Broker - Central Analysis Bureau

Wardingley v. Ecovyst Catalyst Techs., LLC

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

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

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

Reporter

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

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

Core Terms

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

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

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

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

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

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

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

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

Opinion by: PHILIP P. SIMON

Opinion

OPINION AND ORDER

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

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

Factual Background

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

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

Discussion

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

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

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

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

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

[L]aw, regulation, [*7] or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.

49 U.S.C. § 14501(c)(1). For starters, reasonable people may wonder whether state tort claims are even implicated by this preemption provision. They are. So held the Supreme Court in Northwest, Inc. v. Ginsberg, 572 U.S. 273, 284, 134 S. Ct. 1422, 188 L. Ed. 2d 538 (2014).¹ See also Non Typical, Inc. v. Transglobal Logistics Grp. Inc., Nos. 10-C-1058 & 10-C-0156, 2012 U.S. Dist. LEXIS 73452, 2012 WL 1910076, at *2 (E.D. Wis. May 28, 2012) (collecting cases).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[S]hall not restrict the safety regulatory authority of a State with respect to motor vehicles, the authority of a State to impose highway route controls or limitations based on the size or weight of the motor vehicle or the hazardous nature of the cargo, or the authority of a State to regulate motor carriers with regard to minimum amounts of financial responsibility relating to insurance requirements and self-insurance authorization.

49 U.S.C. § 14501(c)(2)(A) (emphasis added). In recent years, following the Ninth Circuit’s analysis in Miller v. C.H. Robinson Worldwide, Inc., several lower courts have interpreted this language [*17] to spare state common law claims asserted against freight brokers from FAAAA preemption. 976 F.3d at 1026-31; see, e.g., Crouch, 563 F. Supp. 3d at 876; Montgomery, 2021 U.S. Dist. LEXIS 170782, 2021 WL 4129327, at *2-3; Finley, 2018 U.S. Dist. LEXIS 182482, 2018 WL 5284616, at *5.

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

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

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

Conclusion

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

SO ORDERED.

ENTERED: November 4, 2022.

/s/ Philip P. Simon

PHILIP P. SIMON, JUDGE

UNITED STATES DISTRICT COURT

End of Document

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

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

Nicholas Meat, LLC v. Pittsburgh Logistics Sys.

Superior Court of Pennsylvania

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

No. 1398 WDA 2021

Reporter

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

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

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

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

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

Core Terms

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

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

Opinion by: McCAFFERY

Opinion

MEMORANDUM BY McCAFFERY, J.:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

PLS presents two issues for our review:

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

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

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

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

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

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

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

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

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

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

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

Id. (citations & quotation marks omitted).

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

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

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

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

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

Trial Ct. Memorandum Op. at 8-9.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[A] State . . . may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.

49 U.S.C. § 14501(c)(1) (emphasis added).

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

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

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

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

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

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

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

Judgment affirmed.

Judgment Entered.

Date: 10/04/2022

End of Document

^*Retired Senior Judge assigned to the Superior Court.

¹Our Supreme Court has explained:

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

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

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

³49 U.S.C. §§ 101-80504.

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

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

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

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

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

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

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

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