Asphalt Contractors Inc. v. R&J Transp., Inc.

532 F.Supp.3d 715

ASPHALT CONTRACTORS INC., Plaintiff,

v.R&J TRANSPORT, INC., et al., Defendants.

Case No. 21-C-0077

United States District Court, E.D. Wisconsin.

Signed April 5, 2021

Joseph L. Olson, Kimberly A. Streff, Michael Best & Friedrich LLP, Milwaukee, WI, for Plaintiff.

Jason Orleans, Orleans Canty Novy LLC, Chicago, IL, for Defendants R&J Transport Inc., Leigh Koehler.

Vincent P. Tomkiewicz, Lewis Brisbois Bisgaard & Smith LLP, Chicago, IL, for Defendant Great West Casualty Company.

Christine M. Rice, Simpson & Deardorff SC, Milwaukee, WI, for Defendant Acuity.

DECISION AND ORDER

LYNN ADELMAN, United States District Judge Plaintiff Asphalt Contractors Inc. filed a complaint in the circuit court for Racine County, Wisconsin, against R&J Transport, Inc., and other parties. The suit concerns damage to an expensive piece of Asphalt's machinery that occurred while R&J, a trucking company, was transporting it from Whitewater, Wisconsin, to Lake Geneva, Wisconsin. Asphalt alleges claims for negligence and breach of contract under Wisconsin law. Although the parties are not diverse, R&J and the other defendants removed the case to this court, alleging that Asphalt's claims arise under federal law. Asphalt now moves to remand the case to state court on the ground that its claims, which concern damage to cargo that occurred during intrastate transportation, do not arise under federal law. Relatedly, R&J and its driver move to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) on the ground that Asphalt's state-law claims are preempted by federal law.

I. BACKGROUND

According to the allegations of the complaint, Asphalt is in the business of paving and asphalt maintenance. In the Spring of 2018, it hired R&J to transport a large piece of equipment known as a Kleemann crusher from Whitewater, Wisconsin to Otto Jacobs Company, which was located in Lake Geneva, Wisconsin. R&J was required to obtain a permit from the Wisconsin Department of Transportation to complete the trip. The complaint alleges that, although R&J obtained a permit for the trip, it mistakenly listed the destination as Geneva Earth Works (which was also located in Lake Geneva) rather than Otto Jacobs. The permit identified a required route for the driver to take, and it listed the maximum permitted height, width, and length of the cargo.

On the day of the trip, R&J's driver, Leigh Koehler, loaded the crusher onto a low-boy trailer. According to the complaint, Koehler did this improperly, which caused the combined height of the trailer and crusher to exceed the maximum permitted height. On the way to the destination, Koehler drove under a highway overpass with insufficient clearance, which caused the crusher to strike the overpass. The impact caused significant damage to the crusher. Asphalt alleges that, had R&J sought a permit for the correct destination and followed the designated route, the accident would not have occurred because Koehler would have exited the highway before encountering the overpass.

Asphalt commenced the present action by filing a complaint against R&J, Koehler, and R&J's insurers in the circuit court for Racine County, Wisconsin. The complaint alleges five causes of action. First, it alleges that R&J and Koehler were negligent in loading and transporting the crusher. Second, it alleges that R&J was negligent in its hiring, training, and/or supervision of Koehler. Third, it alleges that R&J breached the contract that was formed when Asphalt hired R&J to transport the crusher from Whitewater to Otto Jacobs. Fourth, it alleges an alternative claim against R&J for promissory estoppel. Finally, it alleges claims against R&J's insurers under Wisconsin's direct-action statute, Wis. Stat. § 632.24.

After they were served, the defendants, led by R&J, removed the action to this court. Because the parties are not completely diverse, removal was not based on 28 U.S.C. § 1332. Instead, the notice of removal alleges that federal jurisdiction exists under 28 U.S.C. § 1331 and statutes granting district courts jurisdiction over cases involving federal laws regulating interstate commerce. R&J alleges that, although Asphalt's complaint purports to contain only state-law claims for negligence and breach of contract, in fact the complaint must be deemed to arise under federal law. This is so, R&J contends, because Asphalt's claims all boil down to a claim for damage to cargo that occurred during transportation by motor carrier. R&J contends that, in light of the long history of federal regulation (and deregulation) of the motor-carrier industry, a claim for damage to cargo must be deemed to arise under federal law, even if the cargo was damaged during intrastate transportation rather than interstate transportation.

After removing the case, R&J filed a motion to dismiss Asphalt's complaint under Federal Rule of Civil Procedure 12(b)(6). It alleges that Asphalt's state-law claims are preempted by federal law, specifically the Federal Aviation Administration Authorization Act of 1994 ("FAAAA"). According to R&J, the only claim Asphalt could pursue is a claim for damage to cargo under federal common law. This alleged federal common-law claim would be identical to a claim under the Carmack Amendment, which governs claims for damage to cargo that occurs during interstate transportation.

Asphalt opposes R&J's motion to dismiss and moves to remand the case to state court. Asphalt contends that its claims do not arise under federal law because there is no federal cause of action for damage to cargo that occurs during intrastate transportation. Further, Asphalt contends that the FAAAA does not preempt its state-law claims. Asphalt seeks an order awarding it the costs and attorneys’ fees it incurred as a result of the removal.

II. DISCUSSION

I am confronted with both a motion to remand the case to state court and a motion to dismiss the complaint for failure to state a claim upon which relief may be granted. Because the motion to remand raises a challenge to federal subject-matter jurisdiction, I must address it before turning to the motion to dismiss, which pertains to the merits. See Bazile v. Fin. Sys. of Green Bay, Inc. , 983 F.3d 274, 277–78 (7th Cir. 2020) (jurisdiction is a threshold issue that must be addressed before the merits).

A. Motion to Remand

The federal removal statutes provide that a case must be remanded to state court if the district court lacks subject-matter jurisdiction. 28 U.S.C. § 1447(c). In the present case, R&J contends that jurisdiction is conferred by 28 U.S.C. § 1331, which provides that "[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." Whether the action "arises under" federal law is determined by the well-pleaded complaint rule, under which federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint. Caterpillar Inc. v. Williams , 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). "The rule makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law." Id.

Important to this case is an aspect of the well-pleaded complaint rule holding that "a case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption." Id. at 393, 107 S.Ct. 2425. Also important is the "independent corollary" to the well-pleaded complaint rule known as the "complete preemption" doctrine. Id. The Seventh Circuit has described "complete preemption" as a misnomer. See Lehmann v. Brown , 230 F.3d 916, 919 (7th Cir. 2000). The doctrine has "nothing to do with preemption and everything to do with federal occupation of a field." Id. "The name misleads because, when federal law occupies the field (as in labor law), every claim arises under federal law." What we call complete preemption simply recognizes that "[a]ny attempt to present a state-law theory ... is artful pleading to get around the federal ingredient of the claim." Id. Where the doctrine applies, "[s]tate law is ‘completely preempted’ in the sense that it has been replaced by federal law—but this happens because federal law takes over all similar claims, not because there is a preemption defense." Id. at 919–20. Only a small number of federal statutes have completely preemptive effect. Sarauer v. Int'l Ass'n of Machinists , 966 F.3d 661, 669 (7th Cir. 2020). In fact, to date, the Supreme Court has found only three statutes to result in complete preemption: (1) § 301 of the Labor Management Relations Act, 29 U.S.C. § 185 ; (2) § 502(a) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132(a) ; and (3) §§ 85 and 86 of the National Bank Act, 12 U.S.C. §§ 85, 86. See Retail Property Trust v. United Bhd. of Carpenters , 768 F.3d 938, 947–48, 948 n.5 (9th Cir. 2014).

In the present case, R&J contends that the case arises under federal law due to complete preemption. But R&J does not point to a federal statute that any court has deemed to have completely occupied the field of intrastate transportation by motor carrier. Instead, R&J points to the Federal Aviation Administration Authorization Act of 1994, which contains a preemption provision that arguably preempts some or all of the plaintiff's claims. See 49 U.S.C. § 14501(c)(1). But this is merely an express preemption provision and, as just discussed, a suit does not arise under federal law simply because the defendant has a valid preemption defense. Nonetheless, R&J contends that complete preemption applies to this case because, in light of the FAAAA's supposed preemption of the plaintiff's state-law claims, the action must be deemed to arise under "federal common law." See Notice of Removal ¶ 20. This is a somewhat convoluted argument that, at bottom, rests on R&J's mistaken belief that there is such a thing as a federal common law of intrastate...