BNSF Railway Co. v. Seats Inc. , 237 Ariz. 259 ( 2015 )

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
BNSF RAILWAY COMPANY, a Delaware corporation authorized to do
business in Arizona, Cross-Claimant/Appellant,
v.
SEATS INCORPORATED, a Wisconsin corporation, Cross-
Defendant/Appellee.
No. 1 CA-CV 14-0002
FILED 5-5-2015
Appeal from the Superior Court in Coconino County
No. S0300CV201000845
The Honorable Cathleen Brown Nichols, Judge
REVERSED AND REMANDED
COUNSEL
Thorpe Shwer, PC, Phoenix
By William L. Thorpe, Bradley D. Shwer, Kristin Paiva
Counsel for Appellant
Bowman and Brooke, LLP, Phoenix
By Curtis J. Busby, Amanda E. Heitz
Counsel for Appellee
Vorys Sater Seymour and Pease, LLP, Columbus, OH
By J. Scott Jamieson
Co-Counsel for Appellee
BNSF v. SEATS, INC.
Opinion of the Court
OPINION
Presiding Judge Kent E. Cattani delivered the opinion of the Court, in
which Judge Lawrence F. Winthrop and Judge Peter B. Swann joined.
C A T T A N I, Judge:
¶1 This appeal addresses whether the Locomotive Inspection
Act (“LIA”), 49 U.S.C. § 20701 et seq., preempts a state-law claim by a
railway company alleging that a seat manufacturer failed to comply with
the federal standard of care for manufacturing and installing locomotive
seats. We conclude that although LIA establishes uniform federal safety
regulations and preempts claims premised on a state-specific standard of
care, it does not preempt claims based on the federal standard.
Accordingly, we vacate the order of dismissal in this case and remand for
further proceedings consistent with this decision.
FACTS AND PROCEDURAL BACKGROUND
¶2 Jeffery McKinney, a train conductor employed by BNSF
Railway Company (“BNSF”), filed a complaint under the Federal
Employees Liability Act (“FELA”) alleging, among other claims, that he
sustained injuries due to an unsafe seat on a BNSF locomotive. McKinney’s
claims against BNSF are based on a LIA violation. McKinney amended the
complaint to join Seats Inc. (“Seats”), the manufacturer of the allegedly
defective seat, as a defendant, asserting claims for products liability and
negligence per se. BNSF subsequently filed cross-claims against Seats for
indemnification and contribution, if McKinney were to recover from BNSF.
¶3 Seats moved to dismiss McKinney’s complaint and BNSF’s
cross-claims under Arizona Rule of Civil Procedure 12(b)(6) on the basis
that the claims were preempted by federal law. After briefing and
argument, the superior court granted Seats’ motion, holding that LIA
preempts the claims at issue.
¶4 The superior court certified the judgment for Seats as final
under Arizona Rule of Civil Procedure 54(b), and BNSF timely appealed.
We have jurisdiction under Article 6, Section 9, of the Arizona Constitution
2
BNSF v. SEATS, INC.
Opinion of the Court
and Arizona Revised Statutes (“A.R.S.”) §§ 12-120.21(A)(1) and
-2101(A)(1).1
DISCUSSION
¶5 BNSF contends that the superior court erred by dismissing its
indemnification and contribution claims, arguing that these state-law
claims are not preempted by LIA because they are premised on a federal
standard of care rather than a state-specific standard. We agree.
I. Standard of Review.
¶6 Dismissal is appropriate under Rule 12(b)(6) only if “as a
matter of law [the] plaintiff[] would not be entitled to relief under any
interpretation of the facts susceptible of proof.” Fid. Sec. Life Ins. Co. v. State
Dep’t of Ins., 191 Ariz. 222, 224, ¶ 4, 954 P.2d 580, 582 (1998). We review
dismissal under Rule 12(b)(6) de novo. Coleman v. City of Mesa, 230 Ariz.
352, 356, ¶ 8, 284 P.3d 863, 867 (2012).
II. Preemption of BNSF’s Indemnification and Contribution Claims.
¶7 Whether BNSF may assert claims for indemnification and
contribution against Seats turns on whether LIA preempts all state-law
claims or only those based on state-specific (rather than the federally
promulgated) standards of care.
A. Statutory and Regulatory Background.
¶8 LIA provides that “a locomotive . . . and its parts and
appurtenances” must be “in proper condition and safe to operate without
unnecessary danger of personal injury.” 49 U.S.C. § 20701(1). Under LIA,
the Federal Railroad Administration has promulgated regulations on the
governing standards of care, including a requirement that locomotive seats
“be securely mounted and braced.” 49 C.F.R. § 229.119(a). LIA’s safety
standard applies both to railroad carriers and to manufacturers providing
locomotive components. See Kurns v. R.R. Friction Prods. Corp., 132 S. Ct.
1261, 1268–69 (2012).
¶9 LIA does not provide a private right of action to employees
injured by defective locomotive equipment. Urie v. Thompson, 337 U.S. 163,
188 (1949). Instead, an injured employee may bring a FELA claim against
1 Absent material revisions after the relevant date, we cite a statute’s
current version.
3
BNSF v. SEATS, INC.
Opinion of the Court
the railroad alleging a LIA violation, proof of which establishes the
railroad’s negligence as a matter of law. See 45 U.S.C. §§ 51, 56 (establishing
right of action for employee to recover damages caused by railroad’s
negligence); Urie, 337 U.S. at 189 (stating that LIA violation constitutes
negligence per se for purposes of employee’s FELA claim against railroad).
Accordingly, LIA, in conjunction with FELA, “impos[es] on interstate
railroads an absolute and continuing duty to provide safe equipment” and
has the “purpose and effect of facilitating employee recover[y].” Urie, 337
U.S. at 188–89 (citations and internal quotation marks omitted).
B. Preemptive Effect of LIA.
¶10 Under the Supremacy Clause of the United States
Constitution, 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. Although the Supremacy
Clause grants Congress authority to preempt state law, federal enactments
are presumed not to override the states’ traditional police powers unless
Congress clearly manifests an intent to do so. Cipollone v. Liggett Grp., Inc.,
505 U.S. 504, 516 (1992). Even where a statute does not expressly provide
for preemption, “a federal statute implicitly overrides state law either when
the scope of a statute indicates that Congress intended federal law to
occupy a field exclusively or when state law is in actual conflict with federal
law.” Freightliner Corp. v. Myrick, 514 U.S. 280, 287 (1995). The preemptive
effect of LIA falls into the former category, known as “field preemption.”
See Kurns, 132 S. Ct. at 1266; see also Del. & Hudson Ry. Co. v. Knoedler Mfrs.,
Inc. (“Knoedler”), 781 F.3d 656, 661 (3d Cir. 2015).
¶11 Two United States Supreme Court cases have addressed field
preemption under LIA. In Napier v. Atlantic Coast Line Railroad Co., the
Court considered challenges to a Georgia statute requiring that locomotive
fireboxes be equipped with an automatic door, and to a Wisconsin statute
requiring locomotives to have cab curtains. 272 U.S. 605, 607 (1926). The
Court found that LIA 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. Under LIA, only the
federal agency tasked with implementing LIA could “set[] the standard”
for a locomotive’s proper operating condition, and any “requirements by
the states are precluded, however commendable or however different their
purpose.” Id. at 612–13.
¶12 In Kurns, the Court rejected as preempted state common-law
design defect and failure-to-warn claims against the manufacturer of
4
BNSF v. SEATS, INC.
Opinion of the Court
locomotive equipment containing asbestos. 132 S. Ct. at 1264, 1269–70.
Although the claims in Kurns were based on state common-law duties
rather than on state legislation, the Court concluded that “state common-
law duties and standards of care directed to the subject of locomotive
equipment are pre-empted by LIA.” Id. at 1269–70.
¶13 In the instant case, the superior court concluded that, under
Kurns and Napier, LIA preempted BNSF’s state-law cross-claims for
indemnification and contribution premised on an allegedly defective piece
of locomotive equipment. But here, unlike in Kurns and Napier, the claims
at issue do not rely on a state-specific standard of care, but rather on
standards prescribed under LIA itself. Thus, the concerns underlying
preemption (primarily the need for national uniformity) are not implicated.
See Knoedler, 781 F.3d at 666 (“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.”).
¶14 We find persuasive the analysis in Knoedler, in which the
Third Circuit concluded that LIA did not preempt a railway company’s
state-law contribution and indemnification claims—similar to those at issue
here—against a locomotive seat manufacturer because the claims were
premised on LIA’s standards of care. The Third Circuit rejected the
argument that Kurns and Napier mandate preemption of all state claims
regarding the design and manufacture of locomotive equipment:
[T]hose 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 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 LIA
preempts a state claim that is premised on a violation of the
duties and standards of care stemming from LIA itself; in
other words, whether a state claim based on a federal
standard of care is preempted. We conclude that it is not.
781 F.3d at 662.
5
BNSF v. SEATS, INC.
Opinion of the Court
¶15 The Third Circuit noted that “[w]hile there is no Supreme
Court authority exactly on point, there are plenty of strong hints that such
an avenue to relief is not foreclosed.” Id. The Third Circuit cited in
particular to the Supreme Court’s holdings “in other statutory contexts that
violations of federal law can be redressed through state common-law
claims.” Id. For example, in Silkwood v. Kerr-McGee Corp., the Supreme
Court concluded that, even though “the federal government has occupied
the entire field of nuclear safety concerns,” a state-law remedy based on a
violation of the Atomic Energy Act is not preempted. 464 U.S. 238, 249, 258
(1984) (citation omitted). Additionally, the Court has similarly permitted
state-law claims as a means to redress federal violations in the context of
other railroad safety laws. For example, in Crane v. Cedar Rapids & Iowa City
Railway Co., the Supreme Court stated that, because the Safety Appliance
Act (“SAA”), 49 U.S.C. § 20301 et seq., did not create a federal cause of
action, railroad employees could seek a remedy for an SAA violation
through FELA, but 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 the
absence of diversity, to implement a state cause of action.” 395 U.S. 164, 166
(1969); see also Tipton v. Atchison, Topeka & Santa Fe Ry. Co., 298 U.S. 141, 147–
48 (1936) (recognizing that the SAA “leave[s] the genesis and regulation of
such action [for breach of the SAA] to the law of the states”). Thus, although
“[t]he federal statutes create the right; the remedy [as provided through
common-law tort actions] is within the state’s discretion.” Breisch v. Cent.
R.R. of N.J., 312 U.S. 484, 486 (1941).
¶16 In Engvall v. Soo Line Railroad Co., the Minnesota Supreme
Court similarly held that LIA does not preempt a railroad company’s claims
against an equipment manufacturer seeking indemnification and
contribution for liability resulting from an injury to an employee when
these state-law claims are premised on a LIA violation. 632 N.W.2d 560,
569–71 (Minn. 2001). The court reasoned that, because a federal standard
of care was applied, “there [was] no danger of undermining the goal of
nationwide uniformity of railroad operating standards, the primary
rationale for holding state law claims preempted.” Id. at 570–71.
¶17 Seats notes that Engvall has been widely criticized and that a
number of jurisdictions have rejected its holding. See Roth v. I & M Rail Link,
L.L.C., 179 F. Supp. 2d 1054, 1062 (S.D. Iowa 2001) (rejecting Engvall); Union
Pac. R.R. Co. v. Motive Equip. Inc., 714 N.W.2d 232, 236–37, ¶¶ 13–16 (Wis.
Ct. App. 2006) (same); Wright v. Gen. Elec. Co., 242 S.W.3d 674, 680 (Ky. Ct.
App. 2007) (rejecting Engvall and stating that LIA preemption of all state
common-law tort claims “overwhelmingly represent[s] the majority rule”).
But as the Third Circuit noted in Knoedler, “the one Court we must attend
6
BNSF v. SEATS, INC.
Opinion of the Court
to most carefully, the Supreme Court, [has] favorably cited Engvall twice in
[Norfolk & Western Railway Co. v. Ayers, 538 U.S. 135 (2003),] as an example
of a case where a railroad was able to recoup its FELA losses through state-
law indemnification and contribution claims.” 781 F.3d at 665–66 (citing
Ayers, 538 U.S. at 162 n.21, 165 n.23).
¶18 In Knoedler, the Third Circuit further observed that
“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.” 781 F.3d at 664 (quoting Silkwood, 464 U.S. at 251). If all state-
law claims—even those premised on LIA’s standard of care—are
preempted, “railroads would be left with no remedy, no matter how
obvious or egregious the liability of an equipment supplier.” Id. “‘It is
difficult to believe that Congress would, without comment, remove all
means of judicial recourse for those injured by illegal conduct.’ And yet
that would be the result if [the railroad’s] state law indemnification and
contribution claims are preempted.” Id. at 665 (quoting Silkwood, 464 U.S.
at 251).
¶19 We conclude that, consistent with FELA, if an employer has
been found liable in a FELA action, the employer should be permitted to
spread the costs of the injury to other responsible parties. See Ayers, 538
U.S. at 165 (“[I]t 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.”); see also A.R.S. § 12-2506(E) (authorizing a defendant found liable
under FELA to pursue a contribution claim against a third-party tortfeasor).
Thus, BNSF should be permitted to pursue claims against Seats.2
2 We express no view of the merits of BNSF’s claims.
7
BNSF v. SEATS, INC.
Opinion of the Court
CONCLUSION
¶20 Because BNSF seeks to apply a federal standard of care under
LIA, its claims for indemnification and contribution are not preempted. We
therefore vacate the superior court’s order dismissing BNSF’s claims and
remand for further proceedings consistent with this decision.
:ama
8