Houston, Tex. (May 31, 2024) - Close on the heels of a favorable decision for transportation brokers out of the Eastern District of Texas, the Southern District of Texas has issued a similar ruling that is favorable to transportation brokers facing state law tort claims, holding that such claims are preempted by the Federal Aviation Administration Authorization Act ("FAAAA"), 40 U.S.C. § 14501(c)(1). In the earlier ruling, Ashley Hamby, e v. James Wilson, et. al., E.D.TX. 2024 WL 2303850 (May 21, 2024), the Eastern District of Texas granted a motion to dismiss claims of negligent brokering, holding that the plain language of the FAAAA expressly preempted the claims because they did not implicate the Act's safety exception. As the Fifth Circuit has never taken up the question of FAAAA state law claim preemption, there is no binding precedent for brokers within the circuit, and it is hoped that this new decision and the Hamby opinion will inform their ultimate decision on the matter.
In the more recent Morales v. OK Trans, Inc., No. 2:19-CV-00094, 2024 U.S. Dist. LEXIS 57472 (S.D. Tex. May. 29, 2024), the plaintiffs made wrongful death claims against Penske Transportation Management, LLC ("Penske") following an incident in which a tractor-trailer crossed into oncoming lane and collided with a pick-up, leaving one dead. In the petition, the plaintiffs alleged that Penske had committed negligent hiring when it brokered the load. Penske filed a motion for summary judgment based on FAAAA preemption, or, alternatively, that the plaintiffs had failed to present evidence of liability under Texas law.
The Court granted the motion for summary judgment, holding that the plaintiffs' negligent brokering claims was preempted by the FAAAA, and that the Act's safety exception did not apply.
The Morales and Hamby opinions bestow an opportunity for freight brokers currently litigating tort claims in southeast Texas (and nationally) to add new authority to filings designed to have claims dismissed from the outset and at summary judgment. The opinion joins a chorus of similar decisions around the country that together serve as strong persuasive authority on the subject.
Reasoning
The Court in Morales adopted the reasoning of the Seventh Circuit's decision in Ying Ye v. GlobalTranz Enterprises, Inc., 74 F.4th 453, 464 (7th Cir. 2023), concluding that state law negligent hiring claims relate to a broker's services and therefore are preempted by the Act. Specifically, the Court held that the plaintiffs' claim had more than a "tenuous" relationship to broker services.
Next, the Court considered whether the Act's motor-vehicle-safety exception applied to prevent preemption of the claims. Here again, the Court sided with the opinions in Ye, holding that the negligent hiring claims do not fall under the safety exception: "[w]e thus conclude that Ye's negligent hiring claim against GlobalTranz does not fall within the scope of § 14501(c) (2)'s safety exception. The claim is preempted and therefore properly dismissed by the district court."); citing Aspen Am. Ins. Co. v. Landstar Ranger, Inc., 65 F.4th 1261, 1272 (11th Cir. 2023) ("Aspen's negligence claims are not 'with respect to motor vehicles' under the FAAAA's safety exception. They are thus barred by its express preemption provision."); Gillum v. High Standard, LLC, 2020 WL 444371, at *5–6, 7 (W.D. Tex. Jan. 27, 2020)."
In Ye, the Seventh Circuit first held that the negligent hiring claim fell comfortably within the language of the FAAAA's preemption provision. The Court then focused on whether the enforcement of Illinois' common law of negligence would have a significant economic effect on broker services. The Seventh Circuit concluded that it would, finding that the negligence claim in this case "strikes at the core" of the freight broker's services by challenging the sufficiency of the care the broker took in hiring the motor carrier to provide shipping services. Consequently, the Seventh Circuit held that the claim was expressly barred by the FAAAA's preemption provision.
The Court further held that the Act's safety exception did not save the negligent hiring claim from preemption.
Specifically, the Court stated:
The Act's text makes clear that Congress views motor vehicle safety regulations separately and apart from those provisions imposing obligations on brokers. And this separateness counsels a reading of "with respect to motor vehicles" that requires a direct connection between the potentially exempted state law and motor vehicles. Any other construction would expand the safety exception's scope without a clear, text-based limit. So the Court agrees with the district court that the connection here—between a broker hiring standard and motor vehicles—is too attenuated to be saved under § 14501(c)(2)(A).
As the Seventh Circuit itself observed, its conclusion "aligns squarely" with the Eleventh Circuit's decision in Aspen American Insurance Co. v. Landstar Ranger, Inc., 65 F.4th 1261 (11th Cir. 2023). The Seventh Circuit additionally highlighted its disagreement with the Ninth Circuit's decision in Miller v. Robinson Worldwide, Inc., 976 F.3d 1016 (9th Cir. 2020) at length.
In finding that a negligent hiring claim against a broker fell within the FAAAA's safety exception, the Seventh Circuit opined, the Ninth Circuit "unduly emphasized Congress's stated deregulatory purpose in passing the Act," improperly relied "on a presumption against preemption to resolve any ambiguity in the breadth of the safety exceptions' scope"— as acknowledged by the Ninth Circuit in its later decision of R.J. Reynolds Tobacco Co. v. County of Los Angeles, 29 F.4th 542 (9th Cir. 2022) — and disagreed with the Ninth Circuit's conclusion that the phrase "with respect to" appearing in the safety exception was "synonymous" with "relating to."
Takeaway
The Morales decision and its alignment with Hamby, and ultimately Ye, provides freight brokers with yet additional ammunition to argue that the FAAAA's safety exception does not apply to negligent hiring claims against freight brokers, even in claims involving bodily injury. With Morales, Hamby, Ye and Aspen as support, freight brokers should continue to argue for preemption of all claims based in common law tort.
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