United States: Pennsylvania Federal Court Holds Broker Tort Claims Preempted By The FAAAA

Pittsburgh, Pa. (November 13, 2023) - A recent decision out of the U.S. District Court for the Middle District of Pennsylvania brings promising news to freight brokers conducting business throughout the Third Circuit. In Michael Lee, et al. v. Golf Transportation, Inc., et al., Case No. 3:21-cv-01948 (M.D. Pa. Nov. 7, 2023) a magistrate judge presiding over the matter granted a motion for summary judgment in favor of a freight broker defendant on the basis that the common law tort claims levied against it were preempted by the Federal Aviation Administration Authorization Act ("FAAAA"), 40 U.S.C. § 14501(c)(1).

Lee arose from a traffic collision involving a tractor trailer. The transportation of the load the tractor trailer's driver was hauling at the time of the accident was arranged by a freight broker. Other than that, the facts of the case are somewhat murky. The broker tendered the load to a motor carrier other than the driver's employer, who then — in violation of the carrier agreement — double brokered the load. Yet, the motor carrier that received the tender was unaware of who actually picked up the load. As a result, the plaintiffs sued that motor carrier, several third party motor carriers and the freight broker. The plaintiffs asserted a set of typical claims against the broker: vicarious liability, negligent hiring/supervision/retention, negligent entrustment, and joint venture.

The freight broker moved for summary judgment on the grounds that these common law claims were preempted by the FAAAA. Following a thorough, well-reasoned analysis, the Court agreed and dismissed the plaintiffs' claims against the broker with prejudice. The Court centered its analysis on the Third Circuit's direction that FAAAA preemption occurs where a state law's effect on the price, route, or service of interstate transportation is "direct" and "significant." See Bedoya v. American Eagle Express Inc., 914 F.3d 812 (3d Cir. 2019).

Applying Bedoya, the Court found that the plaintiffs' claims related directly to the primary service provided by the freight broker because the claims were based solely upon the broker's selection of a motor carrier for the transportation of a load. The Court also found that the plaintiffs' claims had a significant effect on the broker's services because they sought to impose a duty of care related specifically to how a broker arranges for a motor carrier to transport a load.

Accordingly, the Court found that the plaintiffs' claims were preempted by the FAAAA. In doing so, the Court distinguished a previous decision from Pennsylvania's Middle District that held a plaintiff's claims were not preempted because those particular claims sought only to impose Pennsylvania's common-law duty of ordinary care, i.e., a duty that all businesses must follow, not just freight brokers. Whereas here, the Court observed, the plaintiffs alleged a breach of duties related specifically to broker services: the selection of a motor carrier.

The Court then held that the safety exception to preemption found in Section 14501(c)(2)(A) of the FAAAA did not apply. This exception applies, as the Court explained, when (1) the negligence standard constitutes an exercise of Pennsylvania's "safety regulatory authority" and (2) that authority is exercised "with respect to motor vehicles." Based on the Act's definitions of "broker," "motor carrier," and "motor vehicle," the Court concluded that the plain language of the FAAAA makes clear that "a claim against a freight broker is "necessarily one step removed from a 'motor vehicle.'"

As may be clear based on this conclusion, the Court rejected the Ninth Circuit's broad reading of the safety exception's phrase "with respect to" in Miller v. C.H. Robinson Worldwide, Inc., 976 F.3d 1016 (9th Cir. 2020), and, instead, aligned itself with the Seventh and Eleventh circuits' narrow interpretation of the term in Ye v. GlobalTranz Enterprises, Inc., 74 F.4th 453 (7th Cir. 2023) and Aspen Am. Ins. Co. v. Landstar Ranger, Inc., 65 F.4th 1261 (11th Cir. 2023).

Takeaways

While previous decisions have favorably addressed the FAAAA's preemption of negligent selection claims against brokers, Lee additionally dismissed vicarious liability and joint venture claims on this basis. Moreover, the Lee Court's analysis demonstrates convincingly that existing Third Circuit precedent supports FAAAA preemption of most freight broker tort claims and this decision may very well lead to a favorable precedential opinion from the appellate court.

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