explicit authorization of Congress,” In re Crescent City Estates, LLC, 588 F.3d 822, 826 (4th Cir. 2009), a request for fees and costs is not an Eleventh Amendment issue. Missouri v. Jenkins ex rel. Agyei, 491 U.S. 274, 284, 109 S. Ct. 2463, 105 L. Ed. 2d 229 (1989) (“[T]he Eleventh Amendment has no application to an awared of attorney’s fees, ancillary to a grant of prospective relief, against a State.”). In all respects, Defendants’ motion to dismiss on Eleventh Amendment grounds is therefore DENIED.

 

1. Preemption under the ADA

The United States Constitution’s Supremacy Clause makes federal law “the supreme law of the land . . . anything in the Constitution or laws of any State [*25]  to the contrary notwithstanding.” U.S. Const. art. VI, cl. 2. “As a result, federal statutes and regulations properly enacted and promulgated can nullify conflicting state or local actions.” Coll. Loan Corp. v. SLM Corp., 396 F.3d 588, 595 (4th Cir. 2005). Such state or local laws may be preempted under the Supremacy Clause in three ways–by express preemption, field preemption, or conflict preemption. See Watkins v. Wells Fargo Home Mortg., 631 F.Supp.2d 776, 783 (S.D. W. Va. 2008) (citing Anderson v. Sara Lee Corp., 508 F.3d 181, 191 (4th Cir. 2007) (internal citation omitted)). At issue in this case is express preemption, which occurs when “Congress expressly declares its intent to preempt state law.” Pinney v. Nokia, Inc., 402 F.3d 430, 453 (4th Cir. 2005). Focusing on the plain wording of the statute is the best way to deduce Congress’ preemptive intent. Chamber of Commerce of United States v. Whiting, 563 U.S. 582, 131 S. Ct. 1968, 1977, 179 L. Ed. 2d 1031 (2011) (quoting CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664, 113 S. Ct. 1732, 123 L. Ed. 2d 387 (1993)).

The preemptive provision of the ADA reads:

 

Except as provided in this subsection, a State, political subdivision of a State, or political authority of at least 2 States 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 an air carrier that may provide air transportation under this subpart.

 

 

49 U.S.C. § 41713(b). The ADA defines “States” as “a State, the District of Columbia, and a territory of possession of the United States.” § 41713(a). Air Evac alleges that it is an “air carrier” covered by the ADA, (Am. Compl. § 19), a fact Defendants do not dispute.

Defendants [*26]  raise a three-fold argument to support their contention that the ADA’s preemption provision does not apply in this case. They begin by asserting that the State’s regulation of health care benefits on behalf of PEIA and workers’ compensation insured is a traditional state function not captured within the ADA’s preemptive scope. Next, Defendants contend that West Virginia is acting as a “market participant” contracting for health care services, not a market regulator. They conclude with the argument that preemption under the ADA “is contrary to the powers reserved to the State by the [Tenth] Amendment of the United States Constitution.” (Defs’ Mem. at 21.) The Court considers each argument in the order presented, mindful that issues of fact preclude ultimate resolution of the “market participant” question now.

 

1. Traditional State Function

Defendants correctly note that the preemption inquiry begins “with the assumption that the historic police powers of the States are not to be superseded by [federal law] unless that was the clear and manifest purpose of Congress.” Altria Group, Inc. v. Good, 555 U.S. 70, 77, 129 S. Ct. 538, 172 L. Ed. 2d 398 (2008) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S. Ct. 1146, 91 L. Ed. 1447 (1947)). The assumption is even stronger when Congress legislates in a field of traditional state regulation. Id. (citing [*27]  Medtronic, Inc. v. Lohr, 518 U.S. 470, 485, 116 S. Ct. 2240, 135 L. Ed. 2d 700 (1996)). Thus, the Supreme Court instructs “when the text of a pre-emption clause is susceptible of more than one plausible reading, courts ordinarily ‘accept the reading that disfavors pre-emption.'” Id. (quoting Bates v. Dow Agrosciences, LLC, 544 U.S. 431, 449, 125 S. Ct. 1788, 161 L. Ed. 2d 687 (2005)). Yet when Congress has made plain its desire to preempt state law, it matters not whether it legislates in a field typically occupied by the States. See Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 151, 121 S. Ct. 1322, 149 L. Ed. 2d 264 (2001) (“There is indeed a presumption against pre-emption in areas of traditional state regulation . . . [b]ut that presumption can be overcome where, as here, Congress has made clear its desire for pre-emption.” (citation omitted)). In such a case, the Supreme Court “ha[s] not hesitated” for find state laws falling within the scope of the federal law preempted.” Id.

In the context of the ADA, Congress did just that. Reviewing the preemption provision, the Supreme Court has remarked that the statute “express[es] a broad pre-emptive purpose,” Morales, 504 U.S. at 383, and thus “State enforcement actions having a connection with, or reference to, airline ‘rates, routes, or services’ are pre-empted.” Id. at 384. The Supreme Court reaffirmed Morales’ holding in Rowe v. New Hampshire Motor Transport Association, 552 U.S. 364, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008). Rowe considered the question of preemption in the context of the Federal Aviation Administration Authorization Act (“FAAAA”). The [*28]  state law at issue originated from Maine, which enacted a law forbidding licensed tobacco retailers from employing a “delivery service” unless the service followed particular delivery procedures.

The Supreme Court observed that the FAAAA contains a broad preemption provision “borrowed from the [ADA].” Id. at 368. The Maine law ran into conflict with the FAAAA by substituting governmental edict for “competitive market forces.” Id. at 372 (citing Morales, 504 U.S. at 378). Maine argued, as Defendants do here, that the FAAAA did not preempt the State’s efforts to legislate in the field of public health–an area that is, without question, typically reserved to the states. The Court rejected the argument, noting that the FAAAA’s list of exceptions to preemption “says nothing about a public health exception.” Id. at 997. The holding recognizes the principle that “[h]owever traditional the area, a state law may simultaneously interfere with an express federal policy,” and so be preempted. DiFiore v. Am. Airlines, Inc., 646 F.3d 81, 86 (1st Cir. 2011).

The ADA’s preemption provision has been interpreted in like manner, with at least one federal district court recently holding that state regulations limiting the amount air ambulance providers can recover for their services are preempted by the ADA. Valley Med Flight, Inc. v. Dwelle, 171 F.Supp.3d 930, 942 (D. N.D. 2016) (“The clear intent [*29]  of the legislation is to prevent air ambulance service providers, who are not participating providers, from imposing exorbitant fees on patients who wrongly assume their insurance will cover the charges and are not in a position to discover otherwise. This type of consumer protection law is precisely the type of law Congress sought to preempt when it enacted the ADA.” (citation omitted)). The Court need not adopt this conclusion to resolve the pending motion to dismiss. A finding that Defendants do not escape the ADA’s reach because the legislation was enacted with the aim of protecting public health suffices. On this basis, the Amended Motion to Dismiss is DENIED.

 

1. Market Participant Doctrine

Second, Defendants assert that the State of West Virginia enacted the laws at issue as a “market participant” contracting for health care services, not as a market regulator. The gist of the argument is that the restrictions on reimbursement at issue here do not carry “the force and effect of law.” (Def. Br. at 17.) Rather, say Defendants, the restrictions arise from the State’s own contract-based participation in the healthcare market–a sphere free from the preemptive power of the ADA.

The parties’ [*30]  debate center on American Trucking Associations v. City of Los Angeles, 133 S. Ct. 2096, 186 L. Ed. 2d 177 (2013). In American Trucking, the Supreme Court considered the preemptive effect of the FAAAA over certain contractual requirements imposed on trucking companies by the Port of Los Angeles (“the Port”). The Port contracted with trucking companies–federally licensed motor carriers–to move cargo into and out of the Port. The contracts included two standard terms at issue in the case. The contracts obligated the trucking companies to affix a placard on each truck with a phone number for reporting concerns and required the submission of a plan listing off-street parking locations for each truck. The trucking companies challenged these contractual terms as preempted by the FAAAA.

As previously noted, the preemption provision of the FAAAA is identical to the ADA’s. The former statute preempts a state “law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). In American Trucking, the parties agreed that the regulation at issue met the “related to” prong of the preemption statute. 133 S. Ct. at 2102. (“All parties agree that the Port’s placard and parking requirements relate [*31]  to a motor carrier’s price, route, or service with respect to transporting property.” ). Similarly, Defendants in this case concede that the laws at issue here–the statutory caps and fee schedules limiting Air Evac’s reimbursement; the prohibitions on balance-billing; and the alteration of Air Evac’s membership contracts–are “related to a price . . . of an air carrier.” 49 U.S.C. § 41713(b)(1). The question here, as in American Trucking, is whether the regulations “hav[e] the force and effect of law.” 133 S. Ct. at 2102.

In answering that question, the Supreme Court noted that the FAAAA preemption provision “draws a rough line between a government’s exercise of regulatory authority and its own contract-based participation in a market.” Id. Stated differently, the “force and effect of law” provision excludes from the statute’s preemptive scope contractual arrangements made by a State when it acts as a market participant rather than a market regulator. Id. The existence of a contractual relationship between the Port and trucking companies was not conclusive in determining whether the Port acted in a regulatory as opposed to a proprietary role. Id. at 2102-03. The Port “exercised classic regulatory authority” by first, requiring trucking companies [*32]  to enter into the contracts in order to provide drayage services, and second, imposing criminal penalties on terminal operators for granting port access to any unregistered truck. Id. at 2103. “So the contract here functions,” the Court reasoned, “as part and parcel of a governmental program wielding coercive power over private parties, backed by the threat of criminal punishment.” Id. at 2103. The Court continued:

 

The Port here has not acted as a private party, contracting in a way that the owner of an ordinary commercial enterprise could mimic. Rather, it has forced terminal operators–and through them, trucking companies–to alter their conduct by implementing a criminal prohibition punishable by time in prison. In some cases, the question whether governmental action has the force of law may pose difficulties; the line between regulatory and proprietary conduct has soft edges. But this case takes us nowhere near those uncertain boundaries.

 

 

Id.

Defendants try their best to distinguish American Trucking on the basis that the laws at issue here–the statutory caps and fee schedules limiting Air Evac’s reimbursement, the balance-billing prohibitions, and the alteration of the membership contracts–are not enforced [*33]  through the State’s classic regulatory authority. Unlike the Port Authority in American Trucking, which coerced contractual concessions through threat of criminal sanctions, Defendants contend that “the amount PEIA and the OIC have agreed to reimburse Air Evac for emergency air-evacuation services is not enforced by the coercive mechanisms of the government.” (Defs.’ Mem. at 17.) This is a dubious argument for several reasons, the most obvious of which is the fact that Air Evac has no contract with PEIA or the workers’ compensation insurance program. Air Evac has not agreed to be bound by the State’s regulations, nor can Air Evac opt out of the fee restrictions by declining to transport patients insured by PEIA and workers’ compensation, and Air Evac alleges that it must provide services to all patients in need of emergency air ambulance services, regardless of ability to pay. In other words, even if Air Evac had means to discover a patient’s insured status prior to rendering service, state regulations prohibit it from refusing service on that basis. Because the State cannot manipulate Air Evac’s fees by contract, it appears to have resorted to the regulatory process as a means to [*34]  do so.

Further, as Air Evac points out, states do not typically enact laws without securing compliance through exercise of their coercive power. The laws at issue are replete with civil and criminal penalties.3 West Virginia Code § 16-29D-4(a) is just one example. Section 16-29D-4(a) forbids health care providers like Air Evac to “balance bill” a patient covered by PEIA or Workers’ Compensation. The statute creates an exception for “the delivery of health care services” in an “imminent life-threatening medical or surgical emergency.” Id. A health care entity violating the balancing billing provision is subject to civil penalties of up to $25,000. W. Va. Code § 16-29D-8. Defendants argue these penalties do not apply to Air Evac because provides services almost exclusively in emergency situations. Air Evac alleges that West Virginia has previously taken the position that the balancing billing exclusion applies to all of its air ambulance services. (Am. Compl. ¶ 47.) The Court must accept this allegation as true. Ashcroft, 556 U.S. at 678.

 

3   See W. Va. Code § 5-16-12(a), (c), (d) (imposing civil and criminal liability for knowingly securing or attempting to secure benefits above the statutory cap, willfully overcharging for services, causing a loss to or overpayment from PEIA, or knowingly attempting to secure greater benefits through willful misrepresentation of any material fact); § 16-29D-8 (payment of fines for balance-billing); § 23-1-19(a) (providing for the imposition of fines against any person who willfully obtains or attempts to obtain greater benefits than those provided under the workers’ compensation laws and regulations); § 61-3-24g(1) (punishing as a felony the knowing and willful charging of amounts above the maximum amounts set forth by the OIC fee schedule).

Accordingly, the Court finds that Air Evac plausibly alleges facts sufficient to support its preemption claims. The Court affirms the ADA’s application to the various laws and regulations identified in the Amended Complaint and finds that Air Evac [*35]  plausibly alleges a scenario where the State is acting as a market regulator, not a market participant. It could be that over the course of discovery, Defendants produce evidence that an air ambulance would not be held civilly or criminally liable for violations of these laws under any scenario. Clearly, the “market participant” question will benefit from factual development that is not presently available to the Court. This matter is better reserved for summary judgment. For present purposes, the Court FINDS that Air Evac plausibly alleges grounds giving rise to preemption under the ADA.

 

iii. Tenth Amendment

Next, Defendants move to dismiss on Tenth Amendment grounds. “Assuming this Court finds that West Virginia’s actions are preempted under the ADA,” they write, “this Court should find that Congress exceeded its authority because such preemption is contrary to the powers reserved to the State by the Tenth Amendment of the United States Constitution.” (Defs.’ Mem. in Support Mot. to Dismiss 21.) Defendants have moved to dismiss for failure to state a claim, not for summary judgment. The question of whether the ADA preempts West Virginia law is the ultimate question at issue in the Amended Complaint, and not appropriate for resolution on a motion to dismiss. The [*36]  Court has not resolved that question in this Memorandum Opinion. This argument is not directed to any deficiency in Air Evac’s pleading and the Court DENIES the Amended Motion to Dismiss to the extent premised on the Tenth Amendment. If Defendants wish to lodge a Tenth Amendment challenge to the ADA, they are at liberty to do so by summary judgment motion.

 

1. Contracts Clause

Finally, Defendants argue that Count Three fails to state a claim because § 5-16-8a(b) does not violate the Contracts Clause.

The Contracts Clause dictates, “No State shall . . . pass any . . . Law impairing the Obligation of Contracts.” U.S. Const. art. 1, §10, cl. 1. The Clause “is not interpreted ‘absolutely to prohibit the impairment of . . . government contracts.'” Catawba Indian Tribe v. City of Rock Hill, 501 F.3d 368, 371 (4th Cir. 2007) (quoting Balt. Teachers Union v. Mayor and City Council of Balt., 6 F.3d 1012, 1014 (4th Cir. 1993)). Rather, the “claimant must show (1) contractual impairment, (2) that is substantial, and (3) not a legitimate exercise of state power.” Id. (citing City of Charleston v. Pub. Serv. Comm’n, 57 F.3d 385, 391 (4th Cir. 1995)).

This three-party inquiry is necessarily fact-intensive and does not lend itself well to resolution on a motion to dismiss. On the third prong of the test, for example, Defendants contend that the enactment of HB 4315 was reasonable in relation to an important public purpose. The Court has no evidence by which to assess the merits of this bald assertion. Even if Defendants had provided evidentiary support for their arguments, [*37]  the Court could not consider it without converting the motion to dismiss into a motion for summary judgment. The Court declines Defendants’ invitation to adjudicate Air Evac’s Contracts Clause claim at the motion to dismiss stage of the proceedings. The motion to dismiss the Contracts Clause claim is DENIED.

 

1. CONCLUSION

For the foregoing reasons, the Court DENIES Defendants’ Amended Motion to Dismiss. (ECF No. 37.)

IT IS SO ORDERED.

The Court DIRECTS the Clerk to send a copy of this Order to counsel of record and any unrepresented party.

ENTER: May 15, 2017

/s/ Thomas E. Johnston

THOMAS E. JOHNSTON

UNITED STATES DISTRICT JUDGE