Broker - Central Analysis Bureau

Millam v. Northern Freight, LLC

United States District Court, S.D. Illinois.

JESSICA MILLAM, ADMINISTRATOR OF THE ESTATE OF WAYNE WHALEN Plaintiff,

NORTHERN FREIGHT, LLC, AHMED SANKUS, SAFARA EXPRESS, LIMITED LIABILITY COMPANY, and FEDEX CUSTOM CRITICAL, INC., Defendants.

Case No. 20-cv-00797-JPG

01/26/2023

J. PHIL GILBERT, DISTRICT JUDGE

MEMORANDUM AND ORDER

I. Introduction

*1 This matter comes before the Court on Defendant FedEx Custom Critical, Inc. (“FedEx” or “Defendant”) motion for summary judgement against Plaintiff Jessica Millam, (“Plaintiff”) Administrator of the Estate of Wayne Whalen (“Whalen”) (Doc. 104). Plaintiff opposes the motion (Doc. 107). FedEx, citing exceptional circumstances, filed a reply (Doc. 110). FedEx seeks judgment as a matter of law on Count IV¹ of the operative complaint.

II. Background

This case arises from a motor vehicle accident on July 21, 2020. Whalen was driving on Interstate 70 in Cumberland County, Illinois where he was involved in an accident with Ahmed Sankus (“Sankus”), who was driving a 2014 Freightliner Straight Truck owned by Northern Freight, LLC (“Northern Freight”). In a third amended complaint, Plaintiff filed a four-count complaint asserting a claim for negligence against FedEx. Plaintiff alleges that Sankus was driving the truck as an agent of FedEx during the instant accident. Additionally, Plaintiff further alleges that it was the duty of Sankus, acting as an agent of FedEx to exercise ordinary and reasonable care to operate the motor vehicle.

Additionally, Plaintiff alleges that Sankus, acting as an agent of FedEx, breached his duty by failing to reduce his speed to avoid a collision, drove while distracted, violated Federal Motor Carrier Safety Regulation (“FMCSR”) 392.14 by failing to use extreme caution and failing to reduce speed in hazardous conditions, by failing to discontinue operation due to hazardous conditions. Additionally, Plaintiff alleges Sankus, as an agent of FedEx, failed to reduce speed when the weather warranted in violation of 625 ILCS 5/11-601 and drove while fatigued. Plaintiff alleges that Sankus’s negligent acts was a direct and proximate cause of Plaintiff’s injuries.

Based on the pleadings in this case, Northern Freight has admitted Sankus was driving a truck owned by Northern Freight and Sankus was an employee of Northern Freight. FedEx is a transportation provider for shipments. The agreements at issue are the Transportation Service Agreement (“TSA”), and Master Transportation Agreement (“MTA”). The TSA gave FedEx the right to act as carrier or broker at its discretion.

Regarding the subject July 2020 load, Team Industrial Services hired FedEx to transport from its facility in Ohio to its facility in Illinois. FedEx was listed as the carrier on the shipper’s bill of lading regarding this load, but FedEx argues that it was listed as the carrier because the shipper initially booked the load with FedEx and FedEx ended up brokering the subject load to Safara. (Doc. 104 at 3). Then, Safara “double brokered” the subject load to Northern Freight. FedEx argues that “double brokering” the load was against the terms of the MTA between FedEx and Safara. Plaintiff argues that nothing in the MTA prohibited Safara from leasing with independent contractors or owner operators to hail loads that had been brokered to it. (Doc. 107 at 3).

*2 FedEx dispatches loads through a Rate Confirmation Sheet (“RCS”). Pursuant to the RCS Safara was the carrier for the load, and his driver “Ahmed” was to drive the load. The RCS apparently imposes several terms requiring a driver to communicate with FedEx. Plaintiff argues that Sankus was “picking up the load for FedEx,” the load belonged to FedEx, Safara was the motor carrier for this load, and Northern Freight was an independent contractor. Therefore, Plaintiff argues, Sankus was an agent of FedEx.

III. Analysis

Summary judgment must be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Spath v. Hayes Wheels Int’l–Ind., Inc., 211 F.3d 392, 396 (7th Cir. 2000). The reviewing court must construe the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Thus, the Court construes evidence and draws all reasonable inferences in favor of Plaintiffs.

On summary judgment a court may not make credibility determinations or weigh the evidence, because these are tasks for a factfinder. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Betaco, Inc. v. Cessna Aircraft Co., 32 F.3d 1126, 1138 (7th Cir.1994). In evaluating a motion for summary judgment, “[t]he court has one task and one task only: to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial.” Waldridge v. American Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994).

The Court here will interpret state law “to determine how the state’s highest court would rule.” Anicich v. Home Depot U.S.A., Inc., 852 F.3d 643, 649 (7th Cir. 2017). Here, Illinois law would apply. When there is no dispute over which state’s law applies, the court will apply the substantive law of the state in which the federal court sits. Med. Protective Co. of Fort Wayne v. Am. Int’l Specialty Lines Ins. Co., 911 F.3d 438, 445 (7th Cir. 2018). Here, the parties agree that Illinois law applies, and their choice is consistent with Illinois’s presumption in personal-injury cases to apply the law of the state in which the injury occurred. Townsend v. Sears, Roebuck & Co., 227 Ill.2d 147, 316 Ill.Dec. 505, 879 N.E.2d 893, 903 (2007).

a. Duty under Agency Theory

First, FedEx argues that the evidence is undisputed that Sankus was operating his vehicle as Northern Freight employee and agent, and not as the agent of FedEx. Therefore, FedEx argues that FedEx had no duty to Plaintiff. (Doc. 104 at 5-6). Plaintiff argues the opposite and states there is substantial support that FedEx had control over Sankus.

“Agency is a fiduciary relationship in which the agent has the power to act on the principal’s behalf.” Sphere Drake Ins. Ltd. v. Am. Gen. Life Ins. Co., 376 F.3d 664, 672 (7th Cir. 2004). The test for agency is “whether the alleged principal has the right to control the manner and method in which work is carried out by the alleged agent and whether the alleged agent can affect the legal relationships of the principal.” Chemtool, Inc., v. Lubrication Techs., 148 F.3d 742, 745 (7th Cir. 1998). The parties must consent to a principal-agent relationship, which may be created by conduct or contract. Id. Another significant factor “is the nature of work performed in relation to the general business of the employer.” Sperl v. C.H. Robinson Worldwide, Inc., 408 Ill. App. 3d 1051, 1057-58, 946 N.E.2d 463, 471 (2011). “Other factors to consider are: (1) the right to discharge; (2) the method of payment; (3) the provision of necessary tools, materials, and equipment; (4) whether taxes are deducted from the payment; and (5) the level of skill required.” Id. at 1058, 946 N.E.2d at 471.

*3 FedEx argues that FedEx had no ownership interest in the vehicle driven by Sankus and Sankus was not acting as an agent of FedEx. FedEx’s argument can be distilled as the following: FedEx did not hire Northern Freight or Sankus. FedEx brokered the load to Safara to hail as a carrier. Safara, as a broker, without permission, double brokered the load to Northern Freight, who assigned the load to Northern Freight’s employee Sankus. Therefore, FedEx argues, FedEx had no authority or control over Sankus. Plaintiff argues that there is “substantial evidence” – depositions, contractual agreements, and application of trucking regulations and industry custom of those agreements – to support the allegation FedEx had control over Sankus. (Doc. 107 at 7).

i. Double Brokering

Some explanation regarding a “double broker” relationship is required here. Double brokering involves the practice of a broker receiving a shipment from a shipper and subsequently tendering the shipment to another broker for movement by a motor carrier. It is frequently done without the shipper’s knowledge or the motor carrier’s knowledge. No written or even oral contracts exist between the shipper and the second broker or between the motor carrier ultimately used and the initial broker. Jets Prolink Cargo, Inc. v. Brenny Transp., Inc., No. Civ. 02-1294 ADMRLE, 2003 WL 22047910, 1 n.1 (D. Minn. Aug. 29, 2003). “While there do not appear to be any reported administrative or court decisions that deal with this precise issue, double brokering is often considered illegal in light of the wording of federal regulations.” James C. Hardman, Third Party Contract Issues Concerning Motor Carriers, Brokers, and Shippers, 34 Transp. L.J. 307, 310 (2007) (citing 49 C.F.R. § 371.7 (2007). This Court offers no opinion or finding as to the legality or illegality of double brokering.

Here, the Court finds that Safara giving the load to Northern Freight, who dispatched the load to Sankus constituted double brokering. Plaintiff argues that Safara did not “double broker” the load. (Doc. 107 at 12). Plaintiff argues FedEx knew Safara (or permitted Safara) and other motor carriers would contract with owner-operators to hail loads. (Doc. 107 at 12, 15). Plaintiff provides no support for this claim and the Court will not consider unsubstantiated claims. Plaintiff then cites 49 C.F.R. § 371.2(a) that states Safara was not a broker but rather a motor carrier. Specifically, Plaintiff argues § 371.2(a) states a motor carrier are not brokers “when they arrange or offer to arrange the transportation of shipments which they are authorized to transport.” Id. It is clear based on the MTA that Safara was not permitted to broker the load to Northern Freight. Plaintiff does not provide support that Safara was authorized, through its relationship with FedEx, that it was authorized to transport the load through Northern Freight.

Next, Plaintiff argues that Safara “did not, and could not, broker any loads to anyone.” Plaintiff’s expert, in an affidavit, Walter Guntharp makes this claim. (Doc. 107, Ex. 7). FedEx responds and argues Plaintiff wrongfully contradicts sworn testimony with unsupported expert options (Doc. 110 at 3). The Court reviewed Plaintiff’s expert report, which bases his conclusion that “no double brokerage occurred” and Safara was “unable to double broker” because per the FMCSR, Safara had no brokerage authority. The expert confirmed this by “the owner of Safara who acknowledged that Safara did not have any brokerage authority.” (Doc. 107, Ex. 7 at 6). The expert does not provide a cite to Safara’s answer. Pursuant to FRCP 59(e), this fact is not properly supported. The Court is unclear as to Plaintiff’s expert foundation regarding his opinion. A judge must “look behind [the expert’s] ultimate conclusion …and analyze the adequacy of its foundation.” Mid-State Fertilizer Co. v. Exch. Nat. Bank of Chicago, 877 F.2d 1333, 1339 (7th Cir. 1989). Additionally, while Plaintiff continues to state Safara was not a broker and could not have acted as a broker because of FMCSR, there is a difference between what they were authorized to do, and what they in fact did. Here, Safara double brokered the load, against the terms of the MTA.

*4 Additionally, Plaintiff argues FedEx’s argument regarding double brokering ignores the lease agreement² between Safara and Northern Freight, which identifies Safara as a motor carrier and not as a broker (Doc. 107 at 12-13). Caselaw requires to review the actions of the parties, and not just look at “contractual labels or provisions” to determine agency relationship. without exclusive weight being given to contractual labels or provisions. Sperl, 408 Ill.App.3d at 1057, 349 Ill.Dec. 269, 946 N.E.2d 463; Pekin Ins. Co. v. Ledcor Constr., Inc., 2017 IL App (1st) 162623-U, ¶ 15 (“The alleged conduct, rather than the labeling of the claim in the complaint, is controlling.”). The Court finds this load was double brokered.

ii. Agency Theory

Even if the load was not double brokered, pursuant to the rules set forth under Illinois law for a finding of an agency relationship, the relationship between FedEx and Sankus does not amount to a principal-agent relationship.

Plaintiff heavily relies on Sperl to support a finding that an agency relationship existed between FedEx and Sankus. In Sperl, the appellate court concluded that there was a reasonable basis supporting a finding of an agency relationship and thus declined to overrule a finding of vicarious liability against the defendant CHR, a logistics company that provided transportation-related services. CHR is a licensed freight broker and not a motor carrier. CHR and Dragonfly signed a carrier agreement so Dragonfly could haul loads for CHR. In Sperl, the driver, an employee of Dragonfly, contacted CHR directly, and had to pick up the load at a specified time and make check-in calls with CHR. But there was much more: the driver had to “stay in constant communication” with the CHR’s dispatchers; she was required to follow special instructions concerning the load she was hauling; she “was required to continuously measure the temperature of the load during her trip” and had to call CHR immediately if it did not meet a certain temperature; and the defendant “enforced its special instructions with a system of fines.” Sperl, 408 Ill. App. 3d at 1058, 946 N.E.2d at 471-72. CHR’s requirements effectively required the driver to violate federal regulations regarding the hours a truck driver can drive in a day in order to deliver her load on time, as she would be fined for late delivery. Id. at 1058, 946 N.E.2d at 472. These requirements and the fine-based enforcement, the court concluded, “directed [the driver’s] conduct during the entire transportation process,” thus supporting the finding CHR had the right to control the manner in which the driver performed her job. Id.

Plaintiff argues that pursuant to Sperl, the requirements³ and special instructions in the RCS indicate FedEx had a right to control Sankus’ performance. Specifically, Plaintiff argues the RCS imposed several terms of the driver including a requirement to communicate with FedEx at certain events, dictated the type of trailer to be used, and required drivers to provide FedEx with their cell number to monitor the load at all times. The crux of FedEx’s argument is that Safara double brokered the load to Northern Freight, and therefore it had no authority to exercise control over Sankus. The Court agrees. While Plaintiff argues “it is undisputed that he [Sankus] was required to comply with its terms[,]” (Doc. 107 at 9), this claim is without evidentiary support. Here, because Sankus was not authorized to transport the load, FedEx could not have power or control over him to impose terms in the RCS. Additionally, while the rule requires the Court to evaluate the “right to control” the agent, the record indicates FedEx never communicated with Sankus, nor Sankus with FedEx. Whereas in Sperl, where the driver contacted CHR directly, was required to continuously measure the temperature of the load, and failure to do so resulted in fines, the Court does not find an analogous situation here. The Court cannot find an agency relationship exists where FedEx did not have any involvement with the load, nor knew the driver was not the driver on the RCS. Therefore, FedEx had no control or authority to control Sankus at the time of the accident. Kolchinsky v. W. Dairy Transp., LLC, 949 F.3d 1010, 1015 (7th Cir. 2020) (finding no agency relationship where “evidence shows that Western Dairy had no part in the transaction leading to Mr. Bentley’s fateful trip.”).

*5 Even if the Court grants Plaintiff’s argument that this load was leased and not double brokered, the facts of this case, and conduct do not rise to the level of an agency relationship as a matter of law. There was distance between FedEx and Sankus. FedEx brokered the load to Safara, who then gave the load to Northern Freight, the employer of Sankus. FedEx alleges it had no knowledge of Northern Freight taking over the hauling of the load. A finding that FedEx retained control over a driver from an entirely different company, with which it had no written agreement, does not support agency finding under Illinois law. The Court finds these facts similar to a case recently decided by the Seventh Circuit Court of Appeals where the court affirmed a finding that no agency relationship existed.

In Kolchinsky v. Western Dairy Transport, LLC, WD Logistics, LLC (“WD Logistics”) instructed Mr. Bentley, sole member of Bentley Trucking, LLC, (“Bentley”) to transport milk. 949 F.3d 1010, 1011 (7th Cir. 2020). Bentley provided freight transportation services to WD Logistics according to the terms of Carrier/Broker Agreement, where Bentley retained “full control” over its personnel and either party could terminate agreement on 30-day notice. Id. at 1012. Western Dairy “owns and leases trucks and trailers and hauls freight, while WD Logistics brokers the hauls.” Id. Bentley was the carrier for the load brokered by WD Logistics. Id. Bentley agreed to inform WD Logistics if Bentley could not meet the schedule, the broker reserved the right to withhold damages from Bentley’s pay, and the agreement required Bentley pay for its employees, provide and maintain its own tractor, fuel, insurance, licenses, and permits. Id. The trial court found no agency relationship between Bentley and WD Logistics. On appeal, Plaintiff argued that the requirement to contact at various times, daily status call, call upon delivery, and the fact WD Logistics could charge Bentley for damages if a delivery was late or damaged supported agency finding. The Seventh Circuit held these facts did not amount to the “degree of control that Illinois courts have required when finding an agency relationship exists.” Id. at 1014 (citing Sperl, 349 Ill.Dec. 269, 946 N.E. 2d at 471–72). Assuming arguendo, the load was not double brokered, the case at hand is not close to the facts Illinois courts have required when finding agency relationship exists. FedEx did not have contacts or communications with Northern or Safara, nor did it know the driver was a Northern Freight driver. Unlike Kolinchinsky, there was no agreement between FedEx and Northern Freight. There is no support that FedEx was able to control or retained the right to control the manner of delivery, especially where FedEx was not able to exercise that control over the driver. Without evidence FedEx was able to control any details of the delivery, there can be no agency relationship. “Even if a broker requires an exclusive relationship, has the power to fire, and sets rules governing the manner of loading the trucks, no agency relationship exists if the broker does not have the power to control the details of the manner of delivery.” Id. at 1014; Dowe v. Birmingham Steel Corp., 357 Ill.Dec. 391, 963 N.E.2d 344, 351 (2011) (finding no agency relationship where a trucking company chose the route, set hours, and provided and maintained equipment and insurance).

The Court finds as a matter of law that Sankus was not an agent of FedEx. None of the facts alleged by Plaintiff show the degree of control that Illinois courts have required when finding an agency relationship exists. See also Powell v. Dean Foods Co., 379 Ill.Dec. 837, 7 N.E.3d 675, 698 (2013) (upholding a finding of agency relationship where the trial evidence showed that the shipping company controlled the drivers’ actions, required drivers to wear uniforms, and provided trailers; and the evidence also showed that the driver pulled exclusively for the company for 60 years and used its letterhead); cf Trzaska v. Bigane, 325 Ill.App. 528, 60 N.E.2d 264, 265–67 (1945) (finding no agency relationship where the driver is free to refuse a load).

*6 Plaintiff states in its response that “FedEx clams that looking at the DOT number on the side of the truck determines whose authority the driver was operating under, although it provides no authority for this assertion.” (Doc. 107 at 13). The Court believes that Plaintiff is responding to a citation in FedEx’s motion which states that FedEx argues “it had no ownership interest in the subject truck.” (Doc. 104 at 3). The Court need not consider this argument because it has already found that Sankus was not an agent of FedEx based on the agency test laid out by Illinois courts. See also Petersen v. U.S. Reduction Co., 267 Ill.App.3d 775, 204 Ill.Dec. 415, 641 N.E.2d 845, 851 (1994) (finding no agency relationship despite providing a trailer).

Next the Court looks at the nature of work performed in relation to the general business of the employer. Here, the Court agrees that work performed is similar and directly related. However, without the “right to control the manner and method in which work is carried out,” which is the ultimate test regarding whether to find an agency relationship, the Court cannot sustain an agency relationship on the fact the work performed between FedEx and Sankus is similar or directly related. Other factors that the Court can consider are 1) the right to discharge; (2) the method of payment; (3) the provision of necessary tools, materials, and equipment; (4) whether taxes are deducted from the payment; and (5) the level of skill required. Here, there is no evidence that FedEx had any right to discharge Sankus since Sankus was subject to the lease agreement between Safara and Northern Freight. Regarding the method of payment, per the lease agreement Safara was the one to transmit payment to Sankus (or Northern Freight directly). The Court is unclear as to the other factors and neither FedEx nor Plaintiff detail any application of these factors to FedEx and Sankus. It is clear to this Court in applying the agency test, Sankus was not an agent of FedEx.

Simply put, there are not enough facts to show Sankus was an agent of FedEx. Illinois courts require much more than the facts at hand. Without more, the Court finds, as a matter of law, Sankus was not an agent of FedEx.

b. Proximate Cause

Because the Court has found that FedEx owed no duty to Plaintiff, the Court need not address whether or not FedEx’s negligence was a proximate cause of the accident.

IV. Conclusion

For these reasons the Court GRANTS FedEx Custom Critical’s Motion for Summary Judgment (Doc. 104). Count IV against FedEx Custom Critical is DISMISSED.

IT IS SO ORDERED.

Dated: January 26, 2023

/s/ J. Phil Gilbert

J. PHIL GILBERT

DISTRICT JUDGE

All Citations

Footnotes

1 After FedEx moved for summary judgment, the Court granted Plaintiff’s motion for leave to file an amended complaint to add a count for negligent hiring. Therefore, the operative complaint is at Doc. 113.

2 The lease agreement lays out the “carrier responsibilities” which indicates the following requirements: (1) carrier requires contractor to conduct himself diligently; (2) carrier shall prepare paychecks and pay contractor for services rendered; (3) carrier shall pay contractor when all necessary documents including logbooks, miles and fuel documents, maintenance records, DOT inspection reports, and traffic tickets.

3 Plaintiff argues the RCS required Sankus to communicate with FedEx with the following: 1) arrival at the shipper, 2) when loaded but prior to departing, 3) every 4 hours while on the road, 4) upon arrival and departure from any customs/broker or transfer stops, 5) upon arrival at delivery, 6) when departing the delivery with proof of delivery details, and 7) at any time during shipment when the driver experiences a delay.

End of Document

Lee v. Werner Enters., Inc.

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

November 3, 2022, Filed

CASE NO. 3:22 CV 91

Reporter

2022 U.S. Dist. LEXIS 200848 *; 2022 WL 16695207

SHERRY R. LEE, et al., Plaintiffs, v. WERNER ENTERPRISES, INC., et al., Defendants.

Core Terms

preemption provision, motion to dismiss, preemption, preempted, truck, vicarious liability, broker, motor carrier, reply brief, transportation, carrier, shipper, route, motor vehicle, arranging, load

Counsel: [*1] For Sherry R. Lee, David Lee, Plaintiffs: Andrew R. Young, Law Firm for Truck Safety, Cleveland, OH; Jennifer N. Brown, Arthur Law, Defiance, OH; Joshua M. Leizerman, Rena M. Leizerman, Michael J. Leizerman, Law Firm for Truck Safety, Toledo, OH.

For Hot Shot Expedite, Inc., Dorin Braga, Defendants: David J. Fagnilli, Marshall, Dennehey, Warner, Coleman & Goggin – Cleveland, Cleveland, OH; Vincent E. Cononico, Marshall Dennehey Warner Coleman & Goggin, Cleveland, OH.

Judges: James R. Knepp II, UNITED STATES DISTRICT JUDGE.

Opinion by: James R. Knepp II

Opinion

MEMORANDUM OPINION AND ORDER

Introduction

Plaintiffs Sherry Lee and David Lee bring negligence, vicarious liability, and loss of consortium claims in this personal injury case arising out of a truck crash against Defendants Dorin Braga (the truck driver), Hot Shot Expedite, Inc. (Braga’s employer and owner of the truck) (“Hot Shot”), Werner Enterprises, Inc. (the owner of the truck’s trailer) (“Werner”), Target Corporation (shipper of the goods carried on the truck) (“Target”), and Lipsey Logistics Worldwide, LLC (the shipping broker which arranged the goods’ transport) (“Lipsey”). (Doc. 11). Currently pending before the Court are Defendant Lipsey’s Motion to [*2] Dismiss (Doc. 25), Defendant Target’s Motion to Dismiss (Doc. 26), and Plaintiffs’ Motion to Strike (Doc. 34). All are fully briefed and ripe for decision. Jurisdiction is proper under 28 U.S.C. § 1332. For the reasons set forth below, the Court denies the Motion to Strike and grants both Motions to Dismiss.

Background

This case stems from an auto accident in Paulding County, Ohio, on February 11, 2021. (Doc. 11, at 1-2). Plaintiff Sherry Lee alleges a semi-truck driven by Defendant Dorin Braga rear-ended her car as she slowed down to turn. Id. As she prepared to make a right turn, the truck failed to slow down and yield. Id. at 4. After the impact, Sherry Lee’s car veered off the north side of the roadway, struck a sign, overturned, and came to rest on its right side. Id. As a result of the accident, Sherry Lee is paralyzed from the waist down and is now a paraplegic. Id. at 2. Her injuries included a spinal cord lesion “resulting in complete loss of sensory and motor function below [the lesion],” pelvic fractures, rib fractures, vertebral fractures, a subdural hemorrhage, and a spleen laceration. Id. at 5. Plaintiff alleges Hot Shot, owner of the truck and Braga’s employer, “had its motor carrier [*3] authority involuntarily revoked in February 2020 and was only reinstated in April 2020, less than a year before this crash.” Id. at 11.

Plaintiffs assert driver Braga was negligent in injuring Plaintiff Sherry Lee; that employer and truck owner Hot Shot, trailer owner Werner, shipper Target, and shipping broker Lipsey were negligent in their hiring; and Hot Shot, Werner, Target, and Lipsey are vicariously liable for Braga’s negligence. See Doc. 11. Plaintiff David Lee is Sherry Lee’s husband; he brings a loss of consortium claim. Id. at 14. Plaintiffs seek compensatory and punitive damages. Id.

Standard of Review

On a motion to dismiss under Federal Civil Rule 12(b)(6), the Court tests the complaint’s legal sufficiency. The Court construes the complaint in the light most favorable to Plaintiffs, accepts all factual allegations as true, and determines whether the complaint contains “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). Although a complaint need not contain “detailed factual allegations,” it requires more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Id. at 555. The complaint must “contain sufficient factual matter, accepted as true, to [*4] 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). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

Discussion

Plaintiffs bring negligence claims against all Defendants and vicarious liability claims against all Defendants except Braga. (Doc. 11). Defendants Braga and Hot Shot filed an Answer to the Amended Complaint. (Doc. 12).¹

Defendants Lipsey and Target each filed a Motion to Dismiss. (Doc. 25; Doc. 26). Plaintiffs filed a Motion to Strike part of Defendant Lipsey’s reply brief. (Doc. 34). The Court first considers the Motion to Strike and then the Motions to Dismiss.

Motion to Strike

Plaintiffs move to strike Section C of Defendant Lipsey’s reply brief “because it raises a new issue.” (Doc. 34, at 1). Plaintiffs argue this section of the brief improperly raises the argument “that Plaintiffs failed to allege sufficient facts for the vicarious liability claim” for the first time. Id. at 2. Plaintiffs state Lipsey “does not even mention the term ‘vicarious'” in its original motion. Id. Plaintiffs argue a requirement from the Court for a [*5] sur-reply from Plaintiffs on the new issue “would just further delay this case,” and they contend the new argument should be stricken. Id. at 3. This is necessary, Plaintiffs say, because a reply brief should “not provide the moving party with a new opportunity to present yet another issue for the court’s consideration.” Id. (quoting Scottsdale Ins. Co. v. Flowers, 513 F.3d 546, 553 (6th Cir. 2008)).

Plaintiffs fail to mention they initially raised the issue, not Lipsey. Section IV of Plaintiffs’ opposition brief to Lipsey’s motion to dismiss is titled “The FAAAA Does Not Preempt The Vicarious Liability Claim Against Lipsey.” (Doc. 31, at 19). Plaintiffs begin the section by writing:

Defendant Lipsey does not argue that the FAAAA preempts the Plaintiffs’ vicarious liability claim. But because Lipsey requests dismissal of “Plaintiffs’ claims,” rather than a singular claim or Plaintiffs’ negligent hiring claim, out of an abundance of caution, this memorandum briefly addresses the issue.

Id. Lipsey addressed section on vicarious liability in response to Plaintiffs’ argument. Courts “will generally not hear issues raised for the first time in a reply brief.” United States v. Crozier, 259 F.3d 503, 517 (6th Cir. 2001). “Court decisions have made it clear that [a litigant] cannot raise new issues in a reply brief; [*6] he can only respond to arguments raised for the first time in [the opposing party]’s brief.” Id. (quoting United States v. Jerkins, 871 F.2d 598, 601 n.3 (6th Cir. 1989). A defendant does not err by responding in reply an argument raised by a plaintiff in a prior brief; “reply briefs reply to arguments made in the response brief”. Scottsdale Ins. Co., 513 F.3d at 553 (quoting Novosteel SA v. United States, 284 F.3d 1261, 1274 (Fed. Cir. 2002) (emphasis in original); see also 16 C. Wright, A. Miller, E. Cooper, & E. Grossman, Fed. Prac. & Proc. § 3974 at 428 (1977).

Because Lipsey did not raise a new issue on reply, but rather responded to an argument in Plaintiffs’ opposition brief, Plaintiffs’ Motion to Strike is denied.

Motions to Dismiss

The Court next turns to the Motions to Dismiss. Both Lipsey and Target argue they are entitled to dismissal of all claims.

Plaintiffs bring against Lipsey a negligence claim for “failing to exercise due care in arranging the transportation for the load, by hiring and/or retaining Hot Shot Expedite, Inc.[,] when Lipsey either knew or should have known that Hot Shot Expedite, Inc.[,] posed a risk of harm to others and was otherwise incompetent and unfit to perform the duties of an interstate motor carrier, or intentionally chose not to know” and a vicarious liability claim for “actions and omissions of Defendant Dorin [*7] Braga . . . committed within the course and scope of his employment and/or agency with Defendant Lipsey” and “the acts of Defendants Hot Shot Expedite, Inc.[,] and Werner” as “principal or employer”. (Doc. 11, at 10-11).

Plaintiffs bring nearly identical claims against Target: a negligence claim for “breach[ing] its duty, which it owed to the motoring public, including Sherry Lee, by failing to exercise due care in arranging the transportation for the load, by failing to ensure the load was being shipped by a safe and competent motor carrier” and a vicarious liability claim for “[t]he negligent and reckless actions and omissions of Defendants Dorin Braga, Hot Shot Expedite, Inc., Werner, and Lipsey . . . committed within the course and scope of their respective employment or agency with Defendant Target.” Id. at 13-14.

Defendants Lipsey and Target each argue they are shielded from Plaintiffs’ claims by the preemption provision of the Federal Aviation Authorization Administration Act (“FAAAA”). (Doc. 25, at 1; Doc. 26, at 1). Plaintiffs contend their claims are not preempted by the FAAAA, or in the alternative, the claims fall within the “safety exception” of the preemption provision. [*8] (Doc. 30, at 2; Doc. 31, at 10).

FAAAA Preemption Provision

The FAAAA preemption provision reads as follows:

(c) Motor carriers of property. –

(1) General rule. -Except as provided in paragraphs (2) and (3), a State, political subdivision of a State, or political authority of 2 or more 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 any motor carrier (other than a carrier affiliated with a direct air carrier covered by section 41713(b)(4)) or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.

49 U.S.C. §14501(c)(1).²

The Supreme Court made four holdings regarding interpretation of an identical preemption provision in the Airline Deregulation Act of 1978:

(1) that state enforcement actions having a connection with, or reference to, carrier rates, routes, or services are pre-empted;

(2) that such pre-emption may occur even if a state law’s effect on rates, routes, or services is only indirect;

(3) that, in respect to pre-emption, it makes no difference whether a state law is consistent or inconsistent with federal regulation; and

(4) that pre-emption occurs at least where state laws have a significant [*9] impact related to Congress’ deregulatory and pre-emption-related objectives.

Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384-87, 112 S. Ct. 2031, 119 L. Ed. 2d 157 (1992) (cleaned up).

Several years later, the Supreme Court held the same rulings apply to the preemption provision of the FAAAA:

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

Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364, 370, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008).

There is no binding law on this Court holding whether personal injury tort claims against shippers and brokers are preempted under the FAAAA as interpreted by Rowe and Morales. Plaintiffs argue the parallel preemption provision of the Airline Deregulation Act does not preempt personal injury claims. (Doc. 31, at 15). Contrary to Plaintiffs’ characterization of the case law, the decision they cite for this proposition notes only that one of the parties “does not urge that the ADA preempts personal injury claims relating to airline operations.” American Airlines, Inc. v. Wolens, 513 U.S. 219, 231 n.7, 115 S. Ct. 817, 130 L. Ed. 2d 715 (1995). The Supreme Court did not make [*10] a holding on the issue in Wolens. In a later case, however, the Supreme Court expressly ruled the Airline Deregulation Act’s preemption provision applies to state common law claims, which have “the force and effect of law.” Northwest, Inc. v. Ginsberg, 572 U.S. 273, 281-82, 134 S. Ct. 1422, 188 L. Ed. 2d 538 (2014). This Court finds the holding in Northwest supports a reading of the FAAAA preemption section as applicable to Plaintiffs’ claims.

Plaintiffs next argue their claims are not sufficiently “related to a price, route, or service” as required by the preemption provision. See Doc. 31, at 16. “The phrase ‘related to[]’ . . . embraces state laws having a connection with or reference to carrier rates, routes, or services, whether directly or indirectly . . . At the same time, the breadth of the words ‘related to’ does not mean the sky is the limit.” Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 260, 133 S. Ct. 1769, 185 L. Ed. 2d 909 (2013).

The relation need not be explicit or direct; the preemption provision is to be read broadly. Rowe, 552 U.S. at 370. Plaintiffs’ claims against Lipsey stem entirely from Lipsey’s “arranging the transportation for the load” and “hiring and/or retaining” of the other Defendants. (Doc. 11, at 11). Plaintiffs’ claims against Target similarly stem entirely from Target’s alleged negligence in “arranging the transportation for the load” and Target’s employment or agency [*11] relationships with other Defendants. Id. at 14. In short, Plaintiffs’ claims arise from these Defendants’ services.

Another Judge of this Court previously held — in a truck crash case — that negligence claims brought against a shipper and broker “fall[] squarely within the preemption of the FAAAA.” Creagan v. Wal-Mart Trans., LLC, 354 F. Supp. 3d 808, 813 (N.D. Ohio 2018). This Court agrees with and adopts the reasoning in Creagan. All of Plaintiffs’ tort claims are included within the scope of the FAAAA preemption provision.

Safety Exception

Plaintiffs next argue that even if their claims against Lipsey and Target are encompassed by the preemption provision, they fall within an exception thereto. The FAAAA exempts from preemption:

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

49 U.S.C. §14501(c)(2)(A).

Plaintiffs argue this Court should follow the example of the Ninth Circuit in finding the safety exception protects the claims [*12] from dismissal. The Ninth Circuit held the language “safety regulatory authority of a State” includes common law tort claims and allows such claims to go forward. Miller v. C.H. Robinson Worldwide, Inc., 976 F.3d 1016, 1025-26 (9th Cir. 2020). The Ninth Circuit held “the phrase ‘with respect to’ in the safety exception is synonymous with ‘relating to.’ Consequently, the FAAAA’s safety exception exempts from preemption safety regulations that ‘have a connection with’ motor vehicles,” and while a tort claim does not directly regulate motor vehicles, it promotes safety on the road and is thus a safety regulation. Id. at 1030 (internal quotations and citations omitted).

This Court is not convinced. The plain meaning of the words “safety regulatory authority of a State” does not support the inclusion of private tort claims. See United States ex rel. Felten v. William Beaumont Hosp., 993 F.3d 428, 431 (6th Cir. 2021) (courts “usually interpret a statute according to its plain meaning”). Additionally, if the safety exception preserved all claims related to motor vehicles, as urged by Plaintiffs and Miller, “all preempted claims would then be ‘saved’ by the exception.” Creagan, 354 F. Supp. 3d at 814. This would make the entirety of the preemption provision redundant. Rather, this Court finds “it cannot ignore the straightforward preemption analysis as laid out by the Supreme Court, and finds instructive [*13] the analysis in Rowe.” Volkova v. C.H. Robinson Co., 2018 U.S. Dist. LEXIS 19877, 2018 WL 741441, at *4 (N.D. Ill.). To the eye of this Court, the FAAAA’s preemption provision protects precisely parties such as the shipper and broker, who did not have direct involvement in the accident that injured Plaintiffs. “Contrary to Plaintiff[s’] argument that a finding of preemption leaves her without a remedy, [they] may and [have] sought recourse against the carrier . . . and [the] driver”. Id. This Court therefore finds Plaintiffs’ claims are not encompassed by the safety exception.

Because the Court finds Plaintiffs’ claims against shipper Target and broker Lipsey are preempted by the FAAAA and not protected by the safety exception, the claims must be dismissed.

Conclusion

For the foregoing reasons, good cause appearing, it is

ORDERED that Plaintiffs’ Motion to Strike (Doc. 34), be, and the same hereby is, DENIED; and it is

FURTHER ORDERED that Defendant Lipsey Logistics Worldwide, LLC’s Motion to Dismiss (Doc. 25), be, and the same hereby is, GRANTED; and it is

FURTHER ORDERED that Defendant Target Corporation’s Motion to Dismiss (Doc. 26), be and the same hereby is, GRANTED.

/s/ James R. Knepp II

UNITED STATES DISTRICT JUDGE

End of Document

¹Defendant Werner filed a Motion to Dismiss (Doc. 43), and Plaintiffs voluntarily dismissed Werner from the case under Rule 41(a)(1) (Doc. 46).

²Brokers are expressly included in this provision. Shippers are not. Plaintiffs argue this supports a conclusion that shipper Target is not covered by the law. (Doc. 30, at 2). The Supreme Court in Rowe considered shippers to be included as well. Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364, 372, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008). This Court accordingly interprets the FAAAA preemption provision as applicable to both shippers and brokers.