Eleventh Circuit Ruling on FAAAA Preemption of Freight Broker Tort Claims Sets Up Circuit Split
Houston, Texas (April 18, 2023) – This week, the Eleventh Circuit Court of Appeals issued a ruling that sets up a split in authority over whether freight broker tort claims are preempted by the Federal Aviation Administration Authorization Act (FAAAA) (40 U.S.C. § 14501(c)(1), and whether those claims are excluded from preemption under the “safety exception” found in 49 U.S.C. § 14501(c)(2)(A). Essentially, the court held that the construction of the statute's exception used specific and intentional language and thus does not accommodate general state law negligence claims, regardless of whether they are safety concerns and within the state's safety regulatory authority.
Aspen American Insurance Company v. Landstar Ranger, Inc.
In Aspen Am. Ins. Co. v. Landstar Ranger, Inc., 11 Cir. No. 22-10740, ECF Doc. No. 33-1 (April 13, 2023), a freight broker was contracted to arrange transport for a load from Colorado to Maryland. The load was assigned to a company that the broker believed was one of its fully vetted and approved carriers. However, someone was impersonating the company and took the load without the knowledge of the broker. The shipper filed a claim with its insurance company (Aspen), which in turn filed suit against the broker for allowing the load to be obtained by the impersonator, who stole the goods. Specifically, Aspen asserted the typical negligent hiring, supervision, and retention, and negligent entrustment claims against the broker.
At the trial court level, the United States District Court for the Middle District of Florida granted the broker’s motion to dismiss based on FAAAA preemption and the inapplicability of the safety exception, holding that the “safety exception” applies only when the FAAAA “restrict(s) the safety regulatory authority of a State with respect to motor vehicles.
Specifically, in Aspen, the court stated:
That Aspen’s state law claims seek to enforce a standard that is within “the safety regulatory authority of a state” is necessary, but not sufficient, to sidestep FAAAA preemption. That standard must also be “with respect to motor vehicles.” And, here, we agree with Landstar that it is not . . .. Accordingly, if an indirect connection between a state law and a motor vehicle satisfied the safety exception, then the phrase “with respect to motor vehicles” would have no meaningful operative effect. That interpretation would thus violate the “basic premise of statutory construction . . . that a statute is to be interpreted so that no words shall be discarded as being meaningless, redundant, or mere surplusage.” United States v. Canals-Jimenez, 943 F.2d 1284, 1287 (11th Cir. 1991).
This contrasts with the Ninth Circuit Court of Appeals decision in Miller v. C.H. Robinson Worldwide, Inc., 976 F. 3d 1016 (9th Cir. 2020), in which it was held that tort claims against brokers fell under the “safety exception” of the FAAAA. The Ninth Circuit held that the “safety regulatory of a state” includes general tort law claims and that such claims “stem from motor vehicle accidents” and are therefore “with respect to motor vehicles.” The United States Supreme Court denied certiorari on the case on June 27, 2022. (See Lewis Brisbois’ article from May 2022, “Ninth Circuit Decision Leaves Third-Party Logistics Providers Exposed in Uncertain World of F4A Preemption.”)
This sets up a scenario where tort claims for brokers are not preempted in the Ninth Circuit, but they are in the Eleventh Circuit. The remaining circuits are left to either decide for themselves or wait until the United States Supreme Court directly addresses the issue.
It is important to note a very clear distinction between these two cases – Aspen involves a negligence claim involving stolen property, whereas Miller was a negligence claim involving bodily injury. Whether this distinction will make a difference on appeal remains to be seen. The opinion itself makes the distinction irrelevant:
But it makes little sense for the safety exception to turn on whether a plaintiff seeks damages for property loss or bodily injury—the common law negligence standard is the same no matter the damages a breach has caused.
The opinion provides a roadmap for arguing that negligence claims against brokers, regardless of the claimed damages, are too far removed from regulation of motor vehicles for them to fall under the safety exception.
Due to the nature of the underlying claims in Aspen, the potential for the insurance company to expend the cost of an appeal to the United States Supreme Court seems questionable, at best. Clearly, however, this is an issue that is eventually headed to the highest court in the land for resolution. For the time being, freight brokers should continue to argue for preemption of all claims based in tort, utilizing the language and logic of Aspen as part of that argument.
For more information on this case, contact the authors of this alert. Visit our Transportation Practice page for additional alerts in this area.
Al Durrell, Partner
Joelle Nelson, Partner
Todd A. Gray, Managing Partner - Pittsburgh, PA