Pittsburgh, Pa. (July 18, 2023) – Today, the Seventh Circuit Court of Appeals weighed in on the circuit split over whether freight broker tort claims are preempted by the Federal Aviation Administration Authorization Act ("FAAAA"), 40 U.S.C. § 14501(c)(1), by holding that the plain text and the statutory scheme of the FAAAA bars a plaintiff's state law negligent hiring claim against a freight broker and that the Act's safety exception does not save such claims from preemption. This is excellent news for freight brokers currently defending themselves from common law state tort claims. Such brokers with pending dispositive motions should seek to add this new authority as a supplement and brokers, outside of the Ninth Circuit, whose dispositive motions have previously been denied should consider filing a motion for reconsideration.
In Ying Ye v. GlobalTranz Enterprises, Inc., 7 Cir. No. 22-1805, ECF Doc. No. 43 (July 18, 2023), a freight broker was contracted to provide transportation logistics services for a company seeking to transport goods from Illinois to Texas. The freight broker, in turn, hired a motor carrier company to provide that shipping service. During the transportation of the goods, the motor carrier's driver collided with a motorcycle driven by the plaintiff-appellant's husband who ultimately died from the injuries he sustained from the crash. The plaintiff-appellant brought an action asserting, among other things, a negligent hiring claim against the freight broker.
The trial court granted the freight broker's motion to dismiss as to the negligent hiring claim. More specifically, the United States District Court for the Northern District of Illinois found that the claim was prohibited by the express preemption provision of the FAAAA and that the preemption was not saved by the safety exception.
On appeal, 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's 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 then 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 we agree 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 that 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 Ye decision and its critic of Miller provides freight brokers with solid ammunition to argue that the FAAAA's safety exception does not apply to negligent hiring claims against freight brokers even when the claim involved bodily injury. With Ye and Aspen as support, freight brokers should continue to argue for preemption of all claims based in tort.
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