7th Circuit joins 11th Circuit in Holding State-Law Negligence Claims Preempted By F.A.A.A.A.

By John P. Lock

July 26, 2023

For the second time in less than six months, a federal court of appeals has handed transportation brokers a major win on federal preemption grounds. Last week, the U.S. Court of Appeals for the Seventh Circuit unanimously ruled that the Federal Aviation Administration Authorization Act (“FAAAA”), 49 U.S.C. § 1450(c)(1)-(2), preempts state-law negligence claims against freight brokers. This decision comes on the heels of a near identical ruling by the Eleventh Circuit and underscores the need for practitioners representing transportation brokers to strongly consider relying on FAAAA preemption to seek dismissal of state-law negligence claims.  

Ying Ye, as Representative of the Estate of Shawn Lin v. GlobalTranz Enterprises, Inc.

In Ying Ye, as Representative of the Estate of Shawn Lin v. GlobalTranz Enterprises, Inc, No. 22-1805, 2023 U.S. App. LEXIS 18137 (July 18, 2023), a freight broker, GlobalTranz Enterprises, Inc. (“GlobalTranz”) was retained by a shipper to hire a motor carrier to transport goods from Illinois to Texas.  GlobalTranz hired a motor carrier, Global Sunrise, Inc. (“Global Sunrise”) to transport the goods.  During the load movement, the Global Sunrise truck collided with a motorcyclist, Shawn Lin, on an interstate highway in Texas.  Mr. Lin died as a result of the collision. 
Mr. Lin’s estate brought suit against GlobalTranz claiming, among other things, that GlobalTranz was negligent in hiring Global Sunrise.  Pursuant to a motion for judgment on the pleadings, the United States District Court for the Northern District of Illinois dismissed the estate’s negligence claims against GlobalTranz holding that such claims were preempted by FAAAA § 14501(c)(1), which expressly bars state-law claims “related to a price, route, or service of any motor carrier…, broker, or freight forwarder with respect to the transportation of property.”  The District Court further held that the Act’s “safety exception,” providing that preemption “shall not restrict the safety regulatory authority of a State with respect to motor vehicles,” was inapplicable.
Plaintiff’s estate appealed the dismissal of its negligence claims to the Seventh Circuit Court of Appeals. On July 18, 2023, the Seventh Circuit unanimously affirmed the District Court’s decision. In affirming the lower court, the Circuit Court held that appellant’s negligent hiring claim against GlobalTranz fell within the plain language Act’s preemption provision set forth in § 14501(c)(1). The Court further held that the Act’s safety exception set forth in § 14501(c)(2)(A) did not save the negligence claim from preemption.  In reaching this conclusion, the Court narrowly construed the phrase “with respect to motor vehicles” contained in the safety exception to require a sufficiently direct connection between the potentially exempted state law and motor vehicles. Under this narrow construction, the appellate Court agreed with the District Court’s finding that the link between broker hiring standards and motor vehicles was too attenuated to trigger the protections of the safety exception.    

Consistent with the Eleventh Circuit

Of note, the Seventh Circuit’s ruling in Ying Ye is squarely aligned with the Eleventh Circuit’s recent decision in Aspen American Insurance Co. v. Landstar Ranger, Inc., 65 F. 4th 1261 (11th Cir. 2023).  In Aspen, a shipper’s insurer sought to recover damages from a freight broker for the loss of a high value cargo stolen by a company fraudulently posing as a broker-approved motor carrier. The United States District Court for the Middle District of Florida dismissed the insurer’s negligence claims against the broker, holding that negligent hiring claims against brokers are expressly preempted by § 14501(c)(1) and that such claims are not saved by the Act’s safety exception.  On April 13, 2023, the Eleventh Circuit affirmed the District Court’s decision.     

Contrast with the Ninth Circuit

Both the Seventh Circuit’s ruling in Ying Ye and the Eleventh Circuit’s ruling in Aspen are in sharp contrast with the Ninth Circuit’s 2020 decision in Miller v. C.H. Robinson Worldwide, Inc., 976 F. 3d 1016 (9th Cir. 2020). In Miller, a plaintiff sought to recover damages from a freight broker for negligently hiring a motor carrier whose driver allegedly caused a motor vehicle collision that rendered plaintiff a quadraplegic.  Like the Circuit Courts in Aspen and Ying Ye, the Ninth Circuit in Miller agreed that negligent hiring claims are subject to the plain language of the Act’s express preemption provision set forth in § 14501(c)(1); however, unlike the Aspen and Ying Ye Courts, the Miller Court determined that state-law tort claims fell within the protections of the FAAA’s § 14501(c)(2)(A) safety exception.  In reaching this conclusion, the Miller Court interpreted the phrase “with respect to motor vehicles” broadly to support exemption of state laws with an indirect link to motor vehicles, including negligent hiring claims against brokers.  The United States Supreme Court denied certiorari on the Miller case. In sum, the split in authority at the Circuit Court level boils down to a difference of opinion concerning the breadth of a single phrase consisting of five words contained within the Act’s “safety exception” provision.

Case Significance & Practice Pointer

Ying Ye is significant for several reasons.  First, on the heels of the Aspen decision, it bolsters and provides momentum to the argument that state-law negligence claims against freight brokers are improper.  By joining the Eleventh Circuit’s decision in Aspen, the Seventh Circuit’s ruling in Ying Ye renders the Ninth Circuit’s decision in Miller as the minority position.  While the Seventh Circuit’s decision only governs federal courts in Illinois, Indiana, and Wisconsin, the Court’s well-reasoned opinion should serve as persuasive authority for courts elsewhere. 

Next, Ying Ye is nearly factually identical to Miller. Unlike Aspen which involved a loss of property, both Ying Ye and Miller involve bodily injury claims. While the Aspen Court seemingly perceived this to be a distinction without a difference, expressly stating that “it makes little sense for the safety exception to turn on whether a plaintiff seeks damages for property loss or bodily injury,” plaintiffs asserting direct negligence claims against freight brokers have pointed to this distinction in an effort to minimize the authoritative reach of Aspen.  This factual distinction is not present in Ying Ye.

Finally, the Ying Ye decision reinforces the need for the United States Supreme Court to address the issue. Given the split in authority at the Circuit Court level, it is well within the Supreme Court’s role to provide an authoritative interpretation of the disputed statute. Whether the Supreme Court will grant certiorari and weigh in on this issue any time soon is yet to be seen.  In the interim, freight brokers should continue to argue for FAAA preemption of state-law negligence claims based on the reasoning set forth by both the Seventh Circuit in Ying Ye and the Eleventh Circuit in Aspen.

Please contact John Lock, Esquire, of Lock Gordon Law Group’s Transportation Law practice group with questions about this defense or any other aspect of trucking or transportation law.

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