Gaines Motor Lines, Inc. v. Klaussner Furniture Industries, Inc. , 734 F.3d 296 ( 2013 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-2269
GAINES MOTOR LINES, INC.; B.A.H. EXPRESS, INC.;
FREIGHTMASTER, INC.; DAVID PHILLIPS TRUCKING CO.; H.G.
SMITH COMPANY, INC.; TRIANGLE TRANSPORT AND DISTRIBUTION
SERVICES, LLC; GRAHAM TRUCKING ENTERPRISES, INC.; BIG BEN
TRUCKING, LLC,
Plaintiffs - Appellants,
and
SOUTHLAND TRANSPORTATION COMPANY,
Plaintiff,
v.
KLAUSSNER FURNITURE INDUSTRIES, INC.,
Defendant – Appellee,
and
SALEM LOGISTICS TRAFFIC SERVICES, LLC; SALEM LOGISTICS,
INC.,
Defendants.
Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro. James A. Beaty, Jr.,
District Judge. (1:09-cv-00302-JAB-JEP)
Argued: September 18, 2013 Decided: October 30, 2013
Before SHEDD, DUNCAN, and KEENAN, Circuit Judges.
Vacated and remanded with instructions by published opinion.
Judge Duncan wrote the opinion, in which Judge Shedd and Judge
Keenan joined.
ARGUED: Robert D. Moseley, Jr., SMITH MOORE LEATHERWOOD LLP,
Greenville, South Carolina, for Appellants. James Aaron Dean,
WOMBLE CARLYLE SANDRIDGE & RICE, PLLC, Winston-Salem, North
Carolina, for Appellee. ON BRIEF: C. Fredric Marcinak III,
SMITH MOORE LEATHERWOOD LLP, Greenville, South Carolina, Jon
Berkelhammer, SMITH MOORE LEATHERWOOD LLP, Greensboro, North
Carolina, for Appellants. Michael Montecalvo, WOMBLE CARLYLE
SANDRIDGE & RICE, PLLC, Winston-Salem, North Carolina, for
Appellee.
2
DUNCAN, Circuit Judge:
In this appeal, we address a question of first impression
in this circuit: whether, absent a federal tariff, federal
courts have subject matter jurisdiction over a motor carrier’s
breach of contract claim against a shipper for unpaid freight
charges. For the reasons that follow, we find that the district
court lacked jurisdiction to adjudicate this dispute, and we
lack jurisdiction over this appeal. Accordingly, we vacate the
district court’s opinion and remand with instructions to
dismiss.
I.
A.
Appellants are federally licensed motor carriers (“Motor
Carriers”) who transport goods in interstate commerce.
Appellee, Klaussner Furniture Industries, Inc. ("Klaussner"), is
a furniture company headquartered in Asheboro, North Carolina.
The parties, with the exception of Appellant Graham Trucking
Enterprises, Inc., are incorporated under North Carolina law.
Prior to the summer of 2007, Klaussner contracted directly
with the Motor Carriers to deliver its furniture to corporate
customers, including furniture retailers and renters, both in
and outside of North Carolina. The Motor Carriers would submit
3
quoted rates directly to Klaussner who would then pick amongst
the bids for each shipment.
Then, in August 2007, Klaussner contracted with a third-
party broker, Salem Logistics Traffic Services, LLC (“Salem”),
to coordinate all shipping logistics. Salem charged Klaussner a
uniform rate that was generally higher than the Motor Carriers’
individual bids. In return, Salem promised to reduce costs and
improve customer service by coordinating stops to multiple
Klaussner customers for each scheduled shipment. Salem was
expected to deduct its commission, and then pay the motor
carriers.
Doyle Vaughn, a Klaussner employee, personally notified the
Motor Carriers that they would begin working directly with
Salem. Shortly thereafter, Salem hired Vaughn, who continued to
work from the same desk at Klaussner. Vaughn notified the Motor
Carriers of his change in employment.
The Motor Carriers also received a series of documents,
several of which bore both Klaussner’s and Salem’s logos,
explaining Salem’s new role. Salem’s Vice President of
Logistics, Ralph Raymond, sent a letter explaining that Salem
would manage all “freight payment responsibilities.” J.A. 454.
The Motor Carriers were sent a Fuel Surcharge Addendum, a Mutual
Non-Disclosure Agreement, and instructions from Salem on
submitting quotes. Finally, Klaussner’s Vice President of
4
Supply Chain, Chuck Miller, sent instructions to submit freight
bills “designated as third party payment” to “Klaussner
Furniture c/o Salem Logistics Inc.” and then listed Salem’s
address. J.A. 461.
Each furniture delivery the Motor Carriers undertook
required three documents: a Confirmation of Contract Carrier
Verbal Rate Agreement (“Agreement”); a Carrier Pickup and
Delivery Schedule (“Schedule”); and a bill of lading. The
Agreement memorialized the rate agreed upon by Salem and the
chosen motor carrier, and included the total freight charge for
the load. A freight charge includes the agreed upon rate and
standardized fees, such as a fuel charge. The Agreement was
signed by the motor carrier and does not mention Klaussner. The
Schedule listed the pick-up location as “Klaussner Furniture”
and the destination address. Salem’s address is listed under
the “Bill-To & Contact Information” section.
The bills of lading executed by Klaussner and the Motor
Carriers contained standardized provisions generally used in the
trucking industry. Each bill of lading listed a motor carrier,
a consignor, and a consignee. The party shipping the goods is
the consignor. The party who recieves the goods is the
consignee. Here, Klaussner was the consignor, and Klaussner’s
customer was the consignee. The bills of lading contained the
statement: “freight charges are prepaid unless marked
5
otherwise,” and three options: “Prepaid,” “Collect,” and “3rd
Party.” 1 Most of the relevant bills of lading were marked
“Prepaid.”
The bills of lading contained an executed non-recourse
provision that stated:
SUBJECT TO SECTION 7 OF CONDITIONS, IF THIS SHIPMENT
IS TO BE DELIVERED TO THE CONSIGNEE WITHOUT RECOURSE
ON THE CONSIGNOR, THE CONSIGNOR SHALL SIGN THE
FOLLOWING STATEMENT:
THE CARRIER SHALL NOT MAKE DELIVERY OF THIS SHIPMENT
WITHOUT PAYMENT OF FREIGHT AND ALL OTHER LAWFUL
CHARGES.
Klaussner Furniture Industries, Inc. BY: CAM SMITH 2
J.A. 477-79. This non-recourse language was repeated, but not
executed, in small print at the bottom of the bills of lading.
After initially making payments to the Motor Carriers,
Salem defaulted on its obligations and ultimately went out of
business. The Motor Carriers filed this action in the Middle
District of North Carolina under 49 U.S.C. § 13706(b) of the
Interstate Commerce Commission Termination Act against Klaussner
1
The parties dispute the meaning of “Prepaid” but agree
that, at minimum, it protects the consignee from liability for
freight charges. “Collect” generally means the consignee is
liable for the charges. “3rd Party” may be used to indicate
that a third party, such as a broker, is responsible for the
charges.
2
A non-recourse provision generally protects the shipper
from liability for freight charges once the goods are delivered
to the consignee. See Illinois Steel Co. v. Baltimore & O. R.
Co., 320 U.S. 508, 514 (1944).
6
and Salem 3 on April 22, 2009 to recover the $562,326.30 in
freight charges Salem had failed to pay. In the alternative,
the Motor Carriers sought to recover based on theories of unjust
enrichment and equitable estoppel. After discovery, the Motor
Carriers and Klaussner filed cross-motions for summary judgment.
B.
At the summary judgment hearing, the Motor Carriers first
argued that, as a matter of law, when a bill of lading is
designated “Prepaid,” the shipper is always liable for the
freight charges, even when there is also a non-recourse
provision or a third-party broker is involved. 4 Klaussner
countered that a “Prepaid” designation on a bill of lading means
only that the consignee will not be liable for the freight
charges. Klaussner argued that a non-recourse provision
protects a shipper from liability for any charges above what it
agreed to pay. In this case, Klaussner claimed it fulfilled its
contractual obligations by paying Salem.
3
By the summary judgment stage of the litigation, Salem had
withdrawn. Salem is not a party to this appeal.
4
The Motor Carriers also claimed the non-recourse provision
was unenforceable because the non-recourse language in the
footnote rendered it ambiguous. The district court found that
because the language in the footnote was not executed, it was
irrelevant to its analysis.
7
The district court granted Klaussner’s motion for summary
judgment on this issue, finding that the non-recourse provision
protected Klaussner from double payment as a matter of law. The
district court agreed with Klaussner that under Illinois Steel
Co. v. Baltimore & O.R. Co., 320 U.S. 508 (1944), a non-recourse
provision continues to protect shippers from any liability
beyond its contractual obligations even when a bill of lading is
also designated “Prepaid.” The district court acknowledged that
the designation of “Prepaid” instead of “3rd party” on the bills
of lading introduced some doubt as to whether the Motor Carriers
should have expected a third-party broker to pay shipping
charges. However, the court found that, given Vaughn’s verbal
explanation of Salem’s role and the multiple confirming
documents, the Motor Carriers were on notice to expect payment
from Salem.
The Motor Carriers also sought to establish Klaussner’s
liability under actual and apparent agency theories. The
district court held, however, that the Motor Carriers’ agency
arguments failed to create a triable issue of fact. The
district court found that the only fact on the record to support
the Motor Carriers’ actual agency argument was that Vaughn
continued to work from the same desk at Klaussner after Salem
hired him. Standing alone, this continuity failed to indicate
Klaussner “retained the right to control [Salem].” Hylton v.
8
Koontz, 532 S.E.2d 252, 257 (N.C. 2000) (internal citations
omitted). The district court held that the Motor Carriers’
apparent agency argument failed because the documents with the
dual logos, upon which the Motor Carriers’ argument relied, were
insufficient to suggest that Klaussner led the Motor Carriers to
reasonably believe Salem was its agent. This appeal followed.
II.
A.
In a somewhat unusual twist, it was Klaussner, the
prevailing party below, that argued for the first time on appeal
that the district court lacked jurisdiction over this dispute.
The timing, of course, does not affect our obligation to assure
ourselves of our jurisdiction.
A challenge to a federal court’s jurisdiction “‘can never
be forfeited or waived’” because it concerns our “very power to
hear a case.” United States v. Beasley, 495 F.3d 142, 147 (4th
Cir. 2007) (quoting United States v. Cotton, 535 U.S. 625, 630
(2002)). In fact, we have “an independent obligation to assess
[our] subject-matter jurisdiction” in every case, whether or not
it is challenged. Constantine v. Rectors & Visitors of George
Mason Univ., 411 F.3d 474, 480 (4th Cir. 2005).
The party “seeking to adjudicate a matter in federal court
must allege and, when challenged, must demonstrate the federal
9
court’s jurisdiction over the matter.” Strawn v. AT&T Mobility
LLC, 530 F.3d 293, 296 (4th Cir. 2008). The Motor Carriers
first argue that Congress granted federal courts jurisdiction
over their claim under the Interstate Commerce Commission
Termination Act (“ICCTA”). Alternatively, they contend that the
ICCTA preempts their state law breach of contract claim. The
Motor Carriers argue, therefore, that we should create a cause
of action under federal common law or they will have no forum in
which to adjudicate this dispute.
B.
Issues of subject matter jurisdiction are questions of law
which we review de novo. Dixon v. Coburg Dairy, Inc., 369 F.3d
811, 815 (4th Cir. 2004) (en banc). Were we to reach the
merits, we would review de novo the district court’s grant of
summary judgment, viewing the facts in the light most favorable
to the non-moving party. See LeBlanc v. Cahill, 153 F.3d 134,
148 (4th Cir. 1998). Summary judgment is appropriate only where
“there is no genuine issue of material fact and the moving party
is entitled to a judgment as a matter of law.” Fed. R. Civ. P.
56(a).
III.
Our jurisdiction in this case depends upon whether, absent
a federal tariff, Congress intended federal courts to adjudicate
10
motor carriers’ claims for unpaid freight charges under the
ICCTA. “Within constitutional bounds, Congress decides what
cases the federal courts have jurisdiction to consider.” Bowles
v. Russell, 551 U.S. 205, 212 (2007). As a court of limited
jurisdiction, we will guard against reading Congress’s grant of
authority to the federal courts more broadly than intended. See
Kokkonen v. Guardian Life. Ins. Co. of Am., 511 U.S. 375, 377
(1994).
The issues before us have their genesis in the deregulation
of the trucking industry Congress effected by passing the ICCTA.
Therefore, a brief history of the scope of federal regulation of
the trucking industry is useful at the outset.
A.
In 1935, Congress passed the Motor Carrier Act, which
extended to motor carriers the tariff system that banned price
competition between railroads under the Interstate Commerce Act
(“ICA”). See Munitions Carriers Conference, Inc. v. United
States, 137 F.3d 1027, 1028 (D.C. Cir. 1998). Motor carriers
were required to file a tariff that included their prices and
conditions with the Interstate Commerce Commission. See 49
U.S.C. § 10762(a)(1) (repealed 1995). Motor carriers could
charge each shipper only the rate in the filed tariff and could
11
not give any shipper “preferential treatment.” See 49 U.S.C. §§
10761(a), 10735(a)(1) (repealed 1995).
In Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460
U.S. 533 (1983), the Supreme Court affirmed Louisville &
Nashville R. v. Rice, 247 U.S. 201 (1918) where it “squarely
held that federal-question jurisdiction existed over a suit to
recover [unpaid freight charges].” Thurston, 460 U.S. at 555
(“A carrier's claim is, of necessity, predicated on the tariff-
not an understanding with the shipper.”); see also Illinois
Steel v. Baltimore & O. R. Co., 320 U.S. 508, 511 (1944). In
these cases, the parties’ “‘dut[ies] and obligation[s] . . .
depend[ed] upon’” the federally filed tariff. Thurston, 460
U.S. at 555 (quoting Louisville, 247 U.S. at 202). Thus, the
tariff was the “Act of Congress regulating commerce” under which
we had federal question jurisdiction pursuant to 28 U.S.C. §
1337(a).
After motor carriers operated under the tariff-filing
regime for sixty years, Congress determined that the trucking
industry had become a “mature, highly competitive industry where
competition disciplines rates far better than tariff filing and
regulatory intervention.” S. Rep. No. 104-176, at 10 (1995).
Thus, Congress passed the ICCTA because pervasive regulation of
the industry had “outlived its usefulness.” Id.
12
When the ICCTA went into effect on January 1, 1996, it
repealed price controls for all but two specialized areas of the
trucking industry. Motor carriers transporting household goods
or engaged in noncontiguous domestic trade 5 remained subject to
the tariff-filing requirement. See 49 U.S.C. § 13701(a)(1)(A)-
(B). In these two areas, Congress determined that price
regulation was still in the public interest. Consumers and
small shippers contracting to ship household goods would
continue to be shielded from potential abuses. See S. Rep. No.
104-176, at 11. The tariff requirement in the area of
noncontiguous domestic trade would facilitate intermodal
transport. Id. at 10. All other tariffs on file were
automatically voided by the ICCTA. See 49 U.S.C. § 13710(a)(4).
Congress did not, however, abandon all federal regulation
of the motor carriers that were freed to engage in price
competition. The Surface Transportation Board (“STB”)
maintained jurisdiction over all motor carriers who transport
goods in interstate commerce and between the United States and
its territories or a foreign country. 49 U.S.C. § 13501(1)(A)-
(E). All motor carriers subject to the STB’s jurisdiction must
satisfy licensing requirements by meeting safety, employment,
5
Noncontiguous domestic trade is transportation
“originating in or destined to Alaska, Hawaii, or a territory or
possession of the United States.” 49 U.S.C. § 13102(17).
13
and accessibility standards. 49 U.S.C. § 13902(a). Congress’s
goal in passing the ICCTA was to “strike a good balance” between
deregulation and “preserving very important safety and economic
regulatory powers . . . to protect shippers against abuses that
will not be remedied by competition.” 141 Cong. Rec. 32406
(1995); see also S. Rep. No. 104-176, at 9 (1995)
Against this framework, we must determine whether Congress
intended to grant federal courts jurisdiction over federally
licensed motor carriers’ claims for unpaid freight charges when
they were not required to file a tariff. We turn now to the
question of whether the ICCTA provides such authority.
B.
We begin by examining 49 U.S.C. § 14101(b), which
authorizes federally licensed motor carriers to enter into
private contracts with shippers. The Motor Carriers argue that
this authorization alone is sufficient to establish our
jurisdiction over their claim.
As in any case of statutory interpretation, we begin with
an analysis of the statutory language. Chris v. Tenet, 221 F.3d
648, 651-52 (4th Cir. 2000) (citing Landreth Timber Co. v.
Landreth, 471 U.S. 681, 685 (1985)). The meaning of a statutory
provision is not to be determined in isolation; “we look not
only to the particular statutory language, but to the statute as
14
a whole and to its object and policy.” Crandon v. United
States, 494 U.S. 152, 158 (1990) (internal citations omitted).
1.
Section 14101(b)(1) provides:
In general.—A carrier providing transportation or
service subject to jurisdiction under chapter 135 may
enter into a contract with a shipper, other than for
the movement of household goods described in section
13102(10)(A), to provide specified services under
specified rates and conditions . . . .
49 U.S.C. § 14101(b)(1).
This section of the ICCTA authorizes motor carriers to
privately negotiate their rates with shippers, replacing the
prior tariff-filing requirement. In fact, this section
authorizes one of the two categories of motor carriers still
subject to the tariff-filing requirement, carriers involved in
noncontiguous domestic trade, to contract around the federal
rate schedule. See 49 U.S.C. § 13702(b). Section 14101(b)(1)
only excludes motor carriers transporting household goods.
If a party to a contract authorized by § 14101(b)(1) wants
to sue for breach of contract, § 14101(b)(2) provides:
The exclusive remedy for any alleged breach of a
contract entered into under this subsection shall be
an action in an appropriate State court or United
States district court, unless the parties otherwise
agree.
49 U.S.C. § 14101(b)(2).
15
The mere fact that Congress authorized motor carriers to
privately negotiate rates in § 14101(b)(1) does not imply that
Congress intended § 14101(b)(2) to federalize every resulting
breach of contract claim. Section 14101(b)(2) more accurately
reflects Congress’s goal of reducing federal involvement in
motor carriers’ private contracts. The fact that the exclusive
remedy for breach of contract in § 14101(b)(2) is judicial,
rather than administrative, gains significance in contrast to
the remedies available to motor carriers operating under a
tariff. When their rates are based on a federal tariff, motor
carriers can petition the STB for administrative remedies. See
49 U.S.C. § 13702(b)(6). When their rates are based on a
private contract, however, the motor carriers can only sue in an
“appropriate” court.
Of course, for a federal court to be the “appropriate”
forum to adjudicate a dispute, the aggrieved party must
establish a basis for our jurisdiction. See United States ex
rel. Vuyyuru v. Jadhav, 555 F.3d 337, 347 (4th Cir. 2009); cf.
Ruckelshaus v. Sierra Club, 463 U.S. 680, 683 (1983) (defining
“appropriate” as “specially suitable: fit, proper”). For
example, although not satisfied in this case, the requirements
for diversity jurisdiction are likely often met when motor
carriers contract with shippers to transport goods given the
interstate nature of the trucking industry. See 28 U.S.C. §
16
1332. 6 The Motor Carriers have established that they are subject
to the STB’s jurisdiction because they transport goods in
interstate commerce. As a result, their contract with Klaussner
was authorized by § 14101(b)(1). However, this authorization
alone does not provide us with jurisdiction over their breach of
contract claim.
2.
Comparing § 14706(d) to § 14101(b)(2) also helps to clarify
the limited scope of the latter. Section 14706(a)(1) 7 provides
that motor carriers are liable for goods damaged in transit.
Section 14706(d) authorizes parties seeking damages against a
motor carrier to file suit in “a United States district court or
in a State court.” 49 U.S.C. § 14706(d)(3). In every case
brought under § 14706(a)(1), federal jurisdiction is established
because the claimant is enforcing a federal statutory right.
6
One of the threshold requirements to establish our
jurisdiction under § 1332, complete diversity of citizenship
between each plaintiff and each defendant, is not met in this
case because Klaussner and all but one of the Motor Carriers are
incorporated under North Carolina law. See Exxon Mobil Corp. v.
Allapattah Services, Inc., 545 U.S. 546, 553 (2005); see also 28
U.S.C. § 1332(c)(1)(B) (“[A] corporation shall be deemed to be a
citizen of every State . . . by which it has been
incorporated”).
7
The Motor Carriers argue that § 14706(a)(1) establishes
our jurisdiction over this case. However, this section
addresses claims against motor carriers for damages. It does
not apply to our case, where motor carriers have filed suit
against a shipper to recover freight charges.
17
Thus, the limiting word “appropriate” does not appear in §
14706(d)(3). Section 14101(b)(1), by contrast, authorizes motor
carriers and shippers to enter into private contracts. It does
not provide either the motor carrier or the shipper with a
federal statutory right to enforce in a routine breach of
contract claim. When operating under a private contract
authorized by § 14101(b)(2) instead of a federal tariff,
therefore, a party must first establish an alternative basis for
our jurisdiction before we can adjudicate their dispute. In
this case, the Motor Carriers have failed to meet this threshold
requirement.
C.
We now turn to the sections of the ICCTA that directly
address motor carriers’ billing and collection practices to
determine whether our jurisdiction can be established under one
of these provisions. See 49 U.S.C. § 13701 et seq. Contrary to
the Motor Carriers’ arguments on appeal, these sections do not
provide motor carriers with a federal cause of action when they
sue a shipper for unpaid freight charges under a private
contract. We discuss each briefly.
1.
The Motor Carriers first argue that 49 U.S.C. § 13710(a)(1)
is the functional equivalent of the tariff-filing requirement,
18
and therefore, provides a continuing basis for our jurisdiction.
This section requires motor carriers to provide shippers with a
written or electronic copy of “the rate, classification, rules,
and practices, upon which any rate applicable to its shipment or
agreed to between [the parties] is based.” 49 U.S.C. §
13710(a)(1). When motor carriers’ rates are based on a private
contracting process, it is unclear how this provision would
apply. Even if it did, this section is a disclosure
requirement, and does not impose any obligations regarding the
rates actually charged. It is not, therefore, the equivalent of
a tariff requirement, and does not provide a basis for our
jurisdiction in this case.
2.
The Motor Carriers next argue that their claim arises under
§ 13706, which defines consignee liability for the payment of
freight rates. 49 U.S.C. § 13706(a)-(b). While this section
does not expressly state that its application is limited to
cases where a federal tariff is filed, Chapter 137’s other
provisions addressing motor carriers’ rates only apply when
there is a federal tariff. See, e.g., 49 U.S.C. § 13702; 49
U.S.C. § 13704. Further, the regulations governing motor
carriers’ collection of rates issued pursuant to chapter 137 are
expressly limited to cases where a federal tariff is filed. See
19
49 C.F.R. § 377.101; 49 C.F.R. § 377.203(a)(2). 8 Even if § 13706
could apply in the absence of a federal tariff, this section
does not apply to our facts. In this case, the Motor Carriers
seek to recover from a shipper, or consignor, not a consignee.
In sum, absent a federal tariff, the statutory requirements
regarding the rates and collection practices of motor carriers
in Chapter 137 are not implicated when a motor carrier files
suit against a shipper to recover freight charges.
3.
This conclusion also negates the Motor Carriers’ final
argument for jurisdiction under the ICCTA. The Motor Carriers
argue that the eighteen-month statute of limitations period that
governs motor carriers’ claims for unpaid freight charges under
the ICCTA, 49 U.S.C. § 14705(a), establishes our jurisdiction
over their claim. The Motor Carriers’ argument puts the cart
before the horse. For § 14705(a) to apply, motor carriers must
first establish that their claim arises under the ICCTA. A
statute of limitations period is not an independent grant of
8
The Motor Carriers cite these regulations to support their
argument for our jurisdiction in this case. Given their
inapplicability in the absence of a federal tariff, this
argument is without merit. We note briefly that the Motor
Carriers also cite to the regulations issued pursuant to Chapter
138 of the ICCTA. These regulations apply only when a party
files suit against a motor carrier, and therefore are not
implicated by our facts. See 49 C.F.R. § 378.1.
20
jurisdiction. In this case, we have not found, and the Motor
Carriers have not alleged, a cause of action arising under the
ICCTA. Accordingly, we do not have jurisdiction under the ICCTA
to decide this case.
IV.
In the alternative, the Motor Carriers argue that their
state law breach of contract claim is preempted by § 14501(c)(1)
of the ICCTA. The Motor Carriers urge us, therefore, to create
a cause of action under federal common law to establish our
jurisdiction and provide a forum for their claim against
Klaussner. In any preemption analysis, “the purpose of Congress
is the ultimate touchstone.” Wyeth v. Levin, 555 U.S. 555, 565
(2009) (internal citations and quotations omitted). We begin
with the words of the statute which “necessarily contain[] the
best evidence of Congress’ pre-emptive intent.” CSX Transp.,
Inc. v. Easterwood, 507 U.S. 658, 664 (1993). When a statute
includes an express preemption clause, its presence generally
“‘implies that matters beyond that reach are not pre-empted.’”
Washington Gas Light Co. v. Prince George’s Cnty. Council, 711
F.3d 412, 420 (4th Cir. 2012) (quoting Cipollone v. Liggett
Group Inc., 505 U.S. 504, 517 (1992)). Further, “[f]ederalism
concerns strongly counsel against imputing to Congress an intent
to displace a whole panoply of state law . . . absent some
21
clearly expressed direction.” Custer v. Sweeney, 89 F.3d 1156,
1167 (4th Cir. 1996) (internal quotation omitted).
Section 14501(c)(1) of the ICCTA preempts any state law or
regulation “related to a price, route, or service of any motor
carrier . . . ”. 49 U.S.C. § 14501(c)(1). The Motor Carriers
contend that the North Carolina common law that would decide
this dispute in state court qualifies as “state law” under §
14501(c). The Motor Carriers argue, therefore, that the ICCTA
preempts their claim because its outcome will affect their
prices. In other words, in their view, Congress intended the
phrase “related to” in § 14101(c)(2) to displace all state
contract law that would impact motor carriers’ prices. We are
constrained to disagree.
Congress borrowed the preemption language in § 14501(c)(1)
from the Airline Deregulation Act of 1978 (“ADA”). Compare 49
U.S.C. § 41713(b)(1) with 49 U.S.C. § 14501(1). Prior to the
ICCTA’s enactment, the Supreme Court broadly defined the phrase
“related to” in the ADA to preempt all claims having “a
connection with, or reference to” airline prices, routes, or
services. Morales v. Trans World Airlines Inc., 504 U.S. 374,
384 (1992). Congress was “fully aware of [the] Court’s
interpretation of that language” in Morales when it opted to
include identical language in the ICCTA, and intended to provide
the same protections against state regulation to motor carriers
22
as were provided to airlines in the ADA. See Rowe v. New
Hampshire Motor Transport Ass'n, 552 U.S. 364, 370 (2008)
(citing and quoting legislative history).
The broad preemptive scope of the phrase “related to,”
however, is not without limits. The Morales Court noted that
“‘[s]ome state actions may affect [airline fares] in too
tenuous, remote, or peripheral a manner’ to have pre-emptive
effect.” 504 U.S. at 390 (quoting Shaw v. Delta Air Lines,
Inc., 463 U.S. 85, 100 n.21 (1983)). In American Airlines, Inc.
v. Wolens, 513 U.S. 219 (1995), for example, the Supreme Court
recognized an exception to preemption for routine breach of
contract claims against airlines. American Airlines argued that
a series of class actions filed in state court by participants
in its frequent flyer program for breach of contract were
preempted by the ADA. Id. at 230. The Court determined it was
“[not] plausible that Congress meant to channel into federal
courts the business of resolving, pursuant to judicially
fashioned federal common law, the range of contract claims
relating to airline rates, routes, or services.” Id. at 232.
The Court noted that no state regulation of airlines was at
issue, and that American had voluntarily entered into the
frequent-flyer contracts with consumers. Id. at 229. Most
importantly, the outcome of the case depended on an
interpretation of the contract’s terms, not on an interpretation
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of any federal law or regulation. Id. at 229-31 (“A remedy
confined to a contract’s terms simply holds parties to their
agreements.”). Therefore, the plaintiffs could pursue their
claims against American in state court.
In this case, as in Wolens, resolution of the dispute
between the Motor Carriers and Klaussner depends upon the
court’s interpretation of the parties’ contract. The outcome of
the case turns on the meaning of the “Prepaid” designation and
non-recourse provision in their bills of lading. No state law
or regulation governing the Motor Carriers’ prices, routes, or
services is implicated. As analyzed above, no federal statute
or regulation need be interpreted. The Motor Carriers’ claim
against Klaussner is a routine breach of contract case that is
not preempted by § 14501(c)(1). Furthermore because, similarly
to the ADA, the ICCTA “contains no hint” that Congress intended
federal courts to adjudicate this category of contract disputes
based on federal common law, we decline to do so in this case.
Wolens, 513 U.S. at 232.
V.
Because we conclude that we do not have jurisdiction to
adjudicate this appeal, we “do not and cannot express any
opinion regarding the appeal’s merits.” United States v. Myers,
593 F.3d 338, 340 n.1 (4th Cir. 2010) (citing Constantine, 411
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F.3d at 480). We have authority only to vacate the district
court’s opinion and remand with instructions to dismiss.
Therefore, the decision below is
VACATED AND REMANDED
WITH INSTRUCTIONS.
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