Eleventh Circuit Adds Another Arrow to Transportation Brokers’ Quiver on FAAAA Preemption

Pittsburgh, Pa. (July 11, 2024) - Courts across the country continue to bolster transportation brokers’ defense against state law tort claims, as seen by another favorable ruling in the U.S. Court of Appeals for the Eleventh Circuit this week. In the matter of Katia Gauthier v. Hard to Stop LLC, the U.S. District Court for the Southern District of Georgia, applying the previous ruling in Aspen American Insurance Company v. Landstar Ranger, Inc., 65 F.4th 1261 (11th Cir. 2023), held that the plaintiff’s negligent selection claim against defendant Total Quality Logistics, LLC was preempted by the Federal Aviation Administration Authorization Act (“FAAAA”). Upon appeal, the Eleventh Circuit affirmed.

Background on District Court Case

Katia Gauthier filed suit against Hard to Stop LLC and Total Quality Logistics, LLC following the death of her husband, Peter Gauthier, when his car collided with a tractor trailer driven by Ronald Bernard Shingles. Mr. Shingles was driving a tractor trailer owned by Hard to Stop, carrying a load brokered by Total Quality Logistics, and attempted to make a U-turn on a state highway, resulting in his truck blocking traffic on the roadway. Mrs. Gauthier alleged common law negligence claims against Total Quality Logistics, arguing that it “negligently hired, contracted with, and/or retained Defendant Shingles as a driver and failed to exercise ordinary care to determine his fitness for the task of operating a commercial motor vehicle” and that it had a duty to “ensure that the motor carriers with whom it arranged transportation of goods were reasonably safe.”

Total Quality Logistics filed a motion to dismiss, arguing that Mrs. Gauthier’s negligent hiring claim should be dismissed because the claim was preempted by Section 14501(c)(1) of the FAAAA. Distinguishing the language of the FAAAA from the language of the Airline Deregulation Act (ADA) and the holding by the Supreme Court in Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383 (1992), U.S. District Judge Stan Baker noted that the U.S. Supreme Court has said that Section 14501(c)(1)'s preemptive scope is curtailed by the phrase “with respect to the transportation of property,” which is not included in the ADA. Dan's City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 260 (2013). Therefore, in order to be preempted by the FAAAA, state laws or enforcement actions must: (1) affect a broker’s prices, routes, or services in more than a “tenuous, remote, or peripheral” manner; and (2) concern “the transportation of property.” Judge Baker held that the FAAAA preempts negligence claims that are sufficiently connected to or have a significant impact on brokers’ core bargained-for services: arranging for the transportation of property.

Mrs. Gauthier’s complaint identified Total Quality as a shipment broker, and alleged that, as a freight broker, it owed the following duties:

To investigate and only select and contract with safe and competent contractors and motor carriers to transport goods in interstate commerce;
Not to hire or retain drivers it knew or should have known posed a risk of harm to others;
To arrange for the transport of property in a commercial motor vehicle “in a reasonably prudent manner”; and
To ensure that the motor carriers with whom it arranged transportation of goods were reasonably safe and complied with all laws and industry standards concerning the safe operation and maintenance of commercial motor vehicles.

As a result, Judge Baker held, Mrs. Gauthier’s negligent hiring claim is within the scope of section 14501(c)(1) because it was “related to” Total Quality’s brokerage services.

Reasoning of the Eleventh Circuit

The Eleventh Circuit analyzed the allegations of Mrs. Gauthier and held that they are “materially indistinguishable” from the claim in Aspen. Mrs. Gauthier argued that her claim does not implicate the service of a broker with respect to transportation of property because the Georgia common law on negligence applies to the general public. The Court unequivocally disagreed, stating that although the FAAAA does not preempt general state laws, her claim is not generally applicable, as “[m]embers of the public do not arrange for the motor transportation of property; brokers do.” Citing to its own holding in Aspen, the Court held that Mrs. Gauthier’s common law claim is aimed solely at “the performance of [brokers’] core transportation-related services,” which falls squarely within the preemption provision.

Mrs. Gauthier next argued that cases arising from traffic accidents should be treated differently than cases arising from property loss, such as Aspen. The Court again dismissed this argument on the basis that the nature of the injury is not relevant in the analysis of whether a negligent selection claim falls within the preemption provision, since Section 14501(c)(1) seeks to regulate the broker’s performance of core services and that negligent selection claims lack the necessary direct relationship to motor vehicles required of state laws in order for the safety exception to apply.

Mrs. Gauthier’s contention that Aspen was wrongly decided was equally rejected, as it is well-settled that a prior panel’s holding is binding on subsequent panels unless and until it is overruled. United States v. Dubois, 94 F.4th 1284, 1293 (11th Circ. 2024).

Takeaway

The Gauthier decision, when added to its predecessor Aspen and recent decisions in other appeals courts across the country including Ye, Morales, and Hamby, will assist freight brokers in the continued fight to ensure fair application of the FAAAA’s preemption provision from coast to coast.

For more information about this decision, contact the authors of this alert. Visit our Transportation Practice page to learn more about our capabitilies in this area.

Authors:

Todd A. Gray, Managing Partner - Pittsburgh and Co-Chair of National Transportation Practice

Ashley N. Rodgers, Partner and Vice-Chair of National Transportation Practice

Kyle A. Peterson, Associate