In Delaware & Hudson Railway Co. v. Knoedler Manufs., Inc., the Third Circuit recently ruled on an issue of first impression involving federal preemption under the Locomotive Inspection Act (the LIA). The case involved injuries by railway workers allegedly sustained from defective train seats, parts which fall under the jurisdiction of the LIA. After settling with their employees, the railways filed claims against the companies that manufactured and supplied the seats, seeking indemnification and contribution and alleging that defendants had violated the LIA regulations. The district court dismissed the claims, finding that they were preempted by the LIA itself, and the plaintiffs appealed to the Third Circuit.
The LIA does not explicitly address preemption, nor does it create a private right of action, and so the Court looked to whether the claims were blocked by field preemption, meaning that the statute was intended to occupy the entire field of claims involving the safety of train parts, to the exclusion of claims filed in state court. As an initial matter, the Third Circuit cited prior Supreme Court opinions holding that the LIA does in fact preempt state common law claims that would invoke a state’s own standards of care for the design and manufacture of locomotive equipment (i.e. claims for negligence or design defect). According to the Third Circuit majority, however, these opinions did not address whether the LIA preempts claims that are based on the federal standard of care, i.e. claims brought in state court not for violations of state common law standards, but for violations of the LIA’s own regulations. This is the type of claim filed in this case. Over a dissenting opinion which interpreted the Supreme Court’s prior holdings to require broad preemption of any LIA-related claim filed in state court, the Third Circuit majority held that the LIA does not preempt claims in state court for LIA regulation violations. This is a notable opinion, considering that courts have often shied away from allowing these types of state court actions for violations of federal standards due to preemption concerns.
Interestingly, the Third Circuit held that its decision was influenced by the LIA’s “failure to provide any federal remedy for LIA violations,” and noting that if the claims at issue were preempted, the “railroads would be left with no remedy, no matter how obvious or egregious the liability of an equipment supplier.” The Court also noted that the policy rationale behind federal statutory preemption is not to simply prohibit state law causes of action, but to promote national uniformity, a goal that the Third Circuit held is not undermined, but rather supported by the use of state law to enforce uniform federal standards.
We have discussed preemption a great deal on this blog, in various industries, and confusion tends to arise when federal statutes fail to explicitly address the existence of a private right of action. This opinion, while focused on the railroad industry, seems to support a more general argument that a federal regulation should not be read to leave injured parties – whether major railroads or private individuals – with no remedy when such regulations are violated, unless there is express evidence of Congressional intent to do so, an argument that has not always been successful. This case also demonstrates that overly broad interpretations of preemption to preclude all private state court actions might not always be in the interests of major industry players, especially where – as here – the preemption affects only their right to pursue indemnification but not their ultimate liability. It remains to be seen whether this opinion will be part of a larger trend by circuit courts considering preemption of state law claims and what impact it will have in the long run, but we will continue to monitor cases in the area of preemption as the landscape develops and changes.