Miller v. C.H. Robinson Worldwide, Inc.

976 F.3d 1016

Allen MILLER, Plaintiff-Appellant,

v. C.H. ROBINSON WORLDWIDE, INC.; Ronel R. Singh; Rheas Trans, Inc. ; Kuwar Singh, dba RT Service, Defendants-Appellees,andCostco Wholesale Corporation; Lotus Foods, Inc.; Pride Industries, Defendants.

No. 19-15981

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 8, 2020 Seattle, Washington

Filed September 28, 2020

NGUYEN, Circuit Judge:

Allen Miller ("Miller") suffered serious injuries when he was struck by a semi-tractor trailer while driving near Elko, Nevada. Miller sued C.H. Robinson Worldwide, Inc. ("C.H. Robinson"), the freight broker that arranged for the trailer to transport goods for Costco Wholesale, Inc. ("Costco"). Miller alleges that C.H. Robinson negligently selected an unsafe motor carrier.

The Federal Aviation Administration Authorization Act of 1994 (the "FAAAA") preempts state laws that are "related to a price, route, or service of any ... broker," unless one of the FAAAA's exceptions applies. The district court found Miller's claim preempted under the FAAAA, reasoning that it is "related to" C.H. Robinson's services and does not fall within the exception for "the safety regulatory authority of a State with respect to motor vehicles."

We agree with the district court that Miller's claim is "related to" C.H. Robinson's services. Brokers arrange for transportation by motor carrier, and Miller alleges that C.H. Robinson was negligent in performing that service. But we hold that the district court erred in holding that the safety exception does not apply. In enacting that exception, Congress intended to preserve the States’ broad power over safety, a power that includes the ability to regulate conduct not only through legislative and administrative enactments, but also though common-law damages awards. Miller's claim also has the requisite "connection with" motor vehicles because it arises out of a motor vehicle accident. We therefore reverse and remand.

I. FACTUAL AND PROCEDURAL BACKGROUND

C.H. Robinson is a company that is "regularly engaged in the business of shipping, brokering, and logistics." C.H. Robinson selected Kuwar Singh d/b/a RT Service ("RT Service") and/or Rheas Trans, Inc. ("Rheas Trans") to transport Costco's shipment. RT Service and Rheas Trans are federally licensed motor carriers. The driver of the semi-tractor trailer, Ronel Singh, was employed by RT Service and/or Rheas Trans at the time of the collision.

Singh lost control of the trailer while driving in icy conditions on I-80 near Elko, Nevada. The trailer crossed over the median into oncoming traffic and collided with Miller's vehicle, and Miller "became lodged and pinned" under the trailer. Miller suffered extensive injuries in the collision, and he is now quadriplegic.

In June 2017, Miller sued, among others, C.H. Robinson, RT Service, Rheas Trans, Singh, and Costco.¹ Thereafter, Miller filed an amended complaint. Relevant here, the amended complaint alleges that C.H. Robinson breached its "duty to select a competent contractor to transport" Costco's load "by retaining incompetent, unfit or inexperienced contractors or sub-haulers to arrange and/or take th[e] load." It alleges that C.H. Robinson "knew or should have known" of RT Service's and Rheas Trans's "incompetence" because

[T]here were red flags ... including that [RT Service] and/or Rheas Trans have a history of safety violations; over 40% of their trucks have been deemed illegal to be on the road when stopped for random inspections; they have been cited numerous times for hours of service violations and false log books; and their percentage of out of service violations is twice that of the national average.

In July 2018, C.H. Robinson moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), arguing that the FAAAA preempts Miller's negligence claim. The district court granted the motion, concluding that the claim "sets out to reshape the level of service a broker must provide in selecting a motor carrier to transport property." For instance, "to avoid negligence liability, a broker would consistently need to inspect each motor carrier's background," and "such additional inspection would result in state law being used to, at least indirectly, regulate the provision of broker services by creating a standard of best practices." The district court went on to hold that Miller's claim does not fall within the exception for "the safety regulatory authority of a State with respect to motor vehicles." See 49 U.S.C. § 14501(c)(2)(A). The court reasoned that this exception does not "permit[ ] a private right of action—allowing for Miller to essentially do the state's work and enforce the state's police power." The court also found significant the fact the exception "is silent regarding broker services."

Thereafter, Miller settled with the remaining defendants. The court entered judgment, and this appeal timely followed.

II. JURISDICTION AND STANDARDS OF REVIEW

The district court had jurisdiction pursuant to 28 U.S.C. § 1332, and we have jurisdiction pursuant to 28 U.S.C. § 1291. We review questions of preemption de novo. Cal. Trucking Ass'n v. Su , 903 F.3d 953, 958 (9th Cir. 2018). We also review de novo an order granting a Rule 12(c) motion for judgment on the pleadings. Fleming v. Pickard , 581 F.3d 922, 925 (9th Cir. 2009).

III. DISCUSSION

A. The "Related to" Test for FAAAA Preemption

"In considering the preemptive scope of a statute, congressional intent ‘is the ultimate touchstone.’ " Dilts v. Penske Logistics, LLC , 769 F.3d 637, 642 (9th Cir. 2014) (quoting Engine Mfrs. Ass'n v. S. Coast Air Quality Mgmt. Dist. , 498 F.3d 1031, 1040 (9th Cir. 2007) ). We primarily discern Congress's intent "from the language of the pre-emption statute and the statutory framework surrounding it," but we may also consult "the structure and purpose of the statute as a whole." Id. (quoting Medtronic, Inc. v. Lohr , 518 U.S. 470, 486, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996) ). The scope of a preemption clause is also tempered by "the presumption that Congress does not intend to supplant state law," particularly in areas of traditional state regulation. Id. at 642–43. We therefore presume that Congress has not preempted the "historic police powers of the States ... unless that was the clear and manifest purpose of Congress." Cal. Tow Truck Ass'n v. City & County of San Francisco , 807 F.3d 1008, 1019 (9th Cir. 2015) (quoting City of Columbus v. Ours Garage & Wrecker Serv., Inc. , 536 U.S. 424, 438, 122 S.Ct. 2226, 153 L.Ed.2d 430 (2002) ).

The FAAAA provides, in relevant part:

(1) General rule.–Except as provided in paragraphs (2) and (3), a State, political subdivision of a State, or political authority of 2 or more States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier ..., broker, or freight forwarder with respect to the transportation of property

(2) Matters not covered.–Paragraph (1)–(A) shall not restrict the safety regulatory authority of a State with respect to motor vehicles ....

49 U.S.C. § 14501(c).

The phrase "related to" in the FAAAA "embraces state laws ‘having a connection with or reference to’ ... ‘rates, routes, or services,’ whether directly or indirectly." Dan's City Used Cars, Inc. v. Pelkey , 569 U.S. 251, 260, 133 S.Ct. 1769, 185 L.Ed.2d 909 (2013) (quoting Rowe v. N.H. Motor Transp. Ass'n , 552 U.S. 364, 370, 128 S.Ct. 989, 169 L.Ed.2d 933 (2008) ). To determine whether a state law has a "connection with" rates, routes, or services, we "examine the actual or likely effect" of the law.² Am. Trucking Ass'ns, Inc. v. City of Los Angeles , 660 F.3d 384, 396 (9th Cir. 2011), rev'd in part on other grounds , 569 U.S. 641, 133 S.Ct. 2096, 186 L.Ed.2d 177 (2013). If, for example, the law "mandates that motor carriers [or brokers] provide a particular service to customers, or forbids them to serve certain potential customers, the effect is clear, and the provision is preempted ...." Id. By contrast, state laws that affect prices, routes, or services "in only a ‘tenuous, remote, or peripheral ... manner’ with no significant impact on Congress's deregulatory objectives" are not preempted. Su , 903 F.3d at 960 (quoting Rowe , 552 U.S. at 371, 128 S.Ct. 989 ).

In passing the FAAAA, which is modeled on the Airline Deregulation Act of 1978 (the "ADA"),³ Congress sought to achieve two broad objectives. Id. First, it sought to eliminate the competitive advantage air carriers enjoyed relative to motor carriers. Courts had interpreted the ADA as preempting state regulation of air carriers, but not motor carriers. Id. Second, it sought to "address the inefficiencies, lack of innovation, and lack of competition caused by non-uniform regulations of motor carriers." Id. In particular, Congress was "concerned about States enacting ‘barriers to entry, tariffs, price regulations, and laws governing the types of commodities that a carrier could transport.’ "⁴ Id. at 960–61 (quoting Dilts , 769 F.3d at 644 ); see H.R. Conf. Rep. 103-677, at 82–88 (1994), reprinted in 1994 U.S.C.C.A.N. 1715, 1754–60 (confirming that in passing the FAAAA, Congress was focused on economic deregulation of the trucking industry).

No circuit court has yet considered an FAAAA preemption challenge brought by a broker, and district courts have reached differing conclusions as to whether negligence claims like Miller's are "related to" broker services. Compare Scott v. Milosevic , 372 F. Supp. 3d 758, 769–70 (N.D. Iowa 2019) (holding that personal injury claims alleging negligence are not "related to" broker services), with Loyd v. Salazar , 416 F. Supp. 3d 1290, 1295–98 (W.D. Okla. 2019) (holding that such claims are "related to" broker services), and Creagan v. Wal-Mart Transp., LLC , 354 F. Supp. 3d 808, 813 (N.D. Ohio 2018) (same). District courts are also divided on the question of whether the safety exception applies in...