Del. & Hudson Ry. Co. v. Knoedler Mfrs., Inc.

DELAWARE & HUDSON RAILWAY COMPANY, INC., et.al., Plaintiffs,

v.KNOEDLER MANUFACTURERS, INC., et al., Defendants.

C.A. No. 11-314 Erie

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

Dated: February 12, 2013

District Judge McLaughlin

MEMORANDUM OPINION

McLAUGHLIN, SEAN J., J.

This matter is before the Court upon Motions to Dismiss Pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) filed by Defendants Knoedler Manufacturers, Inc. ("Knoedler") and Durham Industrial Sales, Inc. ("Durham"). This Court has jurisdiction pursuant to 28 U.S.C. § 1332(a)(3). For the reasons which follow, Defendants' motions are granted.

I. Background

This action stems from previous lawsuits brought against Plaintiff Canadian Pacific Railway ("Canadian Pacific") by four of its employees between 2009 and 2011 as a result of injuries that the employees sustained as the result of faulty locomotive seats. (Amended Complaint, ¶¶ 16-17). Each of the four injured employees filed suit under the Federal Employer's Liability Act ("FELA"), 45 U.S.C. § 51 et seq., alleging thatthe faulty seats in Canadian Pacific's locomotives violated the Locomotive Inspection Act, 49 U.S.C. § 20701. (Id. at ¶ 17). Canadian Pacific settled each of the four employee lawsuits for an aggregate amount of $2,723,000. (Id. at ¶¶ 18-21).

The locomotives at issue were manufactured by General Electric ("GE") pursuant to a contract entered into between GE and Canadian Pacific in the early 1990's. (Id. at ¶ 8). The seats which caused the alleged injuries were purchased by GE from Knoedler. (Id. at ¶ 9). However, GE and Canadian Pacific identified certain defects in the seats which presented safety concerns and exchanged numerous communications with Knoedler between 1999 and 2002 regarding the nature of the defects and how they might be repaired. (Id. at ¶¶ 10-12). When Knoedler failed to repair the seats to GE's satisfaction, Knoedler invited Durham to attempt to refurbish and repair the seats on Knoedler's behalf. (Id. at 14-15). However, neither party was able to successfully remedy the defects in the seats resulting in the aforementioned injuries. (Id. at ¶ 16-21).

Having settled with each of the four injured employees, Canadian Pacific is now seeking indemnification from Knoedler and Durham for the judgment amounts and other costs associated with defending and settling those lawsuits. Canadian Pacific also contends that Knoedler and Durham each breached contracts with GE to which Canadian Pacific was a third-part beneficiary.¹ This matter is ripe for review.

II. Standard of Review

Rule 8(a) of the Federal Rules of Civil Procedure states that a pleading must set forth a claim for relief which contains a short and plain statement of the claim showing that the pleader is entitled to relief. A motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6) must be viewed in the light most favorable to the plaintiff and all the well-pleaded allegations of the complaint must be accepted as true. Erickson v. Pardus, 551 U.S. 89, 93-94 (2007); Neitzke v. Williams, 490 U.S. 319 (1989); Estelle v. Gamble, 429 U.S. 97 (1976). The issue is not whether the plaintiff will prevail at the end but only whether he should be entitled to offer evidence to support his claim. Neitzke; Scheuer v. Rhodes, 419 U.S. 232 (1974). As the United States Supreme Court recently held in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), a complaint must be dismissed pursuant to Rule 12 (b)(6) if it does not allege "enough facts to state a claim to relief that is plausible on its face." Id. at 570 (rejecting the traditional 12 (b)(6) standard set forth in Conley v. Gibson, 355 U.S. 41 (1957)). The court must accept as true all allegations of the complaint and all reasonable factual inferences must be viewed in the light most favorable to plaintiff. Angelastro v. Prudential-Bache Securities, Inc., 764 F.2d 939, 944 (3rd Cir. 1985). The Court, however, need not accept inferences drawn by plaintiff if they are unsupported by the facts as set forth in the complaint. See California Pub. Employee Ret. Sys. v. The Chubb Corp., 394 F.3d 126, 143 (3rd Cir. 2004) (citing Morse v. Lower Merion School Dist., 132 F.3d 902, 906 (3rd Cir. 1997)). Nor must the court accept legal conclusions set forth as factual allegations. Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. Although the United States Supreme Court does "not require heightened fact pleading of specifics, [the Court does require] enough facts to state a claim to relief that is plausible on its face." Id. at 570.

III. Discussion

As set forth above, Canadian Pacific's Amended Complaint attempts to state claims for indemnification and breach of contract under Pennsylvania law. The primary argument raised in Defendants' motions to dismiss is that each of these state law claims is entirely preempted by the Locomotive Inspection Act ("LIA"), 49 U.S.C. § 20701. In pertinent part, the LIA provides as follows:

A railroad carrier may use or allow to be used a locomotive or tender on its railroad line only when the locomotive or tender and its parts and appurtenances -

(1) are in proper condition and safe to operate without unnecessary danger of personal injury;

(2) have been inspected as required under this chapter and regulations prescribed by the Secretary of Transportation under this chapter; and

(3) can withstand every test prescribed by the secretary under this chapter.

49 U.S.C. § 20701. In essence, the LIA imposes upon a railroad carrier "an absolute and continuing duty to maintain the locomotive, and all parts and appurtenances thereof, in proper condition . . . without unnecessary peril to life and limb." Lilly v. Grand Trunk Western R. Co., 317 U.S. 481, 485 (1943). However, the LIA does not confer a private right of action upon injured employees. See 49 U.S.C. § 21302 (1994); 49 c.f.r. 229.7(b) (2000); Law v. General Motors, 114 F.3d 908, 912 (9th Cir. 1997); Bonner v. Union Pacific, 2005 WL 1593635 (D. Idaho 2005). Rather, an employee who is injured as the result of a violation of the LIA must bring an action under FELA, a general negligence statute that allows railroad employees to recover for injuries caused by employer negligence. Id. As a supplement to FELA, the LIA "dispenses, for the purposes of employees' suits, with the necessity of proving that violations of the safetystatutes constitute negligence . . . and making proof of such violations . . . effective to show negligence as a matter of law." Urie v. Thompson, 337 U.S. 163, 189 (1949).

In Napier v. Atlantic Coast Line Railroad, the United States Supreme Court held that the federal government possesses exclusive authority to regulate locomotive equipment and, consequently, that LIA fully occupies the field of locomotive design to the exclusion of all state laws. Napier, 272 U.S. 605, 612-13 (1926). The Supreme Court stated:

[T]he power delegated to the Commission by the [LIA] . . . is a general one. It extends to the design, the construction and the material of every part of the locomotive and tender and of all appurtences. . . . We hold that state legislation is precluded, because the [LIA], as we construe it, was intended to occupy the field.

Id. at 611, 613. Following Napier, federal and state courts have repeatedly held that state law claims based on the allegedly defective design, manufacture, and/or repair of a locomotive or its components is pre-empted under the LIA.

In Kurns v. Railroad Friction Products Corp, for example, the United States Supreme Court recently reiterated that the LIA pre-empts Pennsylvania state law claims related to locomotive design and maintenance. Kurns, 132 S.Ct. 1261 (2012). The plaintiff in Kurns, a locomotive welder and machinist, filed claims in Pennsylvania state court premised on defective design and failure to warn after developing mesothelioma as a result of asbestos exposure while working on locomotive brakes and insulation. Following removal to federal court, both the district court and the Third Circuit agreed that the plaintiff's claims were pre-empted by the LIA. The Supreme Court agreed, affirming that "state common-law duties and standards of care directed to the subject of locomotive equipment are pre-empted by the LIA." Id. at 1270.

Courts have also applied the pre-emptive reach of the LIA to state law claims asserted by railroad companies against component manufacturers, such as in the instant case. In Union Pacific Railroad v. Motive Equipment, for example, an injured employee filed suit against Union Pacific when a refrigerator in the cab of a Union Pacific locomotive caught on fire and caused severe injuries. Motive, 714 N.W.2d 232 (Wis. App. 2006). The railroad subsequently filed an action for contribution and indemnification against the manufacturer of the refrigerator. However, the court dismissed the action on the basis of the broad pre-emptive effect of the LIA:

Congress intended federal law to occupy the entire field of locomotive safety and equipment, "particularly as it relates to injuries suffered by railroad workers in the course of their employment." Law v. General Motors Corp., 114 F.3d 908, 910 (9th Cir.1997). In Law, the Ninth Circuit articulated the reason preemption was necessary:

This broad preemptive sweep is necessary to maintain uniformity of railroad operating standards across state lines. Locomotives are designed to travel long distances, with most railroad routes wending through interstate commerce. The virtue of uniform national regulation "is self-evident: locomotive companies need only concern themselves with one set of equipment regulations and need not be prepared to remove or add equipment as they travel from state to state."

Id. (citations omitted). Although cases are repeatedly brought challenging the status of federal

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