Houston, Tex. (May 24, 2024) - This week, in a helpful ruling for transportation brokers, the Eastern District of Texas opined that state law tort claims against brokers are preempted by the Federal Aviation Administration Authorization Act ("FAAAA"), 40 U.S.C. § 14501(c)(1). The Court granted a motion to dismiss claims of negligent brokering, holding that the plain language of the FAAAA expressly preempted the claims because they did not implicate the Act's safety exception.
The opinion presents an opportunity for freight brokers currently defending against tort claims in Texas (and nationally) to add this new authority to defensive filings designed to have claims dismissed from the outset. The importance of this opinion is underscored by the fact that, as noted by the Court, the Fifth Circuit "has not addressed" the question of FAAAA preemption of state law tort claims. However, this case, combined with a growing chorus of decisions around the country, are strong persuasive authority on the subject, and it is hoped that the Fifth Circuit will follow suit.
In Ashley Hamby, et. al. v. James Wilson, et. al., E.D.TX. 2024 WL 2303850 (May 21, 2024), the plaintiffs made wrongful death claims against J.B. Hunt after a tractor-trailer rear-ended a passenger truck, resulting in two deaths. In the petition, the plaintiffs alleged that J.B. Hunt had either acted as the motor carrier transporting the load, or that it had brokered the load. The petition asserted claims for negligent entrustment, negligent hiring, negligent retention, negligent training, negligent supervision and gross negligence against J.B. Hunt. J.B. Hunt filed a motion to dismiss based on the FAAAA preemption. The plaintiffs argued that there was a question as to whether the defendant had acted as a freight broker or as the motor carrier, and that even if J.B. Hunt was only the broker, the FAAAA's safety exception applied. Although the Court did not opine on which "label" to apply to J. B. Hunt, it held that if J.B. Hunt was the motor carrier, the complaint should be dismissed for failure to state a claim, and if it was merely the broker, the case should be dismissed as preempted by federal law.
Reasoning
The Court adopted the reasoning of the Seventh Circuit's decision in Ying Ye v. GlobalTranz Enterprises., Inc., 74 F.4th 453, 464 (7th Cir. 2023), concluding that negligent hiring claims do not fall under the safety exception: "[w]e 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."); citing 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 WL 444371, at *5–6, 7 (W.D. Tex. Jan. 27, 2020)."
In Ye, the Seventh Circuit first held that the negligent hiring claim fell comfortably within the language of the FAAAA's preemption provision. The Court then focused on whether the enforcement of Illinois' common law of negligence would have a significant economic effect on broker services. The Seventh Circuit concluded that it would, finding that the negligence claim in this case "strikes at the core" of the freight broker's services by challenging the sufficiency of the care the broker took in hiring the motor carrier to provide shipping services. Consequently, the Seventh Circuit held that the claim was expressly barred by the FAAAA's preemption provision.
The court further held that the Act's safety exception did not save the negligent hiring claim from preemption.
Specifically, the Court stated:
The Act's text makes clear that Congress views motor vehicle safety regulations separately and apart from those provisions imposing obligations on brokers. And this separateness counsels a reading of "with respect to motor vehicles" that requires a direct connection between the potentially exempted state law and motor vehicles. Any other construction would expand the safety exception's scope without a clear, text-based limit. So the Court agrees with the district court that the connection here—between a broker hiring standard and motor vehicles—is too attenuated to be saved under § 14501(c)(2)(A).
As the Seventh Circuit itself observed, its conclusion "aligns squarely" with the Eleventh Circuit's decision in Aspen American Insurance Co. v. Landstar Ranger, Inc., 65 F.4th 1261 (11th Cir. 2023). The Seventh Circuit also highlighted its disagreement with the Ninth Circuit's decision in Miller v. Robinson Worldwide, Inc., 976 F.3d 1016 (9th Cir. 2020) at length.
More specifically, in finding that a negligent hiring claim against a broker fell within the FAAAA's safety exception, the Seventh Circuit opined, the Ninth Circuit "unduly emphasized Congress's stated deregulatory purpose in passing the Act," improperly relied "on a presumption against preemption to resolve any ambiguity in the breadth of the safety exceptions' scope"— as acknowledged by the Ninth Circuit in its later decision of R.J. Reynolds Tobacco Co. v. County of Los Angeles, 29 F.4th 542 (9th Cir. 2022) — and disagreed with the Ninth Circuit's conclusion that the phrase "with respect to" appearing in the safety exception was "synonymous" with "relating to."
Takeaway
The Hamby decision and its critique of Miller provides freight brokers with solid additional ammunition to argue that the FAAAA's safety exception does not apply to negligent hiring claims against freight brokers, even when the claim involves bodily injury. With Hamby, Ye and Aspen as support, freight brokers should continue to argue for preemption of all claims based in common law tort.
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