U.S. SUPREME COURT

Dan's City Used Cars Inc. v. Pelkey

TRANSPORTATION — Bailment — Pre-emption

New Jersey Law Journal

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Dan's City Used Cars Inc. v. Pelkey, No. 12-52; U.S. Supreme Court; opinion by Ginsburg, J.; decided May 13, 2013. On certiorari to the Supreme Court of New Hampshire.

The Federal Aviation Administration Authorization Act of 1994 (FAAAA) pre-empts state laws "related to a price, route, or service of any motor carrier ... with respect to the transportation of property." 49 U.S.C. § 14501(c)(1). This provision borrows from the Airline Deregulation Act of 1978 (ADA), which pre-empts state laws "related to a price, route, or service of an air carrier," § 41713(b)(1), but it adds the important qualification, "with respect to transportation of property."

Plaintiff-respondent Pelkey brought suit in New Hampshire Superior Court, alleging that defendant-petitioner Dan's City Used Cars (Dan's City), a towing company, took custody of his car after towing it from his landlord's parking lot without Pelkey's knowledge, failed to notify him of its plan to auction the car, held an auction despite Pelkey's notice that he wanted to reclaim the car, and eventually traded the car away without compensating Pelkey for the loss of his vehicle. In disposing of his car, Pelkey further alleged, Dan's City did not meet the requirements contained in Chapter 262 of the New Hampshire Revised Statutes Annotated, which regulates the disposal of abandoned vehicles by a "storage company." Dan's City's misconduct, Pelkey charged, both violated New Hampshire's Consumer Protection Act and breached the towing company's statutory and common-law duties as a bailee to use reasonable care while in possession of a bailor's property.

The court granted summary judgment to Dan's City, concluding that the FAAAA pre-empted Pelkey's claims. The New Hampshire Supreme Court reversed. It held the FAAAA's pre-emption clause inapplicable because Pelkey's claims related to Dan's City's conduct in disposing of his car post-storage, not to conduct concerning "the transportation of property," or a towing company's "service."

Held: Section 14501(c)(1) does not pre-empt state-law claims stemming from the storage and disposal of a towed vehicle. Pp. 7-13.

(a) Where Congress has superseded state legislation by statute, this court's task is to "identify the domain expressly pre-empted," Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 541, focusing first on the statutory language, CSX Transp. Inc. v. Easterwood, 507 U.S. 658, 664. In Rowe v. New Hampshire Motor Transp. Assn., 552 U.S. 364, 370, this court's reading of § 14501(c)(1) was informed by decisions interpreting parallel language in the ADA's pre-emption clause. Thus, the court held, the phrase "related to" embraces state laws "having a connection with or reference to" carrier "rates, routes, or services," whether directly or indirectly. Ibid. At the same time, the breadth of the words "related to" does not mean that the pre-emption clause should be read with an "uncritical literalism." New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655-56. The court has cautioned that § 14501(c)(1) does not pre-empt state laws affecting carrier prices, routes and services "in only a 'tenuous, remote, or peripheral ... manner.'" Rowe, 552 U.S. at 371. Pp. 7-8.

(b) Pelkey's state-law claims escape pre-emption because they are "related to" neither the "transportation of property" nor the "service" of a motor carrier. Although § 14501(c)(1) otherwise tracks the ADA's air-carrier pre-emption provision, the FAAAA formulation's one conspicuous alteration — addition of the words "with respect to the transportation of property" — significantly limits the FAAAA's pre-emptive scope. It is not sufficient for a state law to relate to the "price, route, or service" of a motor carrier in any capacity; the law must also concern a motor carrier's "transportation of property." Title 49 defines "transportation," in relevant part, as "services related to th[e] movement" of property, "including arranging for ... storage [and] handling." Section 13102(23)(B). Pelkey's Consumer Protection Act and negligence claims are not "related to th[e] movement" of his car. Chapter 262 regulates the disposal of vehicles once their transportation — here, by towing — has ended. Pelkey seeks redress only for conduct occurring after the car ceased moving and was stored. Dan's City maintains that because § 13102(23)(B)'s definition of "transportation" includes "storage" and "handling," Pelkey's claims fall within § 14501(c)(1)'s pre-emptive ambit. But "storage" and "handling" fit within § 13102(23)(B)'s definition only when those services "relat[e] to th[e] movement" of property. Thus, temporary storage of an item in transit en route to its final destination qualifies as "transportation," but permanent storage does not. Here, no storage occurred in the course of transporting Pelkey's vehicle.

Pelkey's claims are also unrelated to a "service" a motor carrier renders its customers. The transportation service Dan's City provided — removal of Pelkey's car from his landlord's parking lot — did involve the movement of property, but that service ended months before the conduct on which Pelkey's claims are based. Because Chapter 262, on which Pelkey relies, addresses "storage compan[ies]" and "garage owner[s] or keeper[s]," not transportation activities, it has neither a direct nor an indirect connection to transportation services a motor carrier offers its customers. See Rowe, 552 U.S. at 371.

The conclusion that state-law claims regarding disposal of towed vehicles are not pre-empted is in full accord with Congress' purpose in enacting § 14501(c)(1), which was to displace "a State's direct substitution of its own governmental commands for 'competitive market forces' in determining ... the services that motor carriers will provide." Id. at 372. The New Hampshire prescriptions Pelkey invokes hardly constrain participation in interstate commerce by requiring a motor carrier to offer services not available in the market. Nor do they "freez[e] into place services that carriers might prefer to discontinue in the future." Ibid. Pp. 8-11.

(c) Dan's City's additional arguments in favor of pre-emption are not persuasive. Dan's City contends that because none of Pelkey's claims fit within the exceptions to pre-emption detailed in 49 U.S.C. §§ 14501(c)(2), (3) and (5), his claims must be pre-empted. But exceptions, while sometimes a helpful interpretive guide, do not in themselves delineate the scope of the rule. Here, the exceptions identify matters a state may regulate when it would otherwise be precluded from doing so, but they do not control more than that.

Dan's City also maintains that Pelkey's claims are "related to" its towing service because selling Pelkey's car was the means by which Dan's City obtained payment for the tow. If such state-law claims were pre-empted, no law would govern resolution of a noncontract-based dispute arising from a towing company's disposal of a vehicle previously towed or afford a remedy for wrongful disposal. No such design can be attributed to a rational Congress. See Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 251. Pp. 11-13.

163 N.H. 483, 44 A.3d 480, affirmed.

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