ICU Investigations, Inc. v. Simonik Moving and Storage, Inc.

Superior Court of New Jersey,

Appellate Division.

ICU INVESTIGATIONS, INC., Plaintiff-Appellant,

SIMONIK MOVING & STORAGE, INC., Defendant-Respondent.

Argued: May 20, 2009.

Decided: Aug. 14, 2009.

PER CURIAM.

Plaintiff ICU Investigations, Inc. (ICU) appeals from the trial court’s ruling that its state law claims for consumer fraud, common law fraud and breach of contract are preempted by the Interstate Commerce Commission Termination Act (ICCTA). We affirm in part and reverse in part.

On or about January 30, 2006, defendant Simonik Moving & Storage, Inc. (Simonik) provided ICU with a written “Estimated Costs of Services,” which calculated an estimated cost of $2,500 for moving ICU’s business office contents from its old location in Marlton to its new location in West Berlin. The document also contained a disclaimer, stating it was merely an estimate, and “[a]ll charges are subject to actual time plus travel or actual weight, whichever is applicable.” The parties entered into a contract on or about March 30, 2006, for Simonik to move ICU on April 28, 2006.

On the scheduled move date, Simonik appeared at ICU’s Marlton office, loaded the contents onto its truck and moved the items as contracted to ICU’s West Berlin office. According to ICU, it tendered a $2,500 check but Simonik demanded an additional $800 payment and its employees threatened to hold ICU’s property in storage until that payment was tendered. Following a dispute as to the propriety of the additional charges, ICU’s equipment was ultimately unloaded. ICU thereafter stopped payment on the $2,500 check.

ICU filed a complaint, followed by three amended complaints, eventually settling on class action claims for violation of the Public Movers and Warehousemen Licensing Act, N.J.S.A. 45:14D-1 to -29, and the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -167; and individual claims for violation of the same two acts, as well as breach of contract and common law fraud. The basis for ICU’s class action CFA claim was that Simonik underestimated charges to potential customers to induce them to use Simonik for moving services, i.e., it underestimated the amount of time necessary to complete the move and the number of men to be used in the move, billed for a “supervisor” when such person was not included on the estimate, failed to disclose the fuel surcharge in the estimate and then imposed it before unloading the moved goods, and over-billed for the time of the move. ICU accused Simonik of “bait and switch” practices perpetuated upon customers with little leverage because their possessions were locked in a truck and would not be released until “specious and/or previously undisclosed charges” were paid. ICU asserted as an “ascertainable loss” that it was charged more money than estimated even though it had fewer items moved than were originally in the estimate, and it lost employee productivity when its employees unloaded the moving vans after ICU disputed the charges and Simonik’s employees refused to continue. In its individual CFA claim, ICU further alleged Simonik wrongfully sought to increase the fees and costs before ICU’s property was unloaded; retained ICU’s goods when it refused to tender an additional payment; and refused to unload the truck, forcing ICU’s personnel to do so, which damaged ICU in the form of lost productivity and benefit of the moving bargain.

It appears from the motion transcript that ICU abandoned its Public Movers Act claim as preempted by federal law. ICU’s appeal deals solely with its Consumer Fraud Act, common law fraud and breach of contract claims.

ICU’s breach of contract claim is premised on the same allegations. As to the fraud claim, ICU alleged it relied on Simonik’s estimate to hire it as the “low bidder,” the mover deliberately did not provide an accurate estimate so it could obtain the job and utilize the “power disparity” it obtained to impose additional fees when ICU’s property was locked on the truck, and completed the fraud scheme by refusing to unload the truck and demanding additional fees. ICU sought compensatory and punitive damages on this count.

Simonik filed an answer and counterclaim to the third amended complaint on September 19, 2007. The counterclaim was dismissed with prejudice by order of August 18, 2008, which Simonik has not appealed.

On February 25, 2008, the court ordered ICU to file a motion for partial class certification by March 21, 2008. After the filing date came and went, Simonik, pursuant to a management conference, filed a motion to dismiss ICU’s complaint as preempted by the ICCTA, specifically 49 U.S.C.A. § 14501(c)(1). ICU filed opposition along with a cross-motion to extend discovery. Following oral argument, the court concluded the ICCTA did preempt each of ICU’s state law causes of action, although the court allowed ICU’s counsel a limited period of time to decide whether ICU would amend its complaint to add a cause of action for the limited civil remedies afforded under the ICCTA. See, e.g., 49 U.S.C.A. § 14705(b) (permitting recovery of overcharges against a carrier). Following a dialogue between the court and counsel, it was decided that ICU would not amend its complaint and the complaint and counterclaim would thus be dismissed with prejudice. The court entered an order to that effect on August 18, 2008. This appeal ensued.

On appeal, ICU argues the trial court erred by concluding the ICCTA preempted its CFA, common law fraud and breach of contract claims because: (1) the statute expressly provides that its civil remedies are in addition to state law remedies, 49 U.S.C.A. § 13103; (2) the type of bait-and-switch conduct as occurred here is unrelated to the “price, route, or service of any motor carrier” preempted by 49 U.S.C.A. § 14501(c)(1) as interpreted by the case law; (3) the United State Supreme Court has specifically held that federal transportation deregulation statutes do not preempt state law breach of contract actions, Am. Airlines v. Wolens, 513 U.S. 219, 115 S.Ct. 817, 130 L. Ed.2d 715 (1995); and (4) the statute defines its jurisdiction to exclude purely intrastate moves such as the one at issue here, 49 U.S.C.A. § 13501.

Simonik counters that Congress and the federal and state courts have all concluded that the type of claims asserted by ICU in its complaint, which arise from the intrastate transportation of non-household goods, are either expressly or by implication preempted by federal law. According to Simonik, like the statutory provisions pertaining to the airline, railroad and water carrier industries, the ICCTA provision applying to the motor carrier industry unambiguously prohibits States from enacting or enforcing laws and/or regulations “related to the price, route, or service of any motor carrier” with respect to the intrastate transportation of non-household goods. 49 U.S.C.A. § 14501(c)(1), (2)(B). Simonik emphasizes that this provision has been interpreted broadly to preempt virtually all varieties of State claims. The reasoning behind these interpretations is that the regulation, as achieved through the federal government’s power to preempt state law, serves the dual purpose of avoiding conflicting rules of substantive law in an industry where uniformity is essential, while promoting efficiency by leaving control of as many aspects of the industry as possible to the competitive marketplace. Accordingly, Simonik contends the trial court correctly concluded that ICU’s claims fell within the preemptive scope of the “related to” language of Section 14501 and properly dismissed ICU’s complaint in its entirety with prejudice.

When an appellate court is reviewing issues that are purely legal in nature, such review is de novo, and no deference need be shown to the trial court’s interpretation of the law. Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995).

A court’s primary goal when interpreting a statute is to determine the legislature’s intent. O’Connell v. State, 171 N .J. 484, 488 (2002). A court examines intent by first looking to the plain language of the statute, ibid. (“[a] court may neither rewrite a plainly-written enactment of the Legislature nor presume that the Legislature intended something other than that expressed by way of the plain language”), assigning the common law definitions of statutory terms unless evidence exists that Congress intended otherwise, see United States v. Shabani, 513 U.S. 10, 13, 130 L. Ed.2d 225, 229, 115 S.Ct. 382, 384, (1994). However, if a court concludes the statutory language is ambiguous and there is more than one plausible interpretation, it may look to extrinsic evidence, including the legislative history of the statute. Burnett v. County of Bergen, 198 N.J. 408, 421 (2009) (internal citations omitted). Courts may also do so if a plain reading of the statute leads to an absurd result. Ibid. “It is well-established that statutes must be read in their entirety; each part or section should be construed in connection with every other part or section to provide a harmonious whole.” Bedford v. Riello, 195 N.J. 210, 224 (2008).

The preemptive effect of the ICCTA on ICU’s causes of action is best understood by examining the context in which Congress enacted the statute and the interpretations courts have afforded the ICCTA and related statutes over the years. We thus provide a brief recitation of the legislative and judicial history of the ICCTA.

Under the Supremacy Clause, U.S. Const. art. VI, cl. 2, state laws that “ ‘interfere with, or are contrary to the laws of congress, made in pursuance of the constitution’ are invalid.” Wis. Pub. Intervenor v. Mortier, 501 U.S. 597, 604, 111 S.Ct. 2476, 2481, 115 L. Ed.2d 532, 542 (1991) (quoting Gibbons v. Ogden, 22 U.S. 1, 211, 6 L. Ed. 23, 73 (1824)). Thus, “when the mandates of federal law and state law are not consistent, the state law must yield.” Feldman v. Lederle Lab., 125 N.J. 117, 133 (1991), cert. denied, Lederle Lab. v.. Feldman, 505 U.S. 1219, 112 S.Ct. 3027, 120 L. Ed.2d 898 (1992). The preemption doctrine applies equally to common law and state statutory law. Id. at 134.

Federal preemption of a state law is not to be presumed lightly, however, and the State’s police powers are not to be superseded by federal law unless clearly required by Congress. Village of Ridgefield Park v. N.Y., Susquehanna & W. Ry. Corp., 163 N.J. 446, 453 (2000). “The primary source of Congress’ intent is the language of the preemptive statute and the statutory framework surrounding it.” Ibid.; see also FMC Corp. v. Holliday, 498 U.S. 52, 56, 111 S.Ct. 403, 407, 112 L. Ed.2d 356, 363 (1990). Absent explicit language, courts may infer congressional intent “from the pervasiveness of the federal regulatory scheme.” Vail v. Pan Am Corp., 260 N.J.Super. 292, 297 (App.Div.1992). The United States Supreme Court’s interpretation of a federal statute is controlling. See generally Dewey v. R.J. Reynolds Tobacco Co., 121 N.J. 69, 79 (1990).

Congress passed the Interstate Commerce Act in 1887 and created the Interstate Commerce Commission (ICC), whose initial purpose was to regulate railroad transportation. Grafton & Upton R.R. Co. v. Town of Milford, 337 F.Supp.2d 233, 237 (Mass.Dist.Ct.2004). Over the ensuing years, Congress broadened the ICC’s jurisdiction to include regulatory authority over almost all common carriers, including busing companies and interstate telephone companies. See generally James P. Speta, A Common Carrier Approach to Internet Connection, 54 Fed. Comm. L.J. 225 (2002). In 1935, Congress passed the Motor Carrier Act, placing the highway motor carrier industry under ICC oversight and conferring upon the agency the authority to, among other powers, regulate hours of service, control operating permits, approve trucking routes, and set tariffs. See generally Owner-Operator Indep. Drivers Ass’n, Inc. v. Fed. Motor Carrier Safety Admin., 494 F.3d 188, 193 (D.C.Cir.2007); In Re Olympia Holding Corp., 88 F.3d 952, 955 (11th Cir.1996).

Beginning in the 1970s, Congress began deregulating common carriers, commencing with the railroad industry in 1976. See Railroad Revitalization and Regulatory Reform Act, Pub.L. No. 94-210, 90 Stat. 31 (codified as amended at scattered sections of 49 U.S.C.A.). Two years later, Congress “determine [ed] that ‘maximum reliance on competitive market forces,’ “ as opposed to regulation, would favor lower airline fares and improve service, and enacted the Airline Deregulation Act of 1978(ADA), Pub.L. No. 95-504, 92 Stat. 1705 (1978) (codified at 49 U.S.C.A. App. §§ 1301-1557). Morales v. Trans World Airlines, 504 U.S. 374, 378, 112 S.Ct. 2031, 2034, 119 L. Ed.2d 157, 164 (1992) (internal citations omitted). To ensure the states would not undermine the federal regulation scheme with their own regulations, the ADA included a specific preemption provision prohibiting the states from enacting or enforcing “any law, rule, regulation, standard, or other provision having the force and effect of law relating to rates, routes, or services of any air carrier….” 49 U.S.C.A. § 1305(a)(1); Morales, supra, 504 U.S. at 383, 112 S.Ct. at 2037, 119 L. Ed.2d at 167. The ADA retained the Civil Aeronautics Board’s authority over deceptive trade practices, which was later transferred to the Department of Transportation, but preserved the saving clause in the prior laws, which provided that nothing in the ADA would abridge or alter the common law or statutory remedies and that the provisions of the chapter were in addition to such remedies. Vail, supra, 260 N.J.Super. at 295-96.

In 1994, Congress re-codified the ADA’s preemption provision at 49 U.S.C.A. § 41713(b)(1), but did not substantively change it.

In 1980, Congress deregulated trucking. See Motor Carrier Act of 1980, Pub.L. 96-296, 94 Stat. 793 (1980). In 1994, Congress similarly sought to preempt state trucking regulation. See Federal Aviation Administration Authorization Act of 1994 (FAAAA), 103 Pub.L. 305, 108 Stat. 1605-1606 (1994). In the FAAAA, Congress borrowed the preemption language from the ADA and applied it to combined motor-air carriers. 49 U.S.C.A. § 41713(b)(4)(A).

In 1995, in an effort to deregulate, in substantial part, the railroads and other modes of surface transportation, Congress enacted the ICCTA, effective January 1, 1996, abolished the ICC and transferred its rail and non-rail regulation functions to the newly-created Surface Transportation Board (Board) within the Department of Transportation. 49 U.S.C.A. §§ 701-727; §§ 10101-16106; see also Grafton, supra, 337 F.Supp.2d at 237-38; Ridgefield Park, supra, 163 N.J. at 453. As in the FAAAA, Congress also used the preemption language of the ADA that “a State … may not enact or enforce a law … related to a price, route, or service of any motor carrier … with respect to the transportation of property.” 49 U.S.C.A. § 14501(c)(1).

The United States Supreme Court analyzed the ADA’s preemption language in two major cases. In 1992, it decided Morales, supra, in which it held that guidelines promulgated by the states aimed at curtailing deceptive airline-fare advertisements and enforced by states’ attorneys general through their respective state consumer fraud statutes were expressly preempted as within the “relating to rates, routes, or services” language of Section 1305(a)(1). 504 U.S. at 388-91, 112 S.Ct. at 2039-41, 119 L. Ed.2d at 170-72. The Court rejected the argument that the provision only preempted states from actually prescribing rates, routes, or services, reasoning that this interpretation would read the words “relating to” out of the statute and if Congress intended such limited preemption, it would have forbidden the States to “regulate rates, routes, and services.” Id. at 385, 112 S.Ct. at 2038, 119 L. Ed.2d at 168. The Court further noted that the ordinary meaning of the phrase “relating to” is a broad one, having a dictionary definition of “having a connection with, or reference to.” Id. at 383-84, 112 S.Ct. at 2037, 119 L. Ed.2d at 167.

For aid in construing the ADA phrase, the Court referred to a similar preemption provision in the Employment Retirement Security Act of 1974 (ERISA) and noted several cases in which the Court gave the words “relating to” liberal meaning. Id. at 383-84, 112 S.Ct. at 2036-37, 119 L. Ed.2d at 167-68. The Court analogously defined the “relating to” language in the ADA preemption clause and held that state enforcement actions “having a connection with, or reference to” airline carrier “ ‘rates, routes, or services’ are pre-empted.” Id. at 384, 112 S.Ct. at 2037, 119 L. Ed.2d at 167-68.

The ERISA statute provides for preemption of state laws “insofar as they … relate to any employment benefit plan.” 29 U.S.C.A. § 1144(a). The Court held a state law “relate[s] to” an employment benefit plan, and is thus preempted by ERISA, “ ‘if it has a connection with or reference to such a plan.’ “ Morales, supra, 504 U.S. at 383-84, 112 S.Ct. at 2037, 119 L. Ed.2d at 167 (citations omitted).

The Court further held preemption may occur even if a state law’s effect on rates, routes or services “is only indirect”; respecting preemption, it is immaterial whether a state law is “consistent” or “inconsistent” with federal regulation; and preemption occurs at least where state laws have a “significant impact” related to Congress’ regulatory and preemption-related objectives. Rowe v. N .H. Motor Transp. Ass’n, 552 U.S. —-, —-, 128 S.Ct. 989, 995, 169 L. Ed.2d 933, 939 (2008) (internal citations omitted). It did note, however, that federal law might not preempt state laws that affect fares in only a “tenuous, remote, or peripheral … manner,” such as state laws forbidding gambling. Id. at —-, 128 S.Ct. at 995, 169 L. Ed.2d at 939-40.

Morales also addressed the FAAAA saving clause, which preserved “the remedies now existing at common law or by statute,” and concluded the clause was a “relic of the pre-ADA/no preemption regime.” Id. at 384-85, 112 S.Ct. at 2037, 119 L. Ed.2d at 168. The Court applied the “commonplace” statutory construction principle that the specific governs the general, concluding, “[a] general ‘remedies’ saving clause cannot be allowed to supersede the specific substantive pre-emption provision” of § 1305(a)(1). Ibid.

The Court again analyzed the ADA’s preemption clause in 1995 in Wolens, supra, in which it decided whether Illinois class action consumer fraud and breach of contract claims regarding an airline’s retroactive changes to its frequent flyer program were preempted under the ADA. 513 U.S. at 221-22, 115 S.Ct. at 820, 130 L. Ed.2d at 721. The Supreme Court concluded that the plaintiffs’ consumer fraud claims were substantially similar to those asserted in Morales, and thus preempted by Section 1305(a)(1). Id. at 228, 115 S.Ct. at 823, 130 L. Ed.2d at 725. The Court expressly noted the “ADA’s purpose to leave largely to the airlines themselves, and not at all to States, the selection and design of marketing mechanisms appropriate to the furnishing of air transportation services,” and the DOT’s retention of authority to investigate unfair and deceptive practices and unfair methods of competition by airlines and to order an airline to cease and desist therefrom. Ibid.

The Court held, however, that routine breach of contract actions with no enlargement or enhancement based on state laws or policies external to the agreement are not preempted by the ADA, and it permitted the plaintiffs’ breach of contract claims to proceed. Id. at 228-33, 115 S.Ct. at 824-26, 130 L. Ed.2d at 725-28. The Court did “not read the ADA’s preemption clause … to shelter airlines from suits alleging no violation of state-imposed obligations, [and did not shield them from suits] seeking recovery solely for the airline’s alleged breach of its own, self-imposed undertakings.” Id. at 228, 115 S.Ct. at 824, 130 L. Ed.2d at 725-26.

As the Court explained, the terms and conditions offered by the airlines and accepted by the passengers are “privately ordered obligations” and do not amount to state-imposed laws, rules, or other standards having the force and effect of law within the meaning of the ADA’s preemption provision. Id. at 228-29, 115 S.Ct. at 824, 130 L. Ed.2d at 726. The Court elaborated: “A remedy confined to a contract’s terms simply holds parties to their agreements-in this instance, to business judgments an airline made public about its rates and services.” Id. at 229, 115 S.Ct. at 824, 130 L. Ed.2d at 726. This is particularly the case, the court noted, since the ADA contains the word series “law, rule, regulation, standard, or other provision,” which connotes official, government policies rather than private contracts. Id. at 229 n. 5, 115 S.Ct. at 824 n. 5, 130 L. Ed.2d at 726 n. 5 (quoting 49 U.S.C.A. § 1305(a)(1)).

The Court then looked to Congress’ intent in creating the ADA, and, contrasting the ERISA, explicitly channeling civil actions into federal courts, determined that Congress did not seek “to channel into federal courts the business of resolving, pursuant to judicially fashioned federal common law, the range of contract claims relating to airline rates, routes, or services [as] [t]he ADA contains no hint of such a role for the federal courts.” Id. at 232, 115 S.Ct. at 825, 130 L. Ed.2d at 728. The Court further reasoned that the ADA’s preemption clause, read together with its saving clause, precluded states from imposing their own substantive standards regarding rates, routes, or services but did not preclude a party’s ability to seek relief for an airline’s violation of a term stipulated by the airline itself. Id. at 232, 115 S.Ct. at 826, 130 L. Ed.2d at 728.

In 2008, in Rowe, supra, the Supreme Court analyzed similar preemption language contained in 49 U.S.C.A. § 14501(c)(1) as it applies to motor carriers. 522 U.S. 989, 128 S.Ct. 989, 169 L. Ed.2d 933. The decision in Rowe was the impetus for Simonik’s motion. In that case, the Court examined whether federal law precluded two provisions of a Maine law, which regulated the delivery of tobacco to customers within the state by requiring shippers to utilize a specific delivery service with a mechanism confirming the buyer is of legal age and forbade anyone other than Maine-licensed tobacco retailers from sending or receiving tobacco. Id. at —-, 128 S.Ct. at 993-94, 169 L. Ed.2d at 938.

The Court began with the well-established principle that where judicial interpretations have given settled meaning to an existing statutory provision, repetition of the same language in a new statute indicates the intent to incorporate its judicial interpretation as well. Id. at —-, 128 S.Ct. at 994, 169 L. Ed.2d at 939. Because the FAAAA and the ICCTA were enacted subsequent to Morales, which settled the meaning of the express preemption provision in the ADA, and because Congress used the same language of the air carrier preemption provision of the ADA in the FAAAA and the ICCTA fully aware of the Supreme Court’s interpretation of the former language as set forth in Morales, the Court concluded that the judiciary should construe the preemptive provisions in the subsequent Acts just as broadly and liberally as it had always construed the same provision in the ADA. Ibid. The Court stated, “[G]iven Morales, where the Court held that federal law pre-empts state consumer-protection laws, we find that federal law must also pre-empt Maine’s efforts directly to regulate carrier services.” Id. at —-, 128 S.Ct. at 998, 169 L. Ed.2d at 943.

Using the four-part rule from Morales as a roadmap, the Court observed that the Maine statute forbade licensed tobacco retailers from employing a delivery service unless that service followed particular delivery procedures and in doing so, focused on trucking and other motor carriers, thereby creating a direct “connection with” motor carrier services. Id. at —-, 128 S.Ct. at 995, 169 L. Ed.2d at 940. The law also had a significant impact on the federal statute’s ability to achieve its preemption-related objectives, as it required carriers to offer a system of services that the market did not provide and which the carriers would prefer not to offer, effectively substituting state governmental commands for the competitive market forces sought to be achieved through preemption. Id. at —-, 128 S.Ct. at 996, 169 L. Ed.2d at 941. The Court further concluded that Maine’s regulatory patchwork requiring a special checking system of every shipped tobacco package was inconsistent with Congress’ legislative effort to leave the essential details of a motor carrier’s system for picking up, sorting and carrying goods, where federally unregulated, to the competitive marketplace. Id. at —-, 128 S.Ct. at 996, 169 L. Ed.2d at 941.

II.

We turn now to an analysis of the case on appeal. The relevant provisions of Section 14501, “Federal authority over intrastate transportation,” state:

(1) General rule.-Except as provided in paragraphs (2) and (3), 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 … with respect to the transportation of property.

(2) Matters not covered.-Paragraph (1)-

….

(B) does not apply to the intrastate transportation of household goods….

[49 U.S.C.A. § 14501.]

The general “saving clause,” Section 13101, “Remedies as cumulative,” provides:

Except as otherwise provided in this part, the remedies provided under this part are in addition to remedies existing under another law or common law.

[49 U.S.C.A. § 13103.]

We summarily dispose of ICU’s argument that the general cumulative remedies saving clause can be read independently to trump the specific substantive preemption provision of Section 14501. Such an interpretation would be unsupported by the express operative language of the statute (“Except as otherwise provided in this part”), longstanding principles of statutory construction and the express analysis of the United States Supreme Court. See Morales, supra, 504 U.S. at 384-85, 112 S.Ct. at 2037, 119 L. Ed.2d at 168; see also Wolens, supra, 513 U.S. at 232, 115 S.Ct. at 826, 130 L. Ed.2d at 728; Vail, supra, 260 N.J.Super. at 298.

Based on our analysis of the statutory language and case law, we are satisfied ICU’s CFA and common law fraud claims are preempted by Section 14501(c)(1), as they “relate to a price, route, or service of any motor carrier” involved in the intrastate transportation of non-household goods. Accordingly, we affirm the trial court’s dismissal of these claims. We are not persuaded, however, that ICU’s “routine” breach of contract claim, which alleges no violation of state-imposed obligations, is preempted and we thus reverse that portion of the court’s ruling, and remand for ICU’s breach of contract claim to proceed.

Simonik alternatively argues that even if we hold that Wolens did save ICU’s contract claim from preemption, we should exercise original jurisdiction, R. 2:10-5, and dismiss this count on the grounds that ICU cannot claim any damages arising from Simonik’s alleged breach of contract as it stopped payment of its $2,500 check (the amount of the estimate) after delivery of its goods to its new office and thus did not pay for the services rendered. We decline to do so, and leave Simonik to pursue the relief it deems appropriate on remand.

The New Jersey CFA states:

The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise … or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice….

[N.J.S.A. 56:8-2.]

New Jersey has expressed a clear intent, codified into consumer protection legislation, to regulate potentially unconscionable commercial practices and deceptive advertising to prevent fraud, similar to the Illinois CFA in Wolens. Allowing such a claim to proceed in state court would run counter to the holdings in Morales, Wolens and Rowe that federal law preempts state consumer protection laws as applicable to motor carrier services. Moreover, ICU’s narrow interpretation of Section 14501 as preempting the states, solely, from prescribing rates, routes, and service would fly in the face of the broad interpretation the Supreme Court gave in those cases to the “relating to” language of the preemption statutes.

We are satisfied that ICU’s claims as asserted in its CFA counts “relat [e] to” the motor carrier’s prices and services, specifically, as they challenge items such as the fuel surcharge, the particulars of the estimate and the amount of time and labor associated with the move as evidence of Simonik’s alleged unconscionable commercial practice of intentionally underestimating charges to induce a customer to hire it. Allowing ICU’s CFA claim to proceed would also have a “significant impact” on Congress’ intent to deregulate motor carriers since the CFA provides additional regulation, not less, and such regulation could impinge on the competitive marketplace.

Despite the public welfare considerations and salutary purpose of the CFA, we cannot agree with ICU that federal law creates an exception on that basis to exempt state laws it would otherwise preempt. Where Congress has determined to preempt a field, state regulation is precluded regardless of the “public good” it purports to serve. The ICCTA explicitly lists exceptions in Section 14501, i.e., matters not covered, and says nothing about a consumer protection exception. The Maine statute at issue in Rowe was enacted for a public purpose no less important-the prevention of the sale of tobacco to minors-but in deeming the measure preempted by the ICCTA, the United States Supreme Court found the state law objective immaterial. Rowe, supra, 552 U.S. at —-, 128 S.Ct. at 996-97, 169 L. Ed.2d at 941. While it may seem anomalous to ICU that it is unable to pursue its CFA claim, the reality is that many matters of public importance are subject not only to federal preemption, but also to State preemption. See, e.g., G.H. v. Twp. of Galloway, 199 N.J. 135 (2009) (municipal ordinance prohibiting convicted sex offenders from living within designated distance of schools, park, playgrounds and daycare centers preempted by New Jersey’s Megan’s Law); S. Ocean Landfill, Inc. v. Mayor and Council of Ocean Twp., 64 N.J. 190 (1974) (municipal landfill regulatory ordinance banning deposit of sewerage, septic or cesspool material preempted by New Jersey’s Solid Waste Management Act); Tumino v. Long Beach Twp., 319 N.J.Super. 514 (App.Div.1999) (municipality’s decision to deny the plaintiff’s application to replace a dock on grounds that it would pose a safety hazard invalidated as preempted by New Jersey’s Waterfront Development Act).

That the civil remedies available under the ICCTA are less extensive than those available under the CFA, and that ICU will be left without an equivalent remedy for potential consumer fraud violations may not be used as arguments to avoid federal preemption, since it is well established that Congress, if it explicitly chooses, may, under the doctrine of complete preemption, supersede not only state substantive law, but also state causes of action. See, e.g., Caterpillar, Inc v. Williams, 482 U.S. 386, 393, 107 S.Ct. 2425, 2430, 96 L. Ed.2d 318, 328 (1987). Moreover, the possibility a plaintiff may lack a remedy due to preemption “is consistent with the meaning of the pre-emption doctrine. The fact that a plaintiff is without remedy does not mean that Congress has not addressed the issue. On the contrary, it merely shows that Congress has weighed the matter and struck the balance in defendant’s favor.” Schiffli Embroidery Workers Pension Fund v. Ryan, Beck & Co., 869 F.Supp. 278, 288 (D.N.J .1994).

For example, the ICCTA prohibits a motor carrier from presenting “false or misleading information on a document about the actual rate,” sets forth procedures for resolving claims for disputed charges, provides for enforcement of violations of the Act by the Secretary or the Board or the Attorney General, and permits civil actions by the injured party. 49 U.S.C.A. §§ 13708, 13709, 13710, 14701-14711.

We are also not convinced by ICU’s argument that Congress’ omission of solely intrastate transportation by motor carriers of passengers and/or property as within the general jurisdiction of the Secretary and the Board, 49 U.S.C.A. § 13501, evidenced an intent to allow state enforcement of statutes such as the CFA for claims arising out of ICU’s move from Marlton to West Berlin. Applying the basic tenet of statutory construction that statutes must be read in their entirety and construed together to provide a harmonious whole, see Bedford, supra, 195 N.J. at 224, we must read Sections 13501 and 14501 in conjunction with one another. Section 13501 addresses in general terms what the federal agency can regulate; it does not state the list is exhaustive. Congress, however, expressly provided in Section 14501(c)(B) that the federal preemption does not apply to the “intrastate transportation of household goods”; thus, it is reasonable to conclude that Congress implicitly intended to include within the preemption intrastate transportation of non-household goods, such as ICU’s office goods moved by Simonik.

Section 13501 provides that the Secretary and Board have “jurisdiction, as specified in this part, over transportation by motor carrier and the procurement of that transportation, to the extent that passengers, property, or both, are transported by motor carrier-

(1) between a place in-

(A) a State and a place in another State;

(B) a State and another place in the same State through another State;

(C) the United States and a place in a territory or possession of the United States to the extent the transportation is in the United States;

(D) the United States and another place in the United States through a foreign country to the extent the transportation is in the United States;

(E) the United States and a place in a foreign country to the extent the transportation is in the United States; and

(2) in a reservation under the exclusive jurisdiction of the United States or on a public highway.

[49 U.S.C.A. § 13501.]

ICU’s common law fraud cause of action is premised on the same core operative set of facts as its CFA claim, i.e., inaccurately disclosing and underestimating the charges to obtain the job and attempting to hold the cargo hostage to procure an additional fee, with the relief sought of compensatory and punitive damages. It is therefore clearly related to the price, route or service of a motor carrier. Morales and Wolens make it clear that ICU’s common law fraud claim is also preempted. See Wolens, supra, 513 U.S . at 227-28, 115 S.Ct. at 823-24, 130 L. Ed.2d at 724-26; Morales, supra, 504 U.S. at 384, 112 S.Ct. at 2037, 119 L. Ed.2d at 167-68; see also Vail, supra, 260 N.J.Super. at 294.

Finally, we address ICU’s breach of contract claim. Contrary to ICU’s assertion, Wolens did not establish the wholesale proposition that all breach of contract claims involving airlines, or by extrapolation motor carriers, are saved from federal preemption. Rather, the Supreme Court held that only routine breach of contract actions with no enlargement or enhancement based on state laws or policies external to the agreement are not preempted by the federal statute. Wolens, supra, 513 U.S. at 228-33, 115 S.Ct. at 824-26, 130 L. Ed.2d at 725-28. Thus, where the contract claim alleges “no violation of state-imposed obligations” and a party is seeking recovery solely for the motor carrier’s alleged breach of its “own, self-imposed undertakings,” the claim may proceed in state court. Id. at 228, 115 S.Ct. at 824, 130 L. Ed.2d at 725-26.

Based on our review of ICU’s complaint, we are satisfied that its claim for breach of contract concerns the very “privately ordered obligation[ ]” that the Court explained does not constitute a state-imposed law, rule or other standard having the force and effect of a law as intended by the ADA, or by analogy, the ICCTA. See Wolens, supra, 513 U.S. at 228-29, 115 S.Ct. at 824, 130 L. Ed.2d at 726. ICU’s claim deals specifically with Simonik’s failure to uphold its own contractual terms regarding the price of ICU’s move. This claim is thus not an attempt to use the common law to regulate motor carriers as an industry, but the remedy sought is confined to holding Simonik to “business judgments” about its rates and services. Id. at 229, 115 S.Ct. at 824, 130 L. Ed.2d at 726.

We find unpersuasive Simonik’s argument that our holding in Vail supports a contrary determination. In Vail, the plaintiffs sued Pan Am World Airways in a putative class action based on allegations that from 1986 through 1989, the airline advertised it was initiating an “enhanced security program” and fraudulently charged $5 per ticket to defray the cost of the program. Vail, supra, 26 N.J.Super. at 295. The plaintiffs claimed to have purchased their tickets unaware of the $5 charge and alleged the airline never instituted the program, filing CFA, fraud and breach of contract claims. Id. at 294-95. We found Morales dispositive and upheld the dismissal of the complaint on the grounds all of plaintiffs’ claims “related to” the prices, routes, or services of an air carrier. Id. at 294, 299. Simonik submits the basis of ICU’s contract claim is similar in that it alleges the additional charges associated with fuel and additional manpower were not disclosed and, based on the same rationale, ICU’s contract claim should be preempted. We disagree. We clearly stated in Vail that we based our decision on Morales, id. at 299, and, as Vail predated the Wolens decision, we did not have the benefit of the Supreme Court’s analysis in that case. Accordingly, we did not differentiate between the fraud and contract claims in our preemption analysis. Therefore, even assuming Vail and the present case are factually similar, about which we have our doubts, we do not regard Vail as persuasive authority regarding the breach of contract preemption issue.

Affirmed as to the dismissal of ICU’s CFA and common law fraud claims; reversed and remanded as to ICU’s breach of contract claim.

N.J.Super.A.D.,2009.

ICU Investigations, Inc. v. Simonik Moving & Storage, Inc.

Not Reported in A.2d, 2009 WL 2475225 (N.J.Super.A.D.)

END OF DOCUMENT