Broker - Central Analysis Bureau

Hamby v. Wilson

United States District Court for the Eastern District of Texas, Tyler Division

May 21, 2024, Decided; May 21, 2024, Filed

Case No. 6:23-cv-249-JDK

Reporter

2024 U.S. Dist. LEXIS 90897 *; 2024 WL 2303850

ASHLEY HAMBY, et al., Plaintiffs, v. JAMES WILSON, et al., Defendants.

Core Terms

brokering, preemption, motor carrier, transportation, preempted, motor vehicle, motion to dismiss, negligent hiring, leave to amend, route, load, amended complaint, state law, regulation, motor vehicle safety, preemption clause, negligence claim, force and effect, gross negligence, cause of action, freight, courts, amend

Counsel: [*1] Paul M. Boyd, Mediator, Pro se, Tyler, TX.

For Ashley Hamby, Next Friend of Minors MMH, MJH, MSH, Ashley Webb, Next Friend of Minors GKW, EKW, IKW, Plaintiffs: Justin C Dewett, Morris & Dewett, LLC, Louisiana, Shreveport, LA; Steven Robert Samples, Samples Ames PLLC – Hurst, Hurst, TX; Wade Austin Barrow, Barrow Law, PLLC, Fort Worth, TX.

For James Wilson, Defendant: David George Allen, LEAD ATTORNEY, David Allen Law Group, PLLC, TX, Dallas, TX; Richard Ramirez, LEAD ATTORNEY, David Allen Law Group, PLLC, Dallas, TX.

For Euro Express, LLC, Defendant: David Patrick Helmey, Nicholas Samuel Van Cleve, The Fuentes Firm, PC, Spring, TX.

For Damir Arnaut, Defendant: David Patrick Helmey, LEAD ATTORNEY, The Fuentes Firm, PC, Spring, TX.

For J.B. Hunt Transport, Inc., Defendant: Van Edward Parham, III, Mayer LLP – Dallas, Dallas, TX.

Judges: JEREMY D. KERNODLE, UNITED STATES DISTRICT JUDGE.

Opinion by: JEREMY D. KERNODLE

Opinion

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT J.B. HUNT TRANSPORT’S MOTION TO DISMISS

Before the Court is Defendant J.B. Hunt Transport, Inc.’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Docket No. 35.¹ For the reasons explained below, the Court GRANTS the motion.

For purposes of this order, the Court accepts as true [*2] Plaintiffs’ well-pleaded facts in their Second Amended Complaint. Campbell v. Wells Fargo Bank, N.A., 781 F.2d 440, 442 (5th Cir. 1986).

This case arises from a December 11, 2021 tractor-trailer accident in Panola County, Texas. Defendant James Wilson was driving a tractor-trailer as an employee of Defendants Euro Express, LLC and Damir Arnaut. Docket No. 28 ¶¶ 14-17. Wilson rear-ended a passenger truck, resulting in the vehicle’s complete destruction and the deaths of driver Kaleb Hamby and passenger Gabriel Webb. Id. ¶ 30. Defendant J.B. Hunt Transport, Inc. was either retained as the motor carrier to transport the load Wilson was hauling during the collision, id. ¶ 61, or, alternatively, it brokered the load involved, id. ¶ 67. Plaintiffs also allege that Defendant Great Hauler, Inc. brokered the load being hauled during the accident. Id. ¶ 72.

Plaintiffs bring negligence, negligence per se, and gross negligence causes of action against Defendants James Wilson, Euro Express, and Damir Arnaut; negligence and gross negligence causes of action against Defendant J.B. Hunt; and a negligence cause of action against Defendant Great Hauler. Id. at 5-13.

Defendant J.B. Hunt now moves to dismiss Plaintiffs’ gross negligence, negligent entrustment, negligent hiring, [*3] negligent retention, negligent training, and negligent supervision claims because Plaintiffs’ Second Amended Complaint fails to plead sufficient facts to state a plausible claim for relief. J.B. Hunt also moves to dismiss the claims of negligent brokering, selection, and monitoring of a motor carrier as preempted by the Federal Aviation Authorization Administration Act, 49 U.S.C. §§ 14501, et seq. (the “FAAAA”).

II.

Federal Rule of Civil Procedure 8(a) requires a complaint to include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A complaint must plead “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). A claim will have “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009). “The plausibility standard is not akin to a ‘probability requirement’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556).

A complaint that fails to state a claim may be dismissed under Federal Rule of Civil Procedure 12(b)(6). Motions to dismiss under Rule 12(b)(6) are “viewed with disfavor and are rarely granted.” Lormand v. US Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009) (quoting Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 570 (5th Cir. 2005)). A claim cannot be dismissed under Rule 12(b)(6) unless the plaintiff “would not be entitled to relief under any set of facts or [*4] any possible theory that [it] could prove consistent with the allegations in the complaint.” Muhammad v. Dallas Cty. Cmty. Supervision & Corrs. Dep’t, 479 F.3d 377, 380 (5th Cir. 2007) (citing Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999)). When ruling on a motion to dismiss under Rule 12(b)(6), the Court must accept “all well-pleaded facts in the complaint as true and viewed in the light most favorable to the plaintiff.” Raj v. La. State Univ., 714 F.3d 322, 330 (5th Cir. 2013). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555).

III.

The Court first addresses J.B. Hunt’s argument that the Second Amended Complaint fails to plead facts sufficient to support the gross negligence, negligent entrustment, negligent hiring, negligent retention, negligent training, and negligent supervision claims against J.B. Hunt. Docket No. 36. In their response, Plaintiffs essentially agree and concede that their direct negligence claims against J.B. Hunt are deficient. Docket No. 43 at 11. Accordingly, the Court grants the motion to dismiss these claims against J.B. Hunt.

Plaintiffs, however, also seek leave to amend their complaint to cure the identified deficiencies. Id. at 11-12. The deadline to move for leave to amend pleadings was December 8, 2023. Docket No. 16 at 4. Plaintiffs asked to amend their complaint on February 13, [*5] 2024. Docket No. 43. Defendant J.B. Hunt did not respond to this request.

When a party seeks to amend its pleadings after the deadline in the Court’s scheduling order, Federal Rule of Civil Procedure 16(b) governs. Fahim v. Marriott Hotel Servs., Inc., 551 F.3d 344, 348 (5th Cir. 2008). Rule 16(b)(4) allows that a “schedule may be modified only for good cause and with the judge’s consent.” In determining whether a party has shown good cause, the Court considers four factors: “(1) the explanation for the failure to timely move for leave to amend; (2) the importance of the amendment; (3) potential prejudice in allowing the amendment; and (4) the availability of a continuance to cure such prejudice.” Fahim, 551 F.3d at 348 (quoting S&W Enters., LLC v. Southtrust Bank of Ala., NA, 315 F.3d 533, 536 (5th Cir. 2003)). The Court considers the four factors “holistically” instead of “mechanically count[ing] the number of factors that favor each side.” E.E.O.C. v. Serv. Temps, Inc., 2009 U.S. Dist. LEXIS 95667, 2009 WL 3294863, at *3 (N.D. Tex. Oct. 13, 2009).

Once the moving party demonstrates good cause under Rule 16(b), the Court considers the motion for leave to amend under Rule 15(a)(2), which provides that courts “should freely give leave [to amend] when justice so requires.” Whether to grant leave to amend pleadings under Rule 15 is “within the discretion” of the district court. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330, 91 S. Ct. 795, 28 L. Ed. 2d 77 (1971).

Plaintiffs seek leave to amend only under Rule 15(a)(2) and do not address Rule 16(b). Docket No. 42 at 12-13. Further, Plaintiffs have not attached a proposed amended complaint, as Local Rule CV-7(k) requires [*6] for a motion for leave to amend a complaint. Further, Defendants did not respond to this request, so the Court is unclear on Defendants’ position on the matter. Accordingly, the Court denies Plaintiffs’ request without prejudice. Plaintiffs may seek leave to amend their complaint through an appropriate motion fully addressing the governing factors under Rules 16(b) and 15(a)(2) and providing a copy of their proposed amended complaint.

IV.

Defendant J.B. Hunt also seeks to dismiss Plaintiffs’ claims of negligent brokering, including negligent selection of a motor carrier and negligent monitoring of a motor carrier, as preempted by the FAAAA. Docket No. 37. The FAAAA’s preemption clause provides that 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).

J.B. Hunt argues that the preemption clause should be broadly construed to bar Plaintiff’s negligent brokering claims because these common-law claims are “related” to the “service” of brokering “the transportation of property.” Docket [*7] No. 37 at 4-9. J.B. Hunt further argues that § 14501(c)(2)(A)’s “safety exception” does not save a negligent brokering claim from preemption. This provision of the FAAAA carves out an exception to the preemption clause, explaining that preemption “shall not restrict the safety regulatory authority of a State with respect to motor vehicles.” J.B. Hunt contends that a negligent brokering claim is not an exercise of the state’s safety and regulatory authority and is not “with respect to motor vehicles,” as the exception requires. Id. at 10-12.

Plaintiffs oppose dismissal for two reasons. First, Plaintiffs’ Second Amended Complaint leaves open whether J.B. Hunt was the broker or the motor carrier for the load involved in the accident. Docket No. 43 at 4-5. And, Plaintiffs note, J.B. Hunt’s preemption argument applies only to a broker, not a motor carrier. This fact question, Plaintiff asserts, renders dismissal under Rule 12(b)(6) inappropriate. Id. at 4. Second, even if J.B. Hunt acted as the broker, Plaintiffs contend that their negligence claim is exempt from preemption under the safety exception. Id. at 5-11.

The Fifth Circuit has not addressed FAAAA preemption of state law tort claims. But other courts have generally [*8] taken three different approaches to the question. See Bertram v. Progressive Se. Ins. Co, 2021 U.S. Dist. LEXIS 131251, 2021 WL 2955740, at *2 (W.D. La. July 14, 2021).

First, some courts have found that § 14501’s express preemption language does not apply to state tort claims because negligent hiring or brokering claims are not sufficiently “related to” the “price, route, or service” of a broker. E.g., Meek v. Toor, 2024 U.S. Dist. LEXIS 38206, 2024 WL 943931, at *2 (E.D. Tex. Mar. 5, 2024) (“The Court is not convinced by the rationale that hiring and oversight of transportation companies is so central to the services of freight brokers that negligent hiring claims would significantly impact the services of a freight broker.”); Scott v. Milosevic, 372 F. Supp. 3d 758, 769 (N.D. Iowa 2019) (holding that “the FAAAA does not preempt personal injury claims” against a broker); Mann v. C.H. Robinson Worldwide, Inc., 2017 U.S. Dist. LEXIS 117503, 2017 WL 3191516, at *7 (W.D. Va. July 27, 2017) (explaining that “a negligent hiring claim as an avenue for imposing liability for an accident does not have anything more than a ‘tenuous, remote, or peripheral’ connection to the ‘price, route, or service’ of a broker”).

Second, some courts have found that although § 14501’s express preemption language does apply to state tort claims, such claims are saved from preemption by the safety regulatory exception. E.g., Miller v. C.H. Robinson Worldwide, Inc., 976 F.3d 1016 (9th Cir. 2020); Lopez v. Amazon Logistics, Inc., 458 F. Supp. 3d 505, 512-16 (N.D. Tex. 2020) (“The Court thus finds Plaintiffs’ negligent-hiring claim falls within the scope of the safety regulation exception.”); Johnson v. Herbert, 2023 U.S. Dist. LEXIS 234716, 2023 WL 9503459, at *6-7 (E.D. Tex. Oct. 20, 2023) (“[T]he Court holds that the exception under Section 14501(c)(2)(A) applies [*9] to Johnson’s negligent hiring claim and thus that the FAAAA does not preempt her cause of action.”).

Third, some courts have determined that § 14501’s express preemption applies to state tort claims and that the safety exception does not save them from preemption. Ye v. GlobalTranz Enters., Inc., 74 F.4th 453, 464 (7th Cir. 2023) (“We thus conclude that Ye’s negligent hiring claim against GlobalTranz does not fall within the scope of § 14501(c)(2)’s safety exception. The claim is preempted and therefore properly dismissed by the district court.”); Aspen Am. Ins. Co. v. Landstar Ranger, Inc., 65 F.4th 1261, 1272 (11th Cir. 2023) (“Aspen’s negligence claims are not ‘with respect to motor vehicles’ under the FAAAA’s safety exception. They are thus barred by its express preemption provision.”); Gillum v. High Standard, LLC, 2020 U.S. Dist. LEXIS 14820, 2020 WL 444371, at *5-6, 7 (W.D. Tex. Jan. 27, 2020).

As explained below, the Court finds the reasoning of this third group most persuasive because they most clearly honor the statutory text. The Court thus concludes that § 14501’s express language preempts a negligent brokering claim and that the safety exception does not save the claim from preemption.

The Court first considers whether a negligent brokering claim falls within the FAAAA’s express preemption provision.

Congress can indicate its preemptive intent either expressly, through a statute’s plain language, or impliedly, through its “structure and purpose.” Union Pac. R.R. Co. v. City of Palestine, 41 F.4th 696, 704 (5th Cir. 2022) (quoting [*10] Altria Grp., Inc. v. Good, 555 U.S. 70, 76, 129 S. Ct. 538, 172 L. Ed. 2d 398 (2008)). When a statute includes an express preemption clause—as here—”the court does not indulge ‘any presumption against preemption but instead focus[es] on the plain wording of the clause, which necessarily contains the best evidence of Congress’ preemptive intent.'” Young Conservatives of Tex. Found. v. Smatresk, 73 F.4th 304, 311 (5th Cir. 2023) (quoting Puerto Rico v. Franklin Cal. Tax-Free Tr., 579 U.S. 115, 125, 136 S. Ct. 1938, 195 L. Ed. 2d 298 (2016)).

As noted above, the FAAAA’s preemption clause prohibits a state from enacting or enforcing “a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1).

The first question is thus whether a common law negligence claim is “a law, regulation, or other provision having the force and effect of law.” It is. Because “a common-law rule clearly has ‘the force and effect of law,'” such rules “fall comfortably within the language” of preemption provisions like the FAAAA’s. Northwest, Inc. v. Ginsberg, 572 U.S. 273, 281-82, 134 S. Ct. 1422, 188 L. Ed. 2d 538 (2014); see also Ye, 74 F.4th at 459; Aspen Am. Ins., 65 F.4th at 1266; Lopez, 458 F. Supp. 3d at 512.

The second question is whether a negligent brokering claim is “related to a price, route, or service” of a broker. “[T]he key phrase ‘related to’ expresses a ‘broad pre-emptive purpose.'” Northwest, 572 U.S. at 280 (considering preemption under the Airline Deregulation Act); see also Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 260, 133 S. Ct. 1769, 185 L. Ed. 2d 909 (2013) (interpreting the FAAAA’s preemption clause). But “‘related [*11] to’ does not mean the sky is the limit.” Dan’s City Used Cars, 569 U.S. at 261. And § 14501(c)(1) “does not preempt state laws affecting carrier prices, routes, and services in only a tenuous, remote, or peripheral . . . manner.” Id. (quoting Rowe v. N.H. Motor Transport A’ssn, 552 U.S. 364, 371, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008)) (internal quotations omitted).

Here, Plaintiffs’ allegations supporting their negligent brokering claim go directly to the services of a broker. A broker’s service is “selling, providing, or arranging for, transportation by motor carrier for compensation.” 49 U.S.C. § 13102(2) (defining “broker”). In other words, selecting a motor carrier to transport a load is the essential service of the broker. Plaintiffs’ Second Amended Complaint alleges that J.B. Hunt “had a duty to select a competent motor carrier” and “had an ongoing duty to monitor Euro Express to ensure it was a competent motor carrier” to transport the load involved in the accident leading to this case. Docket No. 28 ¶¶ 69, 70. And Plaintiffs’ negligent brokering claim stems from J.B. Hunt’s alleged breach of that duty. Id. ¶ 71. Thus, the negligent brokering claim is fundamentally “related to” the broker’s service of selecting a competent motor carrier. Ye, 74 F.4th at 459; Aspen Am. Ins., 65 F.4th at 1267-68; Miller, 976 F.3d at 1024-25; Gillum, 2020 U.S. Dist. LEXIS 14820, 2020 WL 444371, at *4 (finding that Texas negligence claims against a freight broker “relate to” the broker’s services). [*12]

Because Plaintiffs’ negligent brokering claim is “a law, regulation, or other provision having the force and effect of law” that is “related to a price, route, or service” of a broker, the plain language of the FAAAA expressly preempts Plaintiffs’ claim here unless it falls within one of the statute’s exceptions.

Plaintiffs argue that their negligent brokering claim is not preempted due to the safety exception in § 14501(c)(2)(A). Docket No. 43 at 5-11. The Court disagrees. See, e.g., Ye, 74 F.4th at 460-65; Aspen Am. Ins., 65 F.4th at 1268-72.

Under § 14501(c)(2)(A), the FAAAA’s preemption clause “shall not restrict the safety regulatory authority of a State with respect to motor vehicles.” To meet this exception, a common law negligence claim must be (1) within a state’s “safety regulatory authority” and (2) “with respect to motor vehicles.” Because the Court concludes that a negligent brokering claim is not “with respect to motor vehicles,” it need not consider the first half of the exception. See Aspen Am. Ins., 65 F.4th at 1273 (Jordan, J., concurring).

“By limiting the safety exception to apply to state laws ‘with respect to motor vehicles,’ Congress narrowed the scope of the exception to those laws concerning a ‘vehicle, machine, tractor, trailer, or semitrailer . . . used on a highway in transportation.'” [*13] 49 U.S.C. § 13102(16) (defining “motor vehicle”). Ye, 74 F.4th at 460. This narrow exception requires a direct link between the state law in question and motor vehicle safety. Id.; Aspen Am. Ins., 65 F.4th at 1271. And there is no direct link between Plaintiffs’ negligent brokering claim and motor vehicle safety.

In its thorough analysis of the statute, the Ye court found a clear delineation between brokers and motor vehicle safety. Id. at 460-64. For example, after implementing the broad preemptive provision of § 14501(c)(1), Congress carved out specific exceptions for state laws for motor vehicle safety, cargo loads, motor carrier insurance, transportation of household goods, and two truck operations. Id. at 461 (citing § 14501(c)(2)). But despite specifically mentioning brokers in § 14501(c)(1), Congress conspicuously failed to mention brokers in any of the preemption exceptions. The Ye court also points out that while § 14501(b)(1) preempts state laws “relating to intrastate rates, intrastate routes, or intrastate services of any freight forwarder or broker,” Congress omitted a safety exception for brokers in § 14501(b) paralleling that of § 14501(c)(2). Id.; see also Aspen Am. Ins., 65 F.4th at 1271-72 (similarly holding that the safety exception applies only to state laws that have a direct relationship to motor vehicles based on the Supreme Court’s finding that a similar phrase in [*14] § 14501(c)(1) “massively limits” the scope of preemption and because allowing an indirect relationship would render portions of § 14501(c)(2)(A) non-operative or redundant).

The Court thus concludes that the safety exception excepts from preemption only state laws or regulations that have a direct relationship to motor vehicle safety. And a negligent hiring or brokering claim is not directly related to motor vehicle safety. Indeed, in their negligent brokering claim, Plaintiffs allege that J.B. Hunt breached its duty by failing to select a competent motor carrier. Docket No. 28 ¶¶ 67-71. But this section of the complaint “does not purport to enforce any standard or regulation on the ownership, maintenance, or operation of” a motor vehicle as defined by 49 U.S.C. § 13102(16). See Aspen Am. Ins., 65 F.4th at 1272. And the “attenuated connection” between the broker and the safety of the motor vehicles operated by the motor carrier “is simply too remote for the safety exception” to apply to a negligent brokering claim. Miller, 976 F.3d at 1031 (Fernandez, J., concurring in part and dissenting in part).

As mentioned, Plaintiffs argue that the complaint leaves open whether J.B. Hunt was the broker or motor carrier for the load at issue, and that the Court should therefore deny J.B. Hunt’s motion [*15] to dismiss the negligent brokering claim at this stage of the case. See Docket No. 43 at 4-5. The Court disagrees. If J.B. Hunt was the broker, then the claim should be dismissed as preempted, as discussed above. If, on the other hand, J.B. Hunt was the motor carrier, then the claim should be dismissed for failure to state a claim. Either way, dismissal of the negligent brokering claim is appropriate under Rule 12(b)(6).

For the reasons explained above, the Court GRANTS Defendant J.B. Hunt’s motion to dismiss (Docket No. 35) Plaintiffs’ gross negligence, negligent entrustment, negligent hiring, negligent retention, negligent training, and negligent supervision claims against J.B. Hunt. Plaintiffs’ request to amend their complaint as to these claims is DENIED without prejudice. Plaintiffs may seek leave to amend their complaint through an appropriate motion.

Further, the Court concludes that Plaintiffs’ negligent brokering claim is preempted by 49 U.S.C. § 14501(c)(1) and is not excepted from preemption by the safety exception clause of § 14501(c)(2)(A). Accordingly, the Court GRANTS Defendant J.B. Hunt’s motion to dismiss (Docket No. 35) Plaintiffs’ negligent brokering claim.

So ORDERED and SIGNED this 21st day of May, 2024.

/s/ Jeremy [*16] D. Kernodle

JEREMY D. KERNODLE

UNITED STATES DISTRICT JUDGE

End of Document

¹Defendant J.B. Hunt filed its motion as a standalone four-page docket entry (Docket No. 35). It then filed a separate seven-page brief supporting its argument to dismiss Plaintiffs’ direct negligence claims (Docket No. 36) and yet another twelve-page brief supporting its argument to dismiss Plaintiffs’ negligent broker claims (Docket No. 37). The Court reminds the parties that Local Rule CV-7(c) requires that a motion and any briefing be contained in a single document. Further, Local Rule CV-7(a)(2) limits non-case-dispositive motions to fifteen total pages. As per the Court’s Order Governing Proceedings (Docket No. 10), counsel are instructed to review the most recent versions of the Federal Rules of Civil Procedure and the Local Rules for the Eastern District of Texas.

Morales v. OK Trans, Inc.

United States District Court, S.D. Texas, Corpus Christi Division.

ADRIANNA MORALES, et al., Plaintiffs,

OK TRANS, INC., et al., Defendants.

CIVIL ACTION NO. 2:19-CV-00094

Filed 03/29/2024

MEMORANDUM OPINION GRANTING PENSKE LOGISTICS’ MOTION FOR SUMMARY JUDGMENT

DAVID S. MORALES UNITED STATES DISTRICT JUDGE

*1 Before the Court is Defendant Penske Logistics LLC’s (“Penske”) motion for summary judgment. (D.E. 180). Plaintiffs are opposed to the motion. See (D.E. 196, p. 1). For the reasons below, the Court GRANTS the motion. (D.E. 180).

I. Background

The facts of this case are straightforward and were recounted in the Court’s order denying Penske’s earlier motion for summary judgment. See (D.E. 123, p. 1–3). On or about December 26, 2018, in Bee County, Texas, Satnam Singh Lehal was driving a tractor-trailer owned and operated by OK Transport, Inc. (“OK Trans.”). See (D.E. 223, p. 10). At some point, the tractor-trailer jackknifed, crossed into the oncoming lane, and collided with a pick-up truck driven by Lyndon Dean Meyer, who died on impact. See id. at 10–11.

Penske previously moved for summary judgment, arguing that it acted as a broker and not a motor carrier for purposes of the shipment at issue in this case. See (D.E. 98, p. 5–6, 9–10). The Court denied that motion, finding disputed fact issues as to whether Penske acted as a motor carrier or broker. See (D.E. 123, p. 7–10).

In the instant motion, Penske assumes—for purposes of this motion only—that it acted as a motor carrier and not as a broker. See (D.E. 180, p. 1–2, n.1, 6). According to Penske, even if it acted as a motor carrier, it was not Lehal’s statutory employer because it had no arrangement with Lehal or OK Trans. See id. at 6–10.

II. Legal Standard

Summary judgment is warranted “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). A dispute is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is material if it “might affect the outcome of the suit under the governing law[.]” Id. In determining whether a judgment as a matter of law is appropriate, the court must decide “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Id. at 251–52. The “court must view the evidence ‘in the light most favorable to the [nonmovant].’ ” Tolan v. Cotton, 572 U.S. 650, 657 (2014) (per curiam) (quoting Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970)). A court is not required to search the record for evidence supporting a party’s opposition to summary judgment. Stults v. Conoco, Inc., 76 F.3d 651, 657 (5th Cir. 1996); Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994).

The movant bears the “initial responsibility” to present evidence proving that no genuine dispute of material fact exists, but the movant does not have to present supporting evidence “negating the opponent’s claim.” See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (emphasis omitted). If the movant “fails to meet this initial burden, the motion must be denied, regardless of the nonmovant’s response.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (per curiam). If the movant meets this burden, then the burden shifts to the nonmovant to “go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial.” Id. (citing Celotex, 477 U.S. at 324). The nonmoving party “must identify specific evidence in the summary judgment record” and demonstrate how that evidence supports their claim. Baranowski v. Hart, 486 F.3d 112, 119 (5th Cir. 2007) (internal quotations and citations omitted). The nonmoving party’s burden cannot be satisfied by “conclusory allegations, unsubstantiated assertions, or only a scintilla of evidence.” Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007) (internal quotations and citation omitted). If the nonmovant fails to meet this burden, then the movant is entitled to summary judgment. Little, 37 F.3d at 1076.

III. Discussion

A. The Statutory-Employer Doctrine

*2 As discussed in the Court’s previous order granting Plaintiffs’ partial motion for summary judgment, there are two theories of statutory employment. See (D.E. 258, p. 3). Only the “responsibility and control” theory is relevant here. See (D.E. 196, p. 7–8 (containing no argument that Penske is Lehal’s employer as contemplated by 49 C.F.R. § 390.5)); D.E. 213, p. 2). Under the responsibility and control theory, an entity is a statutory employer if four conditions are met:

(1) the entity is a motor carrier and not a broker;

(2) it does not own the vehicle involved in the incident;

(3) it is using the vehicle in interstate commerce; and

(4) it does not employ the driver.

See (D.E. 123, p. 4) (order denying Penske’s previous motion for summary judgment); Sentry Select Ins. Co. v. Drought Transp., LLC, No. 15-CV-890, 2017 WL 5382168, at *2 (W.D. Tex. May 3, 2017) (Lamberth, J.); Sharpless v. Sim, 209 S.W.3d 825, 829 (Tex. App.—Dallas 2006, pet. denied)); McKeown v. Rahim, 446 F. Supp. 3d 69, 78–79 (W.D. Va. 2020) (Dillon, J.).

Only the third condition—whether Penske used the vehicle at issue in interstate commerce—is relevant to the instant motion.¹ See (D.E. 180; D.E. 196, p. 2). After viewing all the evidence in the light most favorable to Plaintiffs, the Court finds that Penske is entitled to summary judgment because a motor carrier cannot use a vehicle in interstate commerce unless it has an arrangement with the owner or driver of the vehicle.

As an initial matter, the parties disagree as to the proper wording of the condition at issue—Penske argues that the Court must determine whether “the carrier operates the vehicle under an arrangement with the owner to provide transportation subject to federal regulations[.]” See (D.E. 180, p. 7) (quoting Hernandez v. Union Pac. R.R. Co., No. EP-17-CV-7, 2018 WL 4169328, at *3 (W.D. Tex. June 13, 2018) (Montalvo, J.)). Conversely, Plaintiffs focus on whether Penske “used” the vehicle owned by OK Trans. See (D.E. 196, p. 7). In reply, Penske suggests that relying on Sentry Select Ins. Co., 2017 WL 5382168, at *2, for the “use” standard is misguided. See (D.E. 213, p. 3 n.1). In Sentry, the court cited Sharpless, 209 S.W.3d at 829, for the proposition that the correct condition is that “the company is using the truck in interstate commerce[.]” 2017 WL 5382168, at *2 (emphasis added). But Sharpless provides a slightly different standard: “the carrier operates the vehicle under an ‘arrangement’ with the owner to provide transportation subject to federal regulations[.]” 209 S.W.3d at 829 (citation omitted).

At bottom, the parties’ disagreement turns on whether a motor carrier is statutorily liable for a driver’s negligence only when that carrier has a direct arrangement with the owner of the vehicle. See (D.E. 196, p. 7; D.E. 213, p. 4–5). This Court has yet to address this question—in its D.E. 258 order, the Court held that Liberty Lane “used” OK Trans’s vehicle to fulfill its obligation to transport the shipment on behalf of Penske. (D.E. 258, p. 8). There, it was undisputed that Liberty Lane had an arrangement with OK Trans, the owner of the vehicle, to transport the shipment. See id. (finding that “Liberty Lane had an agreement with OK Trans that Lehal would drive OK Trans’s vehicle on behalf of Liberty Lane to fulfill Liberty Lane’s agreement with Penske”). Conversely, in the instant motion, Penske argues that it had no arrangement with OK Trans. See (D.E. 180, p. 6; D.E. 213, p. 5).

*3 As such, the Court must determine: (1) whether an arrangement between a motor carrier and the owner or driver of a vehicle is required before the motor carrier may be considered the driver’s statutory employer—thus subjecting the motor carrier to vicarious liability—and (2) if so, whether a direct arrangement existed between Penske and OK Trans or Lehal.

B. Whether an Arrangement is Necessary

Penske argues that it cannot be Lehal’s statutory employer because “there was no written or oral lease, or any other arrangement[,]” between Penske and Lehal or OK Trans. (D.E. 180, p. 6). According to Penske, it is five steps removed from Lehal—Penske contracted Penske Transportation Management LLC (“PTM”) to broker the shipment to Liberty Lane; Liberty Lane contracted Liberty Commercial, LLC, to sub-broker the shipment to OK Trans; and OK Trans employed Lehal to drive the shipment. See id. at 7. Penske argues that five steps removed is four steps too many; absent a “direct arrangement,” it cannot be vicariously liable for Lehal’s negligence. Id. at 7–8. Conversely, Plaintiffs argue that the Court may impose statutory-employer liability on Penske even absent a direct arrangement between Penske and OK Trans or Lehal. (D.E. 196, p. 2).

As discussed in the Court’s order granting Plaintiffs’ motion for partial summary judgment, Congress amended federal law in 1956 to require motor carriers to assume control of the vehicles they lease. (D.E. 258, p. 10–11); Price, 727 F.2d at 496. In relevant part, 49 U.S.C. § 14102 provides:

(a) General authority of Secretary—The Secretary may require a motor carrier providing transportation subject to jurisdiction under subchapter I of chapter 135 that uses motor vehicles not owned by it to transport property under an arrangement with another party to—

(1) make the arrangement in writing signed by the parties specifying its duration and the compensation to be paid by the motor carrier;

(2) carry a copy of the arrangement in each motor vehicle to which it applies during the period the arrangement is in effect;

(3) inspect the motor vehicles and obtain liability and cargo insurance on them; and

(4) have control of and be responsible for operating those motor vehicles in compliance with requirements prescribed by the Secretary on safety of operations and equipment, and with other applicable law as if the motor vehicles were owned by the motor carrier.

49 U.S.C. § 14102(a). The intent of the amendments was “to ensure that interstate motor carriers would be fully responsible for the” operation of leased vehicles “and the supervision of drivers, thus protecting the public” from motor carriers who might otherwise attempt to shirk financial responsibility for accidents. Crocker v. Morales-Santana, 854 N.W.2d 663, 668 (N.D. 2014) (citation omitted); see also Simmons, 478 F.2d at 866–67, 866 n.21. Consistent with the text and purpose of the statute, the Department of Transportation promulgated regulations—referenced throughout this Order as the “responsibility and control” regulations—requiring motor carriers who use equipment they do not own to enter into written leases with the entity that owns the equipment. See 49 C.F.R. §§ 376.11–.12. The regulations further require that the lease grant the motor carrier “exclusive possession, control, and use of the equipment for the duration of the lease” and that the lease “provide that the authorized carrier lessee shall assume complete operation for the operation of the equipment for the duration of the lease.” Id. § 376.12(c)(1).

*4 Courts applying § 14102 and the responsibility and control regulations regularly impose statutory-employer liability on motor carriers when the carrier has a direct arrangement with the owner or driver of the vehicle at issue. See Puga, 227 F. Supp. 3d at 763–64 (imposing statutory-liability on a motor carrier where there was evidence of an arrangement between the carrier and the driver); Taghavi v. Soto, No. 3:21-CV-2557-S-BN, 2023 WL 7862769, at *4 (W.D. Tex. Oct. 12, 2023) (Horan, Mag. J.) (articulating that statutory-employer liability requires that a carrier operate the vehicle under an arrangement with the owner), adopted, No. 3:21-CV-2557-S-BN, 2023 WL 7706721, at *1 (Nov. 14, 2023) (Scholer, J.); Del Real v. Transportes De Carga FEMA S.A. de C.V., No. 5:17-CV-00129, 2018 WL 11429351, at *3–4 (S.D. Tex. Nov. 2, 2018) (Saldaña, J.) (finding no statutory-employment liability where there was no evidence that carrier had an arrangement with driver); Hutchinson v. Shuman, No. 4:07-CV-37, 2008 WL 11342643, at *4 (N.D. Miss. June 24, 2008) (Aycock, J.) (imposing statutory-employer liability where the carrier had a contract with the owner of the vehicle); Zamalloa v. Hart, 31 F.3d 911, 918 (9th Cir. 1994) (“[Motor] carriers are liable as the statutory employers of the drivers from whom they lease trucks during the term of the lease, regardless of whether the lease is written or oral.”); Sharpless, 209 S.W.3d 825, 829–30 (Tex. App.—Dallas 2006, no pet.) (affirming trial court’s decision finding statutory-employer liability where there was an arrangement between the carrier and the driver).²

Conversely, this Court found no cases where a court imposed statutory-employer liability absent an arrangement between the motor carrier and the vehicle’s owner or driver. And while Plaintiffs argue that nothing in § 14102(a)’s text requires an arrangement between Penske and Lehal or OK Trans, (D.E. 196, p. 7–8), they fail to grapple with the responsibility and control regulations, see id. These regulations require a lease between a motor carrier who uses equipment it does not own and the owner of that equipment. See 49 C.F.R. § 376.12(a). The regulations also define a “lease” as an “arrangement in which the owner grants the use of equipment, with or without driver, for a specified period to an authorized carrier for use in the regulation transportation of property[.]” 49 C.F.R. § 376.2 (emphasis added); see also Shimko v. Jeff Wagner Trucking, LLC, No. 11-CV-831, 2013 WL 10075919, at *4 (W.D. Wis. June 28, 2013) (Conley, J.). In their attempt to expand statutory-employer liability to arrangements between motor carriers, Plaintiffs cite § 376.22, (D.E. 196, p. 9–11), which contemplates an arrangement where a motor carrier lessor holds equipment under a lease and then leases that same equipment to a second motor carrier. In this scenario, § 376.22 requires the motor carriers to enter into a “written agreement” providing “that control and responsibility for the operation of the equipment shall be that of the lessee from the time possession is taken by the lessee[.]” § 376.22(c)(2). But Plaintiffs cite no cases, and the Court found none, where a court has applied § 376.22 to impose statutory-employer liability on a carrier with no relationship to the owner or driver of the equipment. See (D.E. 196). This lack of case law makes sense, as the statutory and regulatory scheme at issue here is concerned with motor carriers trying to escape liability for negligent drivers by leasing equipment and then treating the drivers of the leased equipment as independent contractors. See Waldhart v. 7S Trucking, Inc., No. 4:15-CV-101, 2016 WL 11476943, at *4 (D. N.D. Dec. 9, 2016) (Erickson, J.). But a lease between two authorized carriers is outside this concern. Because the motor carrier who leased the equipment from the owner is subject to the statutory-employer doctrine, the public is protected from a motor carrier’s attempt to designate the driver as an independent contractor to avoid liability.³

*5 Granted, this Court agrees with Plaintiffs that failure to comply with the written lease requirement in § 14102 or the responsibility and control regulations does not shield a carrier from statutory-employer liability. See (D.E. 258); Jackson v. O’Shields, 101 F.3d 1083, 1089 (5th Cir. 1996). As Judge Ramos stated in Puga, “any requirement of a lease is a consequence of triggering the statute, not the means for triggering the statute. Therefore, no lease—written or oral—is required prior to imposing statutory liability[.]” 227 F. Supp. 3d at 764. As such, motor carriers cannot skirt statutory liability by failing to formalize their arrangements into leases. But here Penske argues that it had no arrangement with OK Trans or Lehal at all—not that it had an arrangement but did not formalize it via a written or oral lease. See (D.E. 180, p. 6). And § 14102(a) is concerned with whether the “necessary relationship” exists—not whether it is termed a lease. See Puga, 227 F. Supp. 3d at 764.⁴ The Court also agrees with Plaintiffs that “use” presupposes the existence of an arrangement. See (D.E. 196, p. 9) (arguing that, barring theft, any “use” necessitates an arrangement). The question is whom that arrangement must be between. And after considering the text of § 14102, the responsibility and control regulations, and the relevant case law, the Court finds that an arrangement must exist between the motor carrier and the owner or driver of the vehicle at issue to trigger statutory-employer liability. To hold otherwise would expand the scope of the statutory-employer doctrine beyond that which other courts have articulated. This Court declines to take that step.

C. Whether an Arrangement Existed Between Penske and OK Trans or Lehal

The parties agree that Penske’s arrangement was with Liberty Lane and not with OK Trans or Lehal. See (D.E. 180, p. 6–7) (containing Penske’s allegations that it did not have an arrangement with OK Trans or Lehal); (D.E. 196, p. 7–8) (Plaintiffs’ response, which argues that Penske is “Lehal’s statutory employer even though Penske’s arrangement was with Liberty”) (emphasis added)). In fact, Plaintiffs admit that “Penske did not directly communicate with [OK Trans] or Lehal[.]” (D.E. 196, p. 9). Thus, it is undisputed that Penske did not have an arrangement with OK Trans or Lehal.

The Court acknowledges Plaintiffs’ contention that there is evidence from which a jury could find that Liberty Lane advised Penske’s sister company, PTM, that OK Trans would transport the shipment. See id. at 4–5. However, even assuming PTM knew that OK Trans would transport the shipment, that knowledge is insufficient to create a factual dispute as to the existence of an arrangement as between Penske and OK Trans. Notably, Plaintiffs do not allege that Penske was aware that OK Trans was to transport the shipment—only that PTM was. See id. at 4–5. And even if Penske was aware that Liberty Commercial had sub-brokered the shipment to OK Trans, there is no evidence that Penske engaged OK Trans in any manner. As such, no arrangement existed, and Penske is entitled to judgment as a matter of law.

IV. Conclusion

For the reasons above, the Court GRANTS Defendant Penske’s motion for summary judgment. (D.E. 180).

SO ORDERED.

Corpus Christi, Texas

All Citations

Footnotes

Penske concedes it acted as a motor carrier for purposes of this motion. See (D.E. 180, p. 6) (noting that “even if” Plaintiff’s allegation that Penske acted as a motor carrier is “accepted as true for purposes of this motion, Plaintiffs’ claims against [Penske] cannot succeed.”). Plaintiffs agree. See (D.E. 196, p. 6). As such, the first condition is not at issue. And Penske admits that it “did not own the vehicle involved in the subject accident, nor did it employ [Lehal].” (D.E. 180, p. 7). Thus, only the third condition is at issue here.
It does not appear that the issue of whether an arrangement between the owner or driver of a vehicle and the motor carrier leasing the vehicle is necessary to impose statutory liability was before any of the courts in these cases. Rather, each case involved facts where the motor carrier had an arrangement with the owner or driver of the vehicle at issue.
This in no way suggests a driver can have only one statutory employer. The Court previously rejected that argument, see (D.E. 287, p. 8–9), and does so again here. When multiple motor carriers have arrangements with the owner or driver of a vehicle, then multiple motor carriers may be subject to the statutory-employer doctrine. Id.
The issue of what constitutes a “necessary relationship” to impose statutory liability was not squarely before the Puga court. See id.

End of Document