Varela v. FCA US LLC

65 Arizona Cases Digest 4

505 P.3d 244

Melissa VARELA, Plaintiff/Appellant,

v.FCA US LLC, et al., Defendants/Appellees.

No. CV-20-0157-PR

Supreme Court of Arizona.

Filed March 1, 2022

G. Lynn Shumway, Shumway Law PLLC, Phoenix; Brent Ghelfi (argued), Ghelfi Law Group, PLLC, Phoenix; and Christopher J. Zachar, Zachar Law Firm, P.C., Phoenix, Attorneys for Melissa Varela

Paul G. Cereghini, Travis M. Wheeler, Bowman and Brooke LLP, Phoenix; and Thomas H. Dupree, Jr. (argued), Gibson Dunn, Washington, DC, Attorneys for FCA US LLC, LVN Motors LLC, and PV Holding Corporation

David L. Abney, Ahwatukee Legal Office, P.C., Phoenix, Attorney for Amici Curiae Arizona Association for Justice and Arizona Trial Lawyers Association

Larry E. Coben, Anapol Weiss, Scottsdale, Attorney for Amici Curiae Center for Auto Safety and Consumers for Auto Reliability and Safety

Patrick X. Fowler, Ashley Wiberg, Snell & Wilmer LLP, Phoenix; and Nicole A. Saharsky, Eric A. White, Mayer Brown LLP, Washington, DC, Attorneys for Amici Curiae PLAC and Alliance for Automotive Innovation

Thomas M. Klein, Briana L. Campbell, Klein Thomas & Lee, Phoenix, Attorneys for Amicus Curiae Nissan North America, Inc.

JUSTICE MONTGOMERY authored the opinion of the Court, in which CHIEF JUSTICE BRUTINEL, VICE CHIEF JUSTICE TIMMER, and JUSTICES BOLICK, LOPEZ, and BEENE joined.

JUSTICE MONTGOMERY, opinion of the Court:

¶1 Under the Supremacy Clause of the Federal Constitution, when a state law conflicts with a properly enacted federal law, the state law is preempted. State law includes duties imposed by state tort law. Federal law includes regulations promulgated by executive agencies under authority delegated by Congress. Preemption may also occur in the absence of a regulation under the doctrine of implied obstacle preemption when state tort law conflicts with a clear federal policy objective established by an executive agency acting within properly delegated authority.

¶2 At issue in this case is whether, in the absence of a promulgated safety regulation, the National Highway Transportation Safety Administration (the "Agency") has established a clear policy objective concerning automatic emergency braking ("AEB") technology that preempts state tort law claims based on an auto manufacturer's alleged failure to install AEB. We hold that, based on the facts and allegations in this case and the administrative record before us, the Agency has not established a policy objective that actually conflicts with the claims at issue. Thus, the claims are not preempted.

I. FACTUAL AND PROCEDURAL BACKGROUND

¶3 In 2015, a 2014 Jeep Grand Cherokee traveling at high speed rear-ended Melissa Varela's stopped car, despite the Jeep driver's last-moment attempt to brake and steer clear. The collision injured Varela and killed her four-year-old daughter, Vivian. The Jeep that struck Varela's car was a Jeep Grand Cherokee "Limited" that was not equipped with forward collision warning plus ("FCW+"), which is also referred to as AEB.¹ FCW+ was available as an option on the Limited and Overland trim level versions of the Grand Cherokee and was a standard feature on the Summit and SRT trim levels.

¶4 Varela sued FCA US LLC, LVN Motors, LLC, and PV Holding Corp. (collectively "Chrysler"), alleging negligence, defective product design, defective product warning, and wrongful death. Varela asserted that the collision would not have occurred, or at least would have caused less damage, if the Jeep had been equipped with FCW+. Chrysler moved to dismiss the lawsuit, asserting it was preempted pursuant to implied obstacle preemption given the Agency's objectives regarding the development and deployment of AEB technology, which do not mandate AEB installation on vehicles such as the Jeep. Relying on policy guidance published by the Agency in 2016 and 2017, as well as the Agency's denial of a petition to regulate AEB in 2017, the trial court granted Chrysler's motion. The court reasoned that the referenced documents "reflect[ed] the federal government's intention to preempt this field ‘to incentivize the installation of these technologies in a way that allows for continued innovation and technological advancement.’ "

¶5 The court of appeals reversed after finding that "nothing in [the] record" indicated the Agency's intention to "preempt tort claims based on the absence of AEB." Varela v. FCA US LLC , 249 Ariz. 89, 95 ¶ 19, 466 P.3d 866, 872 (App. 2020). Based on the facts and allegations in this case, the court distinguished its conclusion from a contrary one reached by a different panel in Dashi v. Nissan North America, Inc. , 247 Ariz. 56, 445 P.3d 13 (App. 2019) (finding claims based on an alleged failure to install AEB preempted under the doctrine of implied obstacle preemption). Varela , 249 Ariz. at 91 ¶ 2, 466 P.3d at 868.

¶6 We accepted review because this case involves an issue of statewide importance concerning the federal preemption of state tort law, and because different panels of the court of appeals have issued conflicting opinions. We have jurisdiction pursuant to article 6, section 5(3) of the Arizona Constitution. We review issues of law concerning the federal preemption of state tort law claims de novo. See Conklin v. Medtronic, Inc. , 245 Ariz. 501, 504 ¶ 7, 431 P.3d 571, 574 (2018).

II. DISCUSSION

A. Preemption in General

¶7 The Supremacy Clause of the Federal Constitution provides that "the Laws of the United States ... shall be the supreme Law of the Land; ... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const. art. VI, cl. 2. Federal law may therefore preempt an otherwise valid state law. Espinoza v. Mont. Dep't of Revenue , ––– U.S. ––––, 140 S. Ct. 2246, 2262, 207 L.Ed.2d 679 (2020) (" ‘[T]his Clause creates a rule of decision’ directing state courts that they ‘must not give effect to state laws that conflict with federal law[ ].’ " (quoting Armstrong v. Exceptional Child Ctr. , Inc. , 575 U.S. 320, 324, 135 S.Ct. 1378, 191 L.Ed.2d 471 (2015) )). State law, for purposes of conflict preemption analysis, includes duties imposed as a result of state tort law. See Geier v. Am. Honda Motor Co. , 529 U.S. 861, 881, 120 S.Ct. 1913, 146 L.Ed.2d 914 (2000).

¶8 Preemption generally occurs in one of two ways. Id. at 884, 120 S.Ct. 1913. Express preemption occurs when federal lawmakers explicitly state that related state law is preempted. Morales v. Trans World Airlines, Inc. , 504 U.S. 374, 383, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992). Preemption can also be implied, Geier , 529 U.S. at 884, 120 S.Ct. 1913, which can manifest in one of three forms. Field preemption occurs "when the scope of a [federal] statute indicates that Congress intended federal law to occupy a field exclusively." Kurns v. R.R. Friction Prods. Corp. , 565 U.S. 625, 630, 132 S.Ct. 1261, 182 L.Ed.2d 116 (2012) (quoting Freightliner Corp. v. Myrick , 514 U.S. 280, 287, 115 S.Ct. 1483, 131 L.Ed.2d 385 (1995) ). A second form is based on impossibility where "it is impossible ... to comply with both state and federal [legal] requirements." English v. Gen. Elec. Co. , 496 U.S. 72, 79, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990). The third form is obstacle preemption, when a state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Arizona v. United States, 567 U.S. 387, 399, 132 S.Ct. 2492, 183 L.Ed.2d 351 (2012) (quoting Hines v. Davidowitz , 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1941) ).

¶9 Federal regulations, in addition to laws passed by Congress, may also preempt state laws. Sprietsma v. Mercury Marine, 537 U.S. 51, 65, 123 S.Ct. 518, 154 L.Ed.2d 466 (2002) (stating that if a state common-law claim directly conflicted with a federal regulation promulgated under the Federal Boat Safety Act, or if it were impossible to comply with any such regulation without incurring liability under state common law, preemption would occur). Obstacle preemption may also occur when a federal agency, acting pursuant to authority delegated by Congress, decides not to regulate a particular matter, so long as its corresponding explanation for the decision conveys an "authoritative" message of preemptive federal objectives. Id. at 66–67, 123 S.Ct. 518 (acknowledging that "a federal decision to forgo regulation in a given area may imply an authoritative federal determination that the area is best left un regulated, and in that event would have as much pre-emptive force as a decision to regulate" (quoting Ark. Elec. Coop. Corp. v. Ark. Pub. Serv. Comm'n, 461 U.S. 375, 384, 103 S.Ct. 1905, 76 L.Ed.2d 1, (1983) )); see also Fid. Fed. Sav. & Loan Ass'n v. de la Cuesta , 458 U.S. 141, 155, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982) (finding that a state's limitation on the use of optional "due-on-sale clauses" in federal savings and loans contracts presented an actual obstacle to regulatory policy "authorizing [but not requiring] federal savings and loan associations to enforce due-on-sale clauses ‘subject only to express limitations imposed by the [Federal Home Loan Bank] Board’ "). Thus, in the specific instance of obstacle preemption, although a court must identify an "actual conflict," an express statement of preemptive intent is not necessary. Geier , 529 U.S. at 884, 120 S.Ct. 1913.

¶10 Chrysler has the burden of establishing preemption. Conklin v. Medtronic, Inc. , 245 Ariz. 501, 504 ¶ 8, 431 P.3d 571, 574 (2018).

B. Administrative Record

¶11 Chrysler contends that the administrative record reflects purposeful action on the part of the Agency to establish a policy to refrain from requiring manufacturers to equip vehicles with AEB, to leave room for manufacturer flexibility in implementing and innovating AEB technology, and to leave the regulation of automated vehicle systems to the federal government rather than the states. Additionally, Chrysler asserts that published guidance documents and the denial of a petition for proposed rulemaking...