Houston, Tex. (August 16, 2024) - Adding to a growing body of Texas case law favoring federal preemption for transportation brokers, U.S. District Judge Andrew Hanen of the Southern District of Texas issued an order this week dismissing state law negligence claims against a broker in Farfan v. Old Dominion Freight Line, Inc., Case No. 4:23-cv-03470, Southern District of Texas, Houston Division (August 12, 2024).
In Farfan, the plaintiffs filed a wrongful death suit after Eric Desoto was involved in an auto accident in Harris County, Texas with a truck owned by Just Van and operated by Just Van's driver. Desoto's injuries eventually led to his death. It was alleged in Farfan's pleadings that Old Dominion was acting as a motor carrier that entered into an agreement with Just Van to haul a load, and that Old Dominion was negligent in its hiring, entrusting and monitoring of Just Van and its driver.
Old Dominion holds both a federal motor carrier license and a federal transportation broker license. For this particular load, the plaintiffs claimed Old Dominion was acting as a motor carrier in court pleadings. However, the Court found that allegation to be false, citing the broker agreement in evidence in the case between Old Dominion and Just Van, as well as the actual course of events and conduct of the parties preceding the accident. Essentially, the Court found that just because you call a company a motor carrier does not make it so. The evidence shows that Old Dominion was clearly acting as a broker in relation to this load.
Old Dominion moved for dismissal of the case on the basis that federal statutes (specifically, the Federal Aviation Administration Authorization Act 49 U.S.C. § 14501 (“FAAAA”)), expressly preempts Farfan's state law negligence claims against it since it was acting as a licensed broker. The Court agreed and dismissed the case.
The Court's reasoning follows closely recent Texas decisions on this issue, specifically citing Ashley Hamby, e v. James Wilson, et. al., E.D.TX. 2024 WL 2303850 (May 21, 2024), in which the Eastern District of Texas 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. Also cited was Morales v. OK Trans, Inc., No. 2:19-CV-00094, 2024 U.S. Dist. LEXIS 57472 (S.D. Tex. May. 29, 2024), in which the plaintiffs made wrongful death claims against Penske Transportation Management, LLC (“Penske”) following a tractor-trailer having crossed into oncoming lane and collided with a pick-up, leaving one dead. In the petition, the plaintiffs alleged that Penske had committed negligent hiring when it brokered the load. Penske filed a motion to for summary judgment based on the FAAAA preemption, or, alternatively, that the plaintiffs had failed to present evidence of liability under Texas law.
The Court in Morales (and now Farfan) 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 state law negligent hiring claims relate to a broker's services and therefore are preempted by the Act.
The Farfan Court also considered whether the FAAAA's motor-vehicle-safety exception applied to prevent preemption of the claims. Here again, the Court sided with the opinions in Ye, holding that the negligent hiring claims do not fall under the safety exception. “Essentially, Plaintiffs claim that Old Dominion negligently arranged for Just Van to transport the shipment, causing the motor vehicle accident at issue. This claim has more than a tenuous relationship to broker services. Rather, the relationship is direct, and consequently, Plaintiff's negligence claim is preempted by § 14501(c)(1).”
Takeaway
The Farfan decision and its alignment with Hamby, Morales, and ultimately Ye, provides freight brokers with yet additional ammunition to argue that the FAAAA's safety exception does not apply to negligent hiring claims against them, even in claims involving bodily injury or death. With Farfan, Morales, Hamby, Ye and Aspen as support, freight brokers should continue to move for dismissal of state law negligence claims as preempted by federal law.
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