Opinion ID: 2768633
Heading Depth: 2
Heading Rank: 1

Heading: Preemption of Canadian Pacific’s

Text: Indemnification and Contribution Claim Congressional power to preempt state law derives from the Supremacy Clause of the Constitution, which provides that federal law “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. “Consideration of issues arising under the Supremacy Clause start[s] with the assumption that the historic police powers of the States [are] not to be superseded by … [federal law] unless that [is] the clear and manifest purpose of Congress.” Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 516 (1992) (first, second, and fourth alterations in original) (citation and internal quotation marks omitted). “Often Congress does not clearly state in its legislation whether it intends to pre-empt state laws … .” Malone v. White Motor Corp., 435 U.S. 497, 504 (1978). When that is the case, “courts normally sustain local regulation of the same subject matter unless it conflicts with federal law or would frustrate the federal scheme, or unless the courts discern from the totality of the circumstances that Congress sought to occupy the field to the exclusion of the States.” Id. At issue here is that latter type of exclusion, known as “field preemption.” The paramount cases concerning preemption under the LIA are Napier v. Atlantic Coast Line Railroad, 272 U.S. 605 (1926), and Kurns v. Railroad Friction Products Corp., 132 9 S. Ct. 1261 (2012). Napier involved challenges to two state statutes: a Georgia statute that required fire boxes on locomotives to be equipped with an automatic door, and a Wisconsin statute that required locomotives to have cab curtains.6 Napier, 272 U.S. at 607. The Supreme Court held that the LIA preempted both state statutes because it was “intended to occupy the field” pertaining to “the design, the construction, and the material of every part of the locomotive and tender and of all appurtenances.” Id. at 611, 613. Napier thus concluded that only the Interstate Commerce Commission – the agency then responsible for implementing the LIA – had the authority to “set[] the standard” by which a locomotive’s “fitness for service shall be determined.” Id. at 612. The Supreme Court recently revisited the preemptive effect of the LIA in Kurns, in which it affirmed our decision upholding the dismissal of an action for injuries from 6 Both the Georgia and Wisconsin statutes addressed health and safety concerns. The automatic door on fire boxes protected firemen from exposure to extreme temperatures while stoking the furnace powering the locomotive; it protected the firemen’s eyesight by reducing glare from the fire (and consequently protected travelers for whom firemen kept a lookout when the railroad crossed highways); and it protected employees and the train itself in the event of an explosion in the fire box. Napier, 272 U.S. at 609-10. Cab curtains prevented snow from piling into the locomotive cabs in the winter months and provided some measure of protection against wind and cold temperatures, thereby protecting engineers and firemen from discomfort and weather-related illnesses. Id. at 610. 10 defective locomotive parts. 132 S. Ct. at 1270. The plaintiffs in Kurns asserted design-defect and failure-to-warn claims against locomotive equipment manufacturers. Specifically, the plaintiffs argued that, under Pennsylvania law, the equipment was defectively designed because it contained asbestos and that the manufacturers failed to warn them about dangers posed by asbestos exposure. Id. at 1264-65. The Supreme Court rejected those claims, recognizing that they were “directed at the equipment of locomotives,” id. at 1269, and “f[e]ll within the [preempted] field … as … defined in Napier,” id. at 1270. In so ruling, the Kurns Court also rejected the plaintiffs’ argument that “the LIA’s pre-emptive scope does not extend to state common-law claims, as opposed to state legislation or regulation.” Id. at 1269. The Court noted that Napier’s “categorical conclusion [of LIA preemption] admits of no exception for state common-law duties and standards of care.” Id. Knoedler and Durham incorrectly read Napier and Kurns to say that all state claims regarding the design and manufacture of locomotive equipment are preempted by the LIA. But those decisions did not speak so broadly. They were explicit in holding, and only holding, that a state may not impose its own duties and standards of care on the manufacture and maintenance of locomotive equipment. See Kurns, 132 S. Ct. at 1269 (“We therefore conclude that state common-law duties and standards of care directed to the subject of locomotive equipment are pre-empted by the LIA.”); Napier, 272 U.S. at 613 (“[R]equirements by the states [regarding locomotive equipment] are precluded, however commendable or however different their purpose.”). The question left unanswered by Napier and Kurns is whether the LIA preempts a state claim that is premised on a violation 11 of the duties and standards of care stemming from the LIA itself; in other words, whether a state claim based on a federal standard of care is preempted. We conclude that it is not. While there is no Supreme Court authority exactly on point, there are plenty of strong hints that such an avenue to relief is not foreclosed. The Court has held in other statutory contexts that violations of federal law can be redressed through state common-law claims. See, e.g., Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 258 (1984) (concluding that a state-law remedy based on a violation of the Atomic Energy Act was not preempted); see also Abdullah v. Am. Airlines, Inc., 181 F.3d 363, 367 (3d Cir. 1999) (noting that “[f]ederal preemption of the standards of care can coexist with state and territorial tort remedies” and holding that state law remedies for a violation of the Federal Aviation Act were not preempted).7 More particularly, in the context of railroad 7 Silkwood and Abdullah are instructive even though they involved express preemption clauses because the Atomic Energy Act and the Federal Aviation Act also occupy their particular fields. Silkwood, 464 U.S. at 240-41, 249 (stating with respect to the Atomic Energy Act that “the federal government has occupied the entire field of nuclear safety concerns, except the limited powers expressly ceded to the states” (internal citation and quotation marks omitted)); Abdullah, 181 F.3d at 367 (“[W]e hold that [the Federal Aviation Act] establishes the applicable standards of care in the field of air safety, generally, thus preempting the entire field from state and territorial regulation.”); see also Altria Grp., Inc. v. Good, 555 U.S. 70, 76 (2008) (noting that even if a statute contains an express preemption clause, “the scope of the statute [could still] indicate[] that Congress intended 12 safety laws, state-law claims have been permitted as a means to redress federal violations. For example, in Crane v. Cedar Rapids & Iowa City Railway Co., the Supreme Court stated that a railroad employee can enforce a violation of the Safety Appliance Acts (“SAAs”), 49 U.S.C. § 20301 et seq., through the FELA but that a “nonemployee must look for his remedy to a common law action in tort, which is to say that he must sue in a state court, in absence of diversity, to implement a state cause of action.”8 395 U.S. 164, 166 (1969). The Court federal law to occupy the legislative field”). The Appellees argue that Silkwood and Abdullah are inapplicable because, as distinguished from the LIA which is silent on the point, Congress indicated in the Atomic Energy Act and the Federal Aviation Act that state common-law remedies would remain available. Silkwood, 464 U.S. at 251 (“[T]he only congressional discussion concerning the relationship between the Atomic Energy Act and state tort remedies indicates that Congress assumed that such remedies would be available.”); Abdullah, 181 F.3d at 375-76 (noting that the Federal Aviation Act’s Savings and Insurance Clauses suggest that Congress did not intend to preempt state-law remedies). Those cases stand for the larger premise, however, that even when Congress has occupied a particular field, state-law claims to remedy federal violations are not necessarily preempted. 8 Knoedler argues that Canadian Pacific is “standing in the shoes of its employees” and therefore “is not, in a technical sense, a ‘non-employee’” able to assert state claims under Crane. (Knoedler Br. at 42.) But the FELA specifically defines who is considered an “employee” and Canadian Pacific does not fall within that definition. See 45 U.S.C. § 51 (“Any employee of a carrier, any part of whose 13 had in fact reached that same conclusion almost three decades earlier in Tipton v. Atchison Tulsa, & Santa Fe Railway Co., when it stated that the SAAs “do not give a right of action for their breach, but leave the genesis and regulation of such action to the law of the states.” 298 U.S. 141, 147-48 (1936). Thus, the Court could say a few years later that there is no longer any question “as to the power of the state to provide whatsoever remedy it may choose for breaches of the [SAAs]. The federal statutes create the right; the remedy is within the state’s discretion.” Breisch v. Cent. R.R. of N.J., 312 U.S. 484, 486 (1941). Those cases are particularly relevant here, as the SAAs are analogous to the LIA in many important respects. The SAAs, like the LIA, regulate locomotive equipment.9 49 duties … shall be the furtherance of interstate or foreign commerce; or shall, in any way … affect such commerce as above set forth shall … be considered as being employed by such carrier in such commerce and shall be considered as entitled to the benefits of this chapter.”). Furthermore, Knoedler’s argument that Canadian Pacific is not an employee – so it has no cause of action under the FELA – but at the same time is an employee – so it cannot bring state-law claims for LIA violations either – sets up a needless no-win scenario for railroads. See infra at pp. 13-14. 9 The SAAs differ from the LIA in that they expressly require certain safety equipment to be used on railroad carriers, such as automatic couplers, efficient hand brakes, secure ladders with handholds or grab irons, and power brakes sufficient to stop the train. 49 U.S.C. § 20302. The LIA, however, more generally requires that a locomotive and all its parts and appurtenances be in proper condition, safe to 14 U.S.C. § 20302. Indeed, the “congressional purpose underlying [the LIA] is basically the same as that underlying [the SAAs]” – namely that locomotive equipment “be employed in active service without unnecessary peril to life or limb.” Urie, 337 U.S. at 190 (citation and internal quotation marks omitted). Furthermore, neither the LIA nor the SAAs provide for private enforcement; instead, railroad employees can only enforce those statutes through the FELA. Urie, 337 U.S. at 188-89. “In this view, [the SAAs], together with the [LIA], are substantively if not in form amendments to the [FELA].” Id. at 189. With respect to preemption, both the LIA and the SAAs have broad preemptive scope. See Kurns, 132 S. Ct. at 1267 (“Congress, in enacting the LIA, ‘manifest[ed] the intention to occupy the entire field of regulating locomotive equipment.’” (alteration in original) (quoting Napier, 272 U.S. at 611)); Gilvary v. Cuyahoga Valley Ry. Co., 292 U.S. 57, 60-61 (1934) (“So far as the safety equipment of [railroad] vehicles is concerned, [the SAAs] operate to exclude state regulation whether consistent, complementary, additional, or otherwise.”). It is true that Napier suggested that the scope of the SAAs’ preemption is limited to the specific equipment listed in the statute, Napier, 272 U.S. at 611, but both Crane and Tipton involved a coupler, which is expressly covered by the SAAs, Crane, 395 U.S. at 165; Tipton, 298 U.S. at 145. Thus, the full preemptive effect of the federal law was operative with respect to that equipment and yet the Supreme Court allowed state common-law actions operate, and adequately inspected and tested. 49 U.S.C. § 20701. 15 to remedy violations of the SAAs.10 Like the LIA, the SAAs are silent as to whether state remedies are preempted.11 Despite that silence, the Supreme Court decided in Crane and Tipton that relief under state law was not preempted.12 10 Tipton’s approval of Walton v. Southern Pacific Co., 48 P.2d 108 (Cal. Ct. App. 1935), is also telling. In Walton, the California Court of Appeals applied the state’s statute of limitations to a wrongful-death claim alleging a violation of the LIA, relying in part on cases involving the SAAs. Walton, 48 P.2d at 115. The Supreme Court expressly approved that analysis, stating that the Walton court “[c]orrectly [held] that the same principles apply in an action under [the LIA] as in one under [the SAAs].” Tipton, 298 U.S. at 151. As discussed previously, supra note 7, the Appellees 11 discounted Silkwood and Abdullah as being irrelevant in part because Congress had indicated with respect to the statutes at issue in those cases that state-law remedies would be excluded from preemption. That argument fails with respect to the SAAs, further confirming that the Crane line of cases are meaningful to the question of the preemptive scope of the LIA. 12 Our dissenting colleague argues that Crane, Breisch, and Tipton have little legal force in light of Kurns, and that, to the extent they are still viable decisions, they should be read as only applying to the SAAs, not the LIA. Dissent slip op. at 10-12. But nothing in the Kurns opinion undercuts or calls into question the SAAs line of cases; in fact, the Supreme Court did not once mention any of those cases in its decision. Especially given the similarities between the LIA and the SAAs, if the Supreme Court had intended to cast doubt on the 16 Furthermore, congressional intent – which is “the ultimate touchstone of preemption analysis,” Abdullah, 181 F.3d at 365 (citation and internal quotation marks omitted) – suggests that state law remedies are not preempted under the LIA. Congress’s silence with respect to state-law remedies “takes on added significance in light of [its] failure to provide any federal remedy” for LIA violations. Silkwood, 464 U.S. at 251 (analyzing Congressional intent regarding the scope of preemption under the Atomic Energy Act). If we were to hold that state law claims asserting a violation of the LIA are preempted, railroads would be left with no remedy, no matter how obvious or egregious the liability of an equipment supplier.13 We are not commenting on the culpability of the vitality of its decisions in the context of the SAAs, it would have done so explicitly. Although the dissent accuses us of giving “short shrift to Kurns,” Dissent slip op. at 7, we are faithfully applying the holding of Kurns, instead of unnecessarily and, in our view, unwisely expanding its language to cover the situation at issue here, as the dissent would do. 13 The dissent contends that it is “crystal clear” that the purpose of the LIA was not to protect railroads from lawsuits. Dissent slip op. at 2. But Congress did intend to protect railroads’ interests through the LIA, as we explained in our opinion in the Kurns case: “The goal of the LIA is to prevent the paralyzing effect on railroads from prescription by each state of the safety devices obligatory on locomotives that would pass through many of them.” Kurns v. A.W. Chesterton Inc., 620 F.3d 392, 398 (3d Cir. 2010), aff’d sub nom. Kurns, 132 S. Ct. 1261 (citation and internal quotation marks omitted). The dissent clearly agrees that the LIA does have that purpose, given that one of the primary arguments in 17 Appellees here but are simply noting that Canadian Pacific cannot sue them directly under the LIA because the LIA does not provide for a private right of action. Similarly, Canadian Pacific cannot sue them under the FELA because that statute gives a remedy only to railroad employees. “It is difficult to believe that Congress would, without comment, remove all means of judicial recourse for those injured by illegal conduct.” Silkwood, 464 U.S. at 251. And yet that would be the result if Canadian Pacific’s state law indemnification and contribution claims are preempted.14 the dissent is that allowing state-law claims to redress LIA violations will threaten national uniformity of railroad safety regulations. In so arguing, however, our colleague is essentially saying that the LIA was intended both to protect railroads from conflicting state regulations and also to purposefully exclude railroads from obtaining judicial recourse in a case like this. We consider that outcome inconsistent and untenable. 14 The Appellees contend that the Ninth Circuit has rejected the argument that the lack of a legal remedy should weigh in an analysis of the preemptive effect of the LIA. That court said in Law v. General Motors Corp., that, “[b]ecause railroad operators are liable for any injuries suffered by their employees, they would not buy locomotives, cars and other equipment that fall short of [LIA] standards.” 114 F.3d 908, 912 (9th Cir. 1997). Knoedler relies on that to argue that, if Canadian Pacific believes that Knoedler sells a defective product, “it can see that justice is done by not buying equipment from Knoedler or using a locomotive with a Knoedler component again.” (Knoedler Br. at 34.) We decline to adopt that analysis. While market forces may have a long-term impact on the conduct of equipment 18 There are other railroad-related cases in which the Supreme Court has approved, in fact encouraged, the use of state-law claims to redress violations of federal law. For example, in Norfolk & Western Railway Co. v. Ayers, the Court declined to allow the defendant railroad to have FELA damages apportioned to third-party tortfeasors who contributed to plaintiffs’ asbestos-related injuries. 538 U.S. at 143. The problem was not with making the third-party tortfeasors share the load. The problem was with making that sharing a matter of dispute in the FELA action, so that the injured employee had to engage in the fight over apportioning fault. The Supreme Court stated that “[o]nce an employer has been adjudged negligent … it accords with the FELA’s overarching purpose to require the employer to bear the burden of identifying other responsible parties and demonstrating that some of the costs of the injury should be spread to them.” Id. at 165. In so concluding, the Court relied on the “numerous FELA decisions … recognizing that FELA defendants may bring indemnification and contribution actions against third parties under otherwise applicable state or federal law.” Id. at 162. One of those FELA decisions was Engvall v. Soo Line Railroad Co., in which the Supreme Court of Minnesota held that, in circumstances nearly identical to those here, state-law claims redressing violations of the LIA are not preempted. See 632 N.W.2d 560, 571 (Minn. 2001) (holding that a manufacturers, they do not provide a remedy for losses already incurred because of the violations of governing standards of care. If Congress intended to foreclose all legal remedies available to railroad companies seeking to recoup FELA damages, it likely would have said so plainly. 19 railroad’s third-party complaint seeking contribution and/or indemnification from an equipment manufacturer to recoup FELA losses was not preempted because the railroad’s claims were based on violations of the LIA, not state standards). The District Court rejected Engvall, noting that it has been criticized by other courts.15 But the one Court we must attend to most carefully, the Supreme Court, favorably cited Engvall twice in Ayers as an example of a case where a railroad was able to recoup its FELA losses through state-law indemnification and contribution claims. Ayers, 538 U.S. at 162 n.21, 164 n.23. 15 The District Court also relies on a number of cases reaching a conclusion arguably at odds with Engvall, but those cases are distinguishable because they are either actions by railroad employees who already had a remedy under the FELA, or they involved causes of action asserting state standards of care, as opposed to federal standards of care. See Stevenson v. Union Pac. R.R. Co., No. 4:07CV00522BSM, 2009 WL 129916, at  (E.D. Ark. Jan. 20, 2009) (“[Union Pacific] seeks contribution and indemnification from Seats based on theories of breach of warranty, negligence, and strict liability.”); Bonner v. Union Pac. R.R. Co., No. CV03-134-S- MHW, 2005 WL 1593635, at  (D. Idaho 2005) (“Nowhere in this statement is the Court able to discern an argument that GM-EMD violated the federal standard imposed by LIA.”); Roth v. I & M Rail Link, L.L.C., 179 F. Supp. 2d 1054, 1063-64 (S.D. Iowa 2001) (“Roth was a railroad employee, and here a federal cause of action under FELA exists.”); Union Pac. R.R. Co. v. Motive Equip., Inc., 714 N.W.2d 232, 234 (Wis. Ct. App. 2006) (rejecting Union Pacific’s assertion that the manufacturer was liable for negligence, strict products liability, and breach of warranties). 20 Furthermore, the policy behind preemption does not support excluding the state-law claims at issue here. The primary rationale for federal preemption in the field of railroad safety regulation is national uniformity. Preemption allows railroad carriers to abide by a single set of national equipment regulations, instead of having to meet different standards and, potentially, to change equipment when a train crosses state lines. Kurns v. A.W. Chesterton Inc., 620 F.3d 392, 398 (3d Cir. 2010), aff’d sub nom. Kurns, 132 S. Ct. 1261 (“The goal of the LIA is to prevent the paralyzing effect on railroads from prescription by each state of the safety devices obligatory on locomotives that would pass through many of them.” (citation and internal quotation marks omitted)). It is therefore clear why Napier and Kurns did not allow states to impose their own standards of care – either through state regulations or through state tort liability – with respect to locomotive equipment. But 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. Congress itself has indicated that the goal of uniform railroad operating standards is not undermined when state-law claims are used to enforce federal law. For example, Congress explicitly stated in the Federal Railroad Safety Act that state law claims seeking damages for federal violations are not preempted. 49 U.S.C. § 20106(b)(1). If Congress thought state claims alleging a failure to comply with federal railroad safety laws would jeopardize uniformity, then it would have declared the elimination rather than the saving of such claims. And the Federal Railroad Administration – the agency responsible for implementing the LIA as well as the Federal Railroad Safety Act – has confirmed that state-law 21 claims can be used to enforce a federal standard of care. See Passenger Equipment Safety Standards; Front End Strength of Cab Cars and Multiple-Unit Locomotives; Final Rule, 75 Fed. Reg. 1180, 1208 (Jan. 8, 2010) (“[The Federal Railroad Administration] was careful to convey that Federal preemption under [the Federal Railroad Safety Act] applied to standards of care under State law – as opposed to claims (causes of action) under State law. They are different.”). It is also noteworthy that state courts already interpret the LIA because FELA claims based on violations of the LIA that are filed in state courts cannot be removed to federal court.16 28 U.S.C. § 1445(a). 16 That fact alone negates the dissent’s contention that allowing state-law remedies for LIA violations poses a significant threat to national uniformity, Dissent slip op. at 4- 6. Because state courts are already interpreting the LIA, any danger to uniformity, to the extent it can be called a danger, is already present. There is always a possibility that, at the margins, state courts will differ in their interpretations of the federal standard of care, but the Supreme Court has not expressed concern with that possibility and neither do we. Further, the hypothetical posed by the dissent – in which a person struck by a train could sue a railroad under strict liability in one state but not in another, Dissent slip op. at 4-5 – does not address differing standards of care. It only concerns whether a wanderer could sue under the LIA. It does not explain how differing state laws that affect who may sue would result in differing substantive standards directed at railroads. 22 In light of the foregoing, the District Court erred in holding that Canadian Pacific’s indemnification and contribution claims are preempted.