By John L. Marchione, Esq.
On Thursday, April 13, 2023, the Eleventh Circuit Court of Appeals affirmed a lower court ruling in favor of transportation broker Landstar Ranger, Inc. (Landstar) and against an Aspen American Insurance Company (Aspen). The Court found that the Federal Aviation Administration Authorization Act (FAAAA) preempts the negligence and gross negligence claims for cargo loss and damage brought by Aspen (on behalf of its insured-shipper) against Landstar.
Aspen alleged that transportation broker Landstar should be liable for its role in brokering a truckload shipment of cell phone cases worth over $600,000 that was ultimately stolen by an imposter motor carrier. Taylor Johnson, who represented Landstar at the trial court level and in the appeal, argued that the negligence claims were preempted by the FAAAA, a law which was enacted by Congress to prohibit the states from reregulating trucking and enforcing state laws or common laws that relate to the prices, routes, or services of a broker with respect to the transportation of property.
After recounting the history and intent of the FAAAA, the Eleventh Circuit held that claims against brokers for negligent selection of a motor carrier or for negligent brokering are clearly within the scope of the conduct that Congress intended to preempt when it drafted the FAAAA’s preemptive provisions. The Eleventh Circuit wrote:
“Indeed, Aspen itself acknowledges that ‘the broker has but a single job – to select a reputable carrier for the transportation of the shipment. That’s all.’ And this is precisely the brokerage service that Aspen’s negligence claims challenge—Landstar’s allegedly inadequate selection of a motor carrier to transport Tessco’s shipment. Accordingly, these claims have ‘a connection with or reference to’ the service of a broker with respect to the transportation of property.”
The Court went on to note that prior cases which have found these types of negligent hiring/selection claims to be outside the scope of the FAAAA’s preemptive scope are incompatible with the United States Supreme Court’s holding in Morales v. Trans World Airlines, Inc. which broadly defined the scope of the preemptive language at issue in the case. Specifically,
“We realize that some district courts have held claims like Aspen’s to be outside the scope of FAAAA preemption on the ground that such claims ‘are generally applicable state common law causes of action’ that ‘are not targeted or directed at the trucking industry.’ E.g., Nyswaner v. C.H. Robinson Worldwide Inc., 353 F. Supp. 3d 892, 896 (D. Ariz. 2019). But those decisions are incompatible with Morales…”
The Eleventh Circuit then held that the FAAAA’s Safety Exception, which Aspen lobbied for, did not apply to the cargo loss and damage claims before the Court because such claims were not “with respect to motor vehicle.” The Court wrote:
“[I]f an indirect connection between a state law and a motor vehicle satisfied the safety exception, then the phrase ‘with respect to motor vehicles’ would have no meaningful operative effect… a mere indirect connection between state regulations and motor vehicles will not invoke the FAAAA’s safety exception.”
Ultimately, in finding for Landstar and against Aspen, the Eleventh Circuit held that “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.”
The Eleventh Circuit’s decision is one of the few federal circuit-level opinions on FAAAA preemption and the only federal circuit-level opinion on FAAAA preemption in the context of claims for cargo loss or damage. Taylor Johnson successfully argued that transportation brokers should not and cannot be held to a patchwork of state standards in conducting their business across the United States. That is the essence of the FAAAA and now transportation brokers will have this federal circuit-level opinion to rely upon when attempting to dismiss suits for cargo loss or damage brought against them under a state’s common law.
This is a great win for transportation brokers and the transportation industry at-large. Taylor Johnson litigation and appellate teams, including attorneys Kristen MJ Johnson and John L. Marchione, obtained the favorable ruling from the Eleventh Circuit. A link to the opinion in Aspen American Insurance Company v. Landstar Ranger Inc., Case No. 22-10740, can be found here.
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