Stephen H. Peters v. Union Pacific RR

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No. 95-1599
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Stephen H. Peters, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the
* Eastern District of Missouri.
Union Pacific Railroad Company, *
*
Appellee. *
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Submitted: September 13, 1995
Filed: April 1, 1996
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Before MAGILL, FLOYD R. GIBSON, and HENLEY, Circuit Judges.
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MAGILL, Circuit Judge.
Stephen H. Peters brought a conversion action in Missouri state court
against Union Pacific Railroad for its refusal to return his locomotive
engineer certificate. Union Pacific Railroad successfully motioned to
remove the action to federal court and to dismiss.
Peters now appeals the district court's1 denial of remand to state
court and subsequent dismissal of his state conversion action. He argues
that his motion for remand was proper because his conversion claim relied
solely on Arkansas law and therefore fell outside the jurisdiction of the
federal courts. He also
1
The Honorable Catherine D. Perry, United States District
Judge for the Eastern District of Missouri.
argues that dismissal was improper because federal law did not preempt his
state claim. Because the Federal Railroad Safety Act preempts Peters'
claim and because Peters failed to exhaust administrative remedies, we
affirm.
I.
Union Pacific Railroad Company (Union Pacific) employed Stephen H.
Peters as a locomotive engineer from 1991 until the end of 1992. As
required by the Federal Railroad Safety Act (FRSA), Union Pacific issued
Peters a locomotive engineer certificate which permitted him to operate a
train locomotive on the general railway system. 45 U.S.C.S. § 431(i) (1992
& Supp. 1995).
On November 30, 1992, Peters violated several locomotive operating
regulations. Union Pacific determined, after a hearing, that Peters had
operated a locomotive above the maximum allowed speed, failed to sound the
whistle at railroad crossing grades, and missed a required inspection. As
a result of these findings, Union Pacific sanctioned Peters on December 14,
1992. Consistent with Federal Railroad Administration regulations, Union
Pacific suspended Peters' certificate for one month. It also discharged
Peters from further employment based on company operating rules.
The Brotherhood of Locomotive Engineers challenged Peters' dismissal
by filing an appeal under the collective bargaining agreement. After
protracted discussions, the parties reached a settlement under which Peters
"would be reinstated to service on a leniency basis without pay for time
lost and this claim (under the collective bargaining agreement) withdrawn."
Thus, approximately six months after dismissing Peters, Union Pacific
allowed him to return to work and reissued his engineer certificate.
Peters filed suit against Union Pacific in Missouri state court on
January 19, 1994, claiming that Union Pacific had
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converted his engineer certificate in violation of Arkansas law. Peters
had requested the return of his certificate at the end of his one-month
suspension period, but Union Pacific refused. Instead, Union Pacific
waited until it reached a settlement with his union five months later. As
a result, Peters claims he lost $45,000 in wages because Union Pacific
denied him the opportunity to work as an engineer for another railroad.
Based on the federal question presented, namely whether Peters had
a property right to an engineer certificate under the FRSA, Union Pacific
removed the matter to federal court. Peters filed a motion to remand on
the grounds that his action rested solely on the conversion of his personal
property under state law. Any application of federal law, he argued, was
collateral to his state tort claim. The court denied Peters' motion to
remand.
Union Pacific then moved to dismiss, asserting that because the state
law claim was preempted by the Federal Railroad Safety Act, 45 U.S.C.S. §§
421-447 (1992 & Supp. 1995), and the Railway Labor Act (RLA), 45 U.S.C.S.
§§ 151-163 (1992 & Supp. 1995), the court lacked subject matter
jurisdiction over the state conversion claim.
The court agreed and dismissed Peters' claim under Federal Rule of
Civil Procedure 12(b)(1), holding that it was preempted because it fell
within the scope of the administrative remedies provided in FRSA and RLA.
It noted that while Peters characterizes his claim as one of common law
conversion of his engineer certificate, in reality he sought
recertification, which is specifically addressed by FRSA regulations. Any
right Peters had to possess the certificate derived wholly from federal
law. Peters appeals the district court's denial of remand and dismissal
for lack of subject matter jurisdiction.
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II.
The propriety of removal to federal court depends on whether the
claim comes within the scope of the federal court's subject matter
jurisdiction. See 28 U.S.C. § 1441(b). A claim may be removed only if it
could have been brought in federal court originally. See id.; Merrell Dow
Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 808 (1986). Because
Peters cannot establish diversity jurisdiction, see 28 U.S.C. § 1332(a),
removal is proper only if Peters' claim raises a federal question. See 28
U.S.C. § 1441. A federal question is raised in "those cases in which a
well-pleaded complaint establishes either that federal law creates the
cause of action or that the plaintiff's right to relief necessarily depends
on resolution of a substantial question of federal law." Franchise Tax Bd.
v. Construction Laborers Vacation Trust, 463 U.S. 1, 27-28 (1983).
A plaintiff's characterization of a claim as based solely on state
law is not dispositive of whether federal question jurisdiction exists.
In certain instances, the preemptive force of a federal statute is so
complete that it transforms complaints styled as ordinary common-law claims
into ones stating a federal claim. Metropolitan Life Ins. Co. v. Taylor,
481 U.S. 58, 65 (1987). Once an area of state law has been completely
preempted, any claim based on that preempted state law claim is considered,
from its inception, to raise a federal claim and therefore arises under
federal law. Humphrey v. Sequentia, Inc., 58 F.3d 1238, 1242 (8th Cir.
1995) (citing Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987)); see
also Deford v. Soo Line R.R., 867 F.2d 1080, 1084 (8th Cir.) (complete
preemption "prohibits a plaintiff from defeating removal by failing to
plead necessary federal questions in a complaint"), cert. denied, 492 U.S.
927 (1989).
We examine the text and structure of a statute to determine if it is
the "clear and manifest purpose of Congress" to preempt an
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area of state law. CSX Transp. v. Easterwood, 113 S. Ct. 1732, 1737
(1993); see also Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516-17
(1992) (explaining that the purpose of Congress is the ultimate
consideration when determining whether federal preemption exists). If the
statute contains an express preemption clause, then the statutory
construction should center on its plain meaning as the best evidence of
Congress's preemptive intent. This appeal requires us to define the
preemptive scope of the FRSA and determine whether Peters' claim comes
within it.
A.
Congress created the FRSA to ensure that railroad safety would be
"nationally uniform to the extent practicable." 45 U.S.C.S. § 434 (1992
& Supp. 1995). The FRSA specifically provides for the establishment of a
program requiring licensing for any operator of a locomotive. 45 U.S.C.S.
§ 431(i). To that end, the Department of Transportation promulgated
comprehensive regulations to ensure that only qualified individuals operate
trains. 49 C.F.R. §§ 240.1-240.411 (1993). These regulations include
provisions for engineer certification, denial of certification, and
replacement of lost, stolen or mutilated certificates.
The FRSA contains an express preemption clause:
[L]aws, rules, regulations, orders, and standards relating to
railroad safety shall be nationally uniform to the extent
practicable. A State may adopt or continue in force any law,
rule, regulation, order, or standard relating to railroad
safety until such time as the Secretary has adopted a rule,
regulation, order, or standard covering the subject matter of
such State requirement.
45 U.S.C.S. § 434 (1992 & Supp. 1995) (emphasis added); see also Burlington
Northern R.R. v. State of Minn., 882 F.2d 1349, 1352 (8th Cir. 1989)
("Section 434 on its face provides for broad
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preemption, permitting state regulation of railroad safety in only two
circumstances: (1) if the FRA has not acted to '[cover] the subject matter'
of the state law, or (2) where the FRA has so acted, if the state law is
necessary to eliminate an essentially local safety concern and satisfies
the other specified conditions.").2
Pursuant to § 434, the Secretary of Transportation issued preemptive
regulations concerning engineer certification. See 49 C.F.R. §§ 240.1-
240.411 (1993). Included in these regulations is a specific, detailed
scheme setting out dispute resolution procedures. See 49 C.F.R.
§§ 240.401-240.411 (1993). The regulations establish a review board to
consider petitions challenging a railroad's denial of certification or
recertification, or revocation of certification. 49 C.F.R. § 240.401(a).
Any person denied certification can petition the Locomotive Engineer Review
Board (Board) to determine whether the denial was improper. 49 C.F.R.
§ 240.401(a) (1993). Any party adversely affected by the Board's decision
has a right of appeal. 49 C.F.R. § 240.411 (1993). This "comprehensive
remedial scheme . . . serves to confirm [the FRSA's] preemptive scope."
Rayner, 873 F.2d at 65.
Operating within this framework, Union Pacific revoked Peters'
locomotive engineer certificate for exceeding the authorized speed, see 49
C.F.R. § 240.307(a), and held him ineligible to hold a certificate for a
period of one month. See 49 C.F.R. § 240.117(g)(3)(i).
2
The FRSA's legislative history also emphasizes that
railroad safety is better served by uniform federal action rather
than "'by subjecting the national rail system to a variety of
enforcement in 50 different judicial and administrative
systems.'" Rayner v. Smirl, 873 F.2d 60, 65 (4th Cir. 1989)
(citing H.R. Rep. No. 91-1194, 91st Cong., 2d Sess., reprinted in
1970 U.S.C.C.A.N. 4104, 4109), cert. denied, 493 U.S. 876 (1989).
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B.
It is against this statutory and regulatory backdrop that Peters
eventually brought his Arkansas conversion claim. Peters asserts that, at
the end of his thirty-day ineligibility period, he was automatically
reinstated as a certified locomotive engineer, but that Union Pacific's
refusal to issue a certification card precluded him from enjoying the
benefits of that status. Union Pacific thereby effected a conversion of
his certificate. Under Arkansas law, a prima facie conversion claim must
show that the defendant intended to exercise control or dominion over the
property of another. City Nat'l Bank of Fort Smith v. Goodwin, 783 S.W.2d
335, 338 (Ark. 1990). Therefore, Peters maintains, his claim presents only
two questions: whether the engineer certificate constitutes property under
Arkansas law, and whether Union Pacific intended to withhold his engineer
certificate.
Peters argues that his conversion claim lies outside the preemptive
reach of the FRSA. According to Peters, his claim does not implicate
issues of railroad safety or involve matters covered by the FRSA
regulations. Rather, his claim concerns only his possessory right to the
certification card. The safety problems that justified the revocation of
Peters' certificate were satisfied with the completion of his suspension.
The FRSA regulations do not address the right of a certified engineer to
possess a certification card, nor do they provide a remedy when a railroad
refuses to provide the necessary certification verification. Because
Peters styles his claim as a challenge to Union Pacific's refusal to return
the certificate following completion of his suspension, and not a challenge
of the suspension itself, he believes that the FRSA does not provide him
a remedy. Based on this reasoning, Peters concludes that his conversion
claim is not preempted by the FRSA.
We disagree with Peters' characterization of his claim. While
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he maintains that his objective is money damages based on his right to have
his certification card returned after the ineligibility period, he needs
to first establish a right to certification itself. Indeed, his conversion
claim depends entirely on the resolution of that one issue. For Peters to
be employed as a locomotive engineer by Union Pacific or any other railroad
required not merely the return of his certification card, but what the
certification card represents. While Peters assumes that certification
occurs automatically at the end of his ineligibility period, nothing in the
regulations suggests that this is so.
Because Peters' conversion claim is necessarily a challenge to Union
Pacific's certification decision, it follows that the claim comes within
the scope of the FRSA regulations and is preempted. Congress has expressly
preempted state laws affecting railroad safety where the Secretary of
Transportation has promulgated regulations. 45 U.S.C.S. § 434. The FRSA
regulations explicitly set out a comprehensive administrative adjudication
system for handling certification disputes. 49 C.F.R. §§ 240.401-240.411.
These regulations directly apply to Peters' conversion claim, which is
predicated on a certification dispute. Any issue raised in this area is
a federal issue justifying removal. See Burlington Northern R.R. v. State
of Mont., 880 F.2d 1104, 1106 (9th Cir. 1989) ("The FRSA does not merely
preempt those state laws which impair or are inconsistent with FRA
regulations. It preempts all state regulations aimed at the same safety
concerns addressed by FRA regulations." (footnote omitted)); see also
Rayner, 873 F.2d at 66 ("Once the federal government acts . . . the FRSA
normally preempts state regulation of that subject matter."); National
Ass'n of Reg. Util. Comm'rs v. Coleman, 542 F.2d 11, 13 (3d Cir. 1976)
("[T]hese statutory provisions evince . . . a 'total preemptive intent.'").
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III.
Having established that Peters' conversion claim comes within the
preemptive scope of the FRSA, we turn our attention to the district court's
dismissal of Peters' claim.
Dismissal was proper in this case if Peters failed to exhaust his
administrative remedies. "Where relief is available from an administrative
agency, the plaintiff is ordinarily required to pursue that avenue of
redress before proceeding to the courts; and until that recourse is
exhausted, suit is premature and must be dismissed." Reiter v. Cooper, 113
S. Ct. 1213, 1220 (1993); see also United States v. Bisson, 646 F. Supp.
701, 706 (D.S.D.) ("It is fundamental that exhaustion of available
administrative remedies is a prerequisite to judicial review."), aff'd, 839
F.2d 418 (1986); Rayner, 873 F.2d at 67 (dismissal for failure to pursue
federal administrative remedies under FRSA).3
The district court properly dismissed Peters' case because he failed
to exhaust the administrative remedies of the FRSA. The Department of
Transportation regulations make it clear that review
3
The exhaustion requirement serves four primary purposes.
First, it carries out the congressional purpose in granting
authority to the agency by discouraging the "frequent and
deliberate flouting of administrative processes [that] could
. . . encourag[e] people to ignore its procedures." Second, it
protects agency autonomy by allowing the agency the opportunity
in the first instance to apply its expertise, exercise whatever
discretion it may have been granted, and correct its own errors.
Third, it aids judicial review by allowing the parties and the
agency to develop the facts of the case in the administrative
proceeding. Fourth, it promotes judicial economy by avoiding
needless repetition of administrative and judicial factfinding,
and by perhaps avoiding the necessity of any judicial involvement
at all, if the parties successfully vindicate their claims before
the agency. Bisson, 646 F. Supp. at 706; see also McKart v.
United States, 395 U.S. 185 (1969). Without an exhaustion
requirement, people would be encouraged to ignore the
administrative dispute resolution structure, destroying its
utility. Andrade v. Lauer, 729 F.2d 1475, 1484 (D.C. Cir. 1984).
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of a railroad decision to deny certification must occur through a review
petition filed with the Federal Railroad Administration. See 49 C.F.R. §
240.403(a); see also 45 U.S.C. § 431(f). Peters chose to forego the
administrative remedies available to him under the FRSA. To challenge
Union Pacific's decision not to issue a locomotive engineer certificate,
Peters was required to first raise the issue with the Locomotive Engineers
Review Board. This Board is administratively charged with determining
whether a railroad employee is entitled to certification following the end
of a suspension period. "Any person who has been denied certification
. . . may petition the Federal Railroad Administration to review the
railroad's decision." See 49 C.F.R. § 240.401(a).
If Peters had followed the dispute resolution procedures created by
the Secretary of Transportation, he would have petitioned the Board for
review within 180 days of the railroad decision not to certify him. The
Board would then have issued a written decision including a finding of
facts upon which the decision is based. The adversely affected party would
have had two levels of appeal within the administrative structure. 49
C.F.R. §§ 240.407, 240.411. Peters chose not to avail himself of this
procedure and cannot now complain that he has no available remedy.
IV.
Because the FRSA expressly preempts state law on engineer
certification disputes and because Peters failed to exhaust available
administrative remedies, we affirm the district court's dismissal.
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A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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