BNSF Ry. Co. v. Seats, Inc.

235 F.Supp.3d 1089

BNSF RAILWAY COMPANY, a Delaware Corporation authorized to do business in Nebraska, Plaintiff,

v.SEATS, INCORPORATED, a Wisconsin Corporation, Defendant.

4:16CV3121

United States District Court, D. Nebraska.

Signed January 23, 2017

Andrew D. Weeks, Nichole S. Bogen, Sattler, Bogen Law Firm, Lincoln, NE, for Plaintiff.

Anthony P. Steinike, James M. Hearon, Quarles, Brady Law Firm, Chicago, IL, for Defendant.

MEMORANDUM AND ORDER

Richard G. Kopf, Senior United States District Judge

Plaintiff BNSF alleges that in 2015, it settled a contested Federal Employers' Liability¹ ("FELA") and Locomotive Inspection Act² ("LIA") action with an employee engineer. (Filing 1 , Complaint ¶¶ 16 & 19.) The engineer alleged that the backrest of his locomotive seat gave away suddenly and without warning as a result of an allegedly defective reclining mechanism, resulting in career-ending injuries to his back. (Id. ¶¶ 15 & 17.) He claimed the locomotive seat—which was designed, manufactured, and marketed by the defendant in this action, Seats, Inc., and installed by General Electric ("GE")—did not comply with the federal standards set forth in the LIA because it was not in proper condition and safe to operate without unnecessary danger of personal injury. (Id. ¶¶ 12–14, 18.)

In the action now before this court, BNSF alleges that Seats, Inc., contracted to sell locomotive seats to GE, a locomotive manufacturer, for use in GE's locomotives, including the one in which the BNSF employee engineer was injured. (Id. ¶¶ 8–9.) BNSF claims it is a third-party beneficiary of this contract between Seats, Inc., and GE to supply and install seats in locomotives used in interstate commerce that were safe, suitable for their intended use, and in compliance with the LIA. (Id. ¶ 11.) In this diversity action alleging products liability based on both negligence and strict liability, breach of contract, and equitable subrogation, indemnity, or contribution, BNSF seeks to recover from Seats, Inc., the amount of the settlement, expenses, and attorneys' fees incurred as a result of the physical harm caused to BNSF's engineer by the defective, non–LIA–compliant seat.

Defendant Seats, Inc., has filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) , arguing that (1) all of BNSF's claims are preempted by the LIA; (2) BNSF's breach of contract claim fails to state a claim because BNSF is not an intended third-party beneficiary of the subject contract; and (3) BNSF's equitable subrogation, indemnity, or contribution allegations fail to state a claim because Seats, Inc., and BNSF do not share a common liability. (Filing 8 .)

LIA PREEMPTION

The LIA sets standards for locomotives and its "parts and appurtenances," generally requiring them to be "in proper condition and safe to operate without unnecessary danger of personal injury." 49 U.S.C. § 20701(1) . In Napier v. Atlantic Coast Line R. Co. , 272 U.S. 605, 47 S.Ct. 207, 71 L.Ed. 432 (1926) , the United States Supreme Court held that the LIA's predecessor—the Boiler Inspection Act ("BIA")—"occupied the field of regulating locomotive equipment ... so as to preclude state legislation" requiring that locomotives contain fireboxes with automatic doors and cab curtains, neither of which were required by federal law. Id. at 607, 47 S.Ct. 207. The Court found that the power delegated to the Interstate Commerce Commission by the BIA "is a general one," "was intended to occupy the field," and "extends to the design, the construction, and the material of every part of the locomotive and tender and of all appurtenances." Id. at 611, 613, 47 S.Ct. 207.

The United States Supreme Court reaffirmed the broad preemptive scope of the LIA in Kurns v. Railroad Friction Products Corp. , 565 U.S. 625, 132 S.Ct. 1261, ––– L.Ed.2d –––– (2012), holding that the Act preempts the entire field of regulating locomotive equipment, including state common-law tort claims for defective design and failure to warn against manufacturers of locomotive equipment. The Court stated that "[b]ecause petitioners' claims are directed at the equipment of locomotives, they fall within the pre-empted field" which "admits of no exception for state common-law duties and standards of care." Id. at 1269.

BNSF attempts to circumvent the Court's holding in Kurns that state-law tort claims "directed to the subject of locomotive equipment" are preempted by the LIA, id. at 1270, by alleging that Seats, Inc., violated the federal standard of care imposed by the LIA, not a standard of care under Nebraska law.³ (Filing 11 , Pl.'s Br. Opp'n Def.'s Mot. to Dismiss at CM/ECF p. 3.) BNSF argues that because Napier and Kurns involved state-law claims that were premised upon state duties and standards of care, those case are inapplicable to this action, which is based on the defendant's "violations of the LIA and their promises to provide LIA–compliant seats." BNSF explicitly represents that it "is not seeking to hold Seats accountable to a Nebraska standard of care, but rather to hold Seats accountable to provide a locomotive seat ‘in compliance with federal standards.’ " (Filing 11 at CM/ECF pp. 5 –6.) See Delaware & Hudson Ry. Co., Inc. v. Knoedler Mfrs., Inc. , 781 F.3d 656 (3rd Cir. 2015) (in case where railroad withdrew its product-liability and negligence claims, but asserted claims for indemnification, contribution, and breach of contract against equipment supplier and manufacturer for defective locomotive seats, court held that state claims based on federal standard of care not preempted by LIA; noting that "railroads would be left with no remedy" if court held otherwise and that "the enforcement under state law of a federal standard of care does not undermine national uniformity because it does not impose conflicting regulations that a railroad must heed during interstate travel"); BNSF Ry. Co. v. Seats, Inc. , 237 Ariz. 259, 349 P.3d 1096 (Ariz. App. Ct. 2015) (LIA does not preempt railroad's state-law claims alleging that locomotive seat manufacturer failed to comply with federal standard of care set forth in LIA because application of federal standard does not threaten to undermine goal of nationally uniform railroad operating standards); Engvall v. Soo Line R.R. Co. , 632 N.W.2d 560 (Minn. 2001) (LIA does not preempt state actions based upon violation of federal standard of care set forth in the LIA, thus allowing railroad to bring state-law contribution claim against locomotive manufacturer).

Several courts have specifically rejected the above cases or have refused to recognize an exception to the broad scope of LIA preemption set forth in Napier and Kurns for claims asserting violations of a federal standard of care under the LIA. Stevenson v. Union Pac. R. Co. , No. 4:07CV00522, 2009 WL 129916 (E.D. Ark. Jan. 20, 2009) (railroad's state-law negligence and strict-liability claim for contribution and indemnity against locomotive seat manufacturer was preempted by LIA because the "subject matter of the claim falls within the preempted field," which extends to the design, construction, and material of every part of the locomotive; explicitly rejecting Engvall and railroad's argument that it was not relying on state-law standard; stating that LIA preemption of state tort actions against locomotive-part manufacturers "applies whether a direct action is brought against the manufacturer or a claim for indemnity and/or contribution" because "[a]ny claim, whether state or federal , based on LIA standards would necessarily affect the locomotive design, construction, and material decisions made by railroads" (internal quotation and citation omitted; emphasis added)); Roth v. I & M Rail Link, L.L.C. , 179 F.Supp.2d 1054 (S.D. Iowa 2001) (state-law negligence claims against locomotive manufacturer brought by administrator of deceased train conductor's estate was preempted by LIA when claims were based on violations of federal regulations promulgated under LIA; noting that "[t]he majority of courts that have addressed the issue have held that the LIA preempts state common-law tort actions against manufacturers for claims relating to the design and construction of a locomotive's parts" and that "[a]ny claim, whether state or federal , based on LIA standards would necessarily affect the locomotive design, construction, and material decisions made by railroads" (emphasis added)); Union Pac. R.R. Co. v. Motive Equip., Inc. , 291 Wis.2d 236, 714 N.W.2d 232 (2006) (railroad's contribution action against manufacturer of refrigerator that was installed in locomotive and resulted in employee's injury was preempted under LIA; noting that majority of courts follow the Napier principle that federal law preempts all state claims, that "Congress has established the field of locomotive equipment and safety as one which requires broad preemptive effect," that Congress did not provide private right of action for violations of LIA, and that "any claim, including one alleging contribution/indemnification, will be preempted by federal law if the subject matter of the claim falls within the preempted field"; criticizing and declining to follow Engvall as violative of congressional intent to occupy entire field of locomotive equipment regulation and as the result of "adoption of a public policy unique ... to Minnesota"). See also First Sec. Bank v. Union Pac. R.R. Co. , 152 F.3d 877 (8th Cir. 1998) (LIA preempted state-law tort claim brought by estate of deceased motorist who was struck by train to the extent such claim challenged adequacy of railroad's warning horn; citing federal regulation that established minimum sound levels for warning devices on locomotives); Springston v. Consol. Rail Corp. , 130 F.3d 241 (6th Cir. 1997) (LIA preempted injured motorist's state tort claims against train manufacturer for not equipping train with warning devices that were "above and beyond those devices required by federal law"); Law v. Gen. Motors Corp. , 114 F.3d 908 (9th Cir. 1997) ...