Case Study / Appellate disposition of a trucking accident case raises this question: Where federal court certifies question of state law to supreme court of the state whose law it is applying under Erie v. Tompkins in a diversity action, if such state supreme court opines that the law of its state compels it to decline giving an answer, may the federal court nevertheless arrive at its own answer thereafter?

Learmouth v. Sears, Roebuck & Co., — F.3d —, No. 09-60651, 2013 WL 708170 (5th Circuit, February 27, 2013).

Free copy of opinion available here. 

Mississippi jury awarded plaintiff $4 million in general verdict – and the jury had not instructed to separate its verdict to differentiate between “economic” damages and “non-economic”.   

Mississippi has a statute that caps “non-economic” damages at $1 million. Based on this statute the federal district court remitted $2,218,905 of the stipulated non-economic damages portion of the verdict to $1,000,000 – and entered an order for judgment totaling $2,781,094. 

On appeal to the U.S. Court of Appeals for the 5th Circuit defendant truck operator (Sears) appealed the jury’s verdict, and plaintiff appealed the “non-economic” damages statute (i.e., the one limiting such to a cap of $1,000,000) under provisions of the Mississippi Constitution.  

The 5th Circuit upheld the verdict, and on the validity of the $1,000,000 damages cap under the Mississippi Constitution certified those constitutional questions to the Mississippi Supreme Court. 

The Mississippi Supreme Court declined to answer the certified question on the ground that to do so would be “speculation” or “conjecture”. All it knew of the verdict, so the Mississippi Supreme Court reasoned, was that it was a “general” verdict undifferentiated at a lump sum of $4 million. It’s sole basis for quantifying such a would-be verdict for “non-economic” damages would be guesswork, therefore, it would, “decline to answer a certified constitutional question outside the clear context of its application”.  

Upon receiving this response from the Mississippi Supreme Court, the 5th Circuit asked the parties to brief it and then ruled on the Mississippi Constitution question on which the Mississippi Supreme Court had declined to rule. It upheld the (Mississippi) constitutionality of the damages cap and affirmed the judgment of the federal district court. 

Brad Clanton, Esq. of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., in “Circuit Notes: Fifth Circuit” as edited by Emma J. Hinnegan, Esq. of Liskow & Lewis, offers a compelling summary of the significance of this case in the “Appellate Practice” Committee of the American Bar Association Section of Litigation – concluding

“In Learmonth, the Mississippi Supreme Court declined to answer the certified questions, so the Fifth Circuit answered those questions itself. However, in the course of explaining its refusal to directly answer the certified questions, the Mississippi Supreme Court stated that Mississippi law would not allow it to answer the certified questions even if they had come before it on direct appeal due to the “speculation” necessary to answer the constitutional questions. Should the Fifth Circuit have deferred to the Mississippi Supreme Court’s answer on that question of Mississippi law? Are there any binding requirements placed on federal courts regarding deference, or lack thereof, to answers to questions certified to a state appellate court, or the declination by the state court to answer the questions based on the law of that state that also governs in federal diversity matters? Is the Full Faith and Credit Clause of the U.S. Constitution implicated in these instances? Are there other limitations placed on the certifying court in these instances?”

MOTOR CARRIERS (INSURANCE) / Declaratory judgment action by insurance carrier against trucking company – held: Insurance carrier had no duty to indemnify trucking company for accident involving trucking company’s independent contractor’s truck while that truck was being driven by an employee of trucking company (driving on behalf of independent contractor and not on behalf of trucking company).

“Although Congress required motor carriers to obtain public-liability insurance, it did not require carriers to obtain insurance for their employees. The regulations expressly provide that this public-liability insurance “does not apply to injury to or death of the insured’s employees while engaged in the course of their employment.” 49 C.F.R. § 387.15.”

“The district court held that the policy contains an exclusion for employees of the insured and that because Olivas was an employee, there was no coverage for his injuries….”

Canal Indemnity Co. v. Rapid Logistics, Inc., Slip copy, 2013 WL 657665 (U.S. Court of Appeals for the 5th Circuit, February 22, 2013). Free copy available here.

MOTOR CARRIERS (CONTRACT) / After truckload stolen at repair facility freight broker contractually on the hook for any theft loss brings third party complaint against truck repair facility – (1) Held by court: Contract count dismissed because no agreement pled as between broker and repair facility; (2) Observed by court: Perhaps freight broker “intends to state a negligence claim” of some kind not abolished by the Illinois Contribution Act – so court grants leave to plead again.

Where truckload was stolen while truck rig was being repaired. Shipper’s subrogated insurer sued freight broker on its contract with shipper to pay “full actual loss” for any theft of load. Freight broker brings third party complaint against repair facility for amount of theft loss. Held: Third party complaint dismissed without prejudice because freight broker, “has not pled any contractual agreement or relationship between [repair facility] and [freight broker] or other facts stating a facially plausible claim for indemnity”. Observed: “Perhaps, despite … some of the wording of the third-party complaint, [freight broker] intends to state a negligence claim against [repair facility] or some other cause of action” that was not abolished by the Illinois Contribution Act (740 ILCS 100 / 2 (b).

Zurich American Insurance Co. v. LCG Logistics, LLC, Slip copy, 2013 WL 675896 (U.S. District Court for the Southern District of Illinois, February 24, 2013). Free copy available here.

“Clearly, though, LCG has not pled any contractual agreement or relationship between TCI and LCG or other facts stating a facially plausible claim for indemnity as currently presented in Count II of the third-party complaint (as well as paragraph 13, paragraph 17, and the prayer for relief). Perhaps, despite the label on Count II and some of the wording of the third-party complaint, LCG intends to state a negligence claim against TCI or some other cause of action in Count II. The Court cannot discern that from the record now before it. Rule 12(f) striking is not appropriate in this case; the references to indemnity are not redundant, immaterial, impertinent, or scandalous. The most prudent course of action is to dismiss the entire third-party complaint and allow LCG an opportunity to amend it.”

MOTOR CARRIER (FEDERAL PREEMPTION & “EMPLOYER” DEFINITION) / The Federal Motor Carrier Safety Act – including its definition of “employer” – did not preempt state workers compensation law because “the purposes of the two statutes are clearly distinct”.

Truck driver injured on the job when consignee’s employee drove a forklift over driver’s foot while driver stood on loading dock. First, brought successful claim under Kentucky workers compensation law against his motor carrier-employer, then brought the subject tort suit against consignee and consignee’s parent (diversity jurisdiction). In holding Kentucky workers compensation law provided exclusive relief that precluded the subject tort suit the court ruled: Congress had not, “intended] the [Federal Motor Carrier Safety Act] to define ‘employer’ for the purposes of workers’ compensation laws” – therefore it did not preempt Kentucky workers compensation law.

Black v. Dixie Consumer Products, LLC, Slip copy, 2013 WL 645954 (U.S. Court of Appeals for the 6th Circuit, February 22, 2013). Free copy available here.

“B. Preemption by the Motor Carrier Safety Act

“Black also asserts that the provisions defining “employer” within the Federal Motor Carrier Safety Act (FMCSA) preempt the classification of Georgia-Pacific and Dixie as statutory employers under the KWCA.

“The FMCSA states that the primary purpose of the legislation is:

(1) to promote the safe operation of commercial motor vehicles; (2) to minimize dangers to the health of operators of commercial motor vehicles and other employees whose employment directly affects motor carrier safety; and (3) to ensure increased compliance with traffic laws and with the commercial motor vehicle safety and health regulations and standards prescribed and orders issued under this chapter. 49 U.S.C. § 31131(a). The statute provides, inter alia, that an “employer” is “a person engaged in a business affecting interstate commerce that owns or leases a commercial motor vehicle in connection with that business, or assigns an employee to operate it,” 49 U.S.C. § 31132(3)(A), and continues to enumerate various duties of employers with respect to the safety of motor vehicles and their operators.

“When considering federal preemption of state law, this court must begin “with the traditional presumption . . . that Congress did not intend to displace state law . . . unless that was the clear and manifest purpose of Congress.” Interstate Towing Ass’n, Inc. v. City of Cincinnati, 6 F.3d 1154, 1161 (6th Cir. 1993) (citations and internal quotations omitted). “In no field has [this] deference to state regulation been greater than that of highway safety regulation.” Id. at 1162. Further, preemption of state authority occurs only in limited cases: (1) where Congress preempts state law in express terms; (2) when Congress creates a regulatory scheme “so pervasive as to make reasonable the inference that Congress left no room to supplement it”; or (3) where “state law is preempted to the extent that it actually conflicts with federal law.” Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190, 203-04 (1983).

“Here, the FMCSA did not expressly preempt the Kentucky workers’ compensation statute, and Black [Plaintiff] does not allege any actual conflict between the federal and state laws. Rather, Black claims that the FMCSA is a “comprehensive scheme for the regulation of commercial motor vehicle safety,” which was intended to “fully occupy the parameters of motor carrier employment.”

“However, Black’s argument is without merit. First, there is no indication that Congress intended the FMCSA to preempt state workers’ compensation statutes where the purposes of the two statutes are clearly distinct. The primary purpose of the KWCA is to ensure that workers’ compensation benefits are available to injured employees and thus requires contractors to assume responsibility for the provision of workers’ compensation benefits where the subcontractor has otherwise failed to do so. In contrast, the FMCSA was enacted specifically to promote the safety of commercial motor vehicles and their operators and accordingly sets forth detailed safety and health standards for those operators. There is simply no indication that the FMCSA, a statute intended to promote commercial motor vehicle safety, should preempt state legislation regarding the provision of workers’ compensation benefits.

“Black further argues that Georgia-Pacific and Dixie should be required to comply with the FMCSA before they may be considered “employers” under the KWCA. However, there is no indication that a classification of Georgia-Pacific or Dixie as an “employer” under the FMCSA should have any bearing on its classification, if any, under the KWCA, or that Congress intended the FMCSA to define “employer” for the purposes of workers’ compensation laws. The fact that Dixie and Georgia-Pacific can be classified as employers for the purpose of one statute, but not the other, is of no consequence.”

COMMERCIAL (AND LAWYER’S ETHICS) / Chicago Bulls great Scottie Pippen and his special purpose corporation sued the law firm that represented them in purchase and financing of ownership interest of a Gulfstream II. Held: Plaintiffs based on (1) major mistakes at closing, (2) arguable fraud in not addressing document terms changed without notice to plaintiffs, and conflict of interest by plaintiff’s lawyers, plaintiffs had cause of action either in tort (verdict below was based on negligence) or in contract & agency (claim of breach of fiduciary duty dismissed below) – but not both.

“Operative facts” found by court: (1) Law firm made material mistakes in closing process that harmed plaintiffs, (2) ownership documents materially changed without notice to plaintiffs, and (3) law firm whose partner represented plaintiffs included partner who economically “on other side” of deal from plaintiffs.

Pippen v. Pedersen & Houpt, 2013 WL 702507 (Illinois Court of Appeals, February 26, 2013). Free copy available here.

FEDERAL TORT CLAIMS ACT (AVIATION) / Suit under Federal Tort Claims Act for FAA’s “allegedly negligent actions” in crash into mountain in Puerto Rico of airplane piloted by wrongful death plaintiff’s husband and in which other plaintiffs’ decedents were passengers. QUESTION #1: Does such a plaintiff have to file an “SF-95” form to exhaust his or her administrative remedy by presenting a claim to the appropriate federal agency – here the FAA – and then allow six months for the agency (FAA) to investigate it? Held: No – not if the relevant decedent’s estate already filed its own SF-95 that gives substantial notice instead. QUESTION #2: Can plaintiff recover for survival damages where he or she were specifically disclaimed damages on the SF–95 by writing “none” in the box labeled “personal injury”? No – “Plaintiff explicitly noted that no personal injury claims were sought and therefore Defendant [FAA] was not put on notice of this claim as required”.

In re Air Crash Near Rio Grande Puerto Rico on December 3, 2008, Slip copy, 2013 WL 646257 (U.S. District Court for the Southern District of Florida, February 21, 2013). No free copy available at time of posting.

TORTS (NEGLIGENCE) / In personal injury action by truck driver against shipper (retailer Wal-Mart) and provider of pallets – Held regarding shipper duties: (1) “It is reasonable for a carrier or truck driver to expect that the shipper that loads cargo onto the truck container will do so in a manner that is safe and will not increase the likelihood of accident or injury.”; and (2) Federal Motor Carrier Safety Regulations impose legal obligations on shippers and shippers’ agents relating to safe loading of freight.

Federal Motor Carrier Safety Regulations referred to are at 49 C.F.R. § 390.5

Aragon v. Wal-Mart Stores East, LP, Slip copy, 2013 WL 593837 (U.S. District Court for the Eastern District of Missouri, February 15, 2013). Free copy available here.

On shipper duties for careful freight loading at common law:

“Under Missouri law “[a]ny action for negligence requires the plaintiff to establish that the Continue reading

TORTS (NEGLIGENCE & PREMISES LIABILITY) / Premises liability and negligence action against airline and U.S. Government for injuries to wheelchair-bound airline passenger as she went through TSA process at airport, case dismissed with prejudice – held: (1) plaintiff failed to exhaust administrative remedies with TSA as required by Federal Tort Claims Act for her claim against the U.S. Government, and (2) defendant airline did not have “possession” or “control” of area (TSA space in airport) where it allegedly committed premises liability or negligence torts.

Hogan v. Northwest Airlines, Inc., Slip copy, 2013 WL 607852 (U.S. District Court for the Eastern District of Michigan, February 19, 2013. Free copy available here.

MARITIME (EMPLOYMENT & TORTS) / (3) Jones Act cases alleging injuries suffered by maritime employees caused (at least in part) by employer’s negligence.

Brewer v. Motiva Enterprises, LLC, Slip copy, 2013 WL 499296 (U.S. District Court for the Eastern District of Louisiana, February 7, 2013). Free copy available here.

Miranda v. NCL (Bahamas)Ltd, Slip copy, 2013 WL 504103 (U.S. District Court for the Southern District of Florida, February 8, 2013). Free copy available here.

Chenevert v. Massman Construction Co., Slip copy, 2013 WL 527411 (U.S. District Court for the Northern District of Mississippi, February 11, 2013). Free copy available here.

MOTOR CARRIERS (TORTS & VICARIOUS LIABILITY) / Truck driver sues Wal-Mart for negligence for injuries she sustained when a stack of boxes fell on her as she was unloading a trailer full of merchandise at a Wal-Mart distribution center. Wal-Mart brings 3rd party complaint against motor carrier for negligence in training its employee-truck driver. Held: 3rd party complaint states a cause of action.

Salient fact: Boxes fell on truck driver when she opened the door of her truck – i.e., they fell on driver from within the truck trailer itself and not from elsewhere in the Wal-Mart facility.

Court construed 3rd party complaint as alleging acts or omissions on part of motor carrier independent and distinct from those of the truck driver herself.

Shelvey v. Wal-Mart Stores East, L.P., Slip copy, 2013 WL 489158 (U.S. District Court for the Northern District of Illinois, February 8, 2013). Free copy available hereContinue reading