A recent case illustrates the continuing, years-long fallout from deregulation, as courts seek to reconcile the end of economic regulation of motor carriers with federal statutes that remain in force and that appear to govern carriers. This case is the unusual case that benefits carriers by, ironically, finding that federal preemption does not always apply.
The intersection of carriers' claims for freight charges, and federal law has spawned much litigation in recent years. Recent disputes have centered on whether the federal courts have federal question jurisdiction over freight charge collections cases. Although the decisions have not been entirely uniform, many courts have held that the courts lost federal question jurisdiction over freight charge collection actions with the abolition of the filed rate doctrine. See, e.g., Gaines Motor Lines, Inc. v. Klaussner Furniture Indus., Inc., 734 F.3d 296 (4th Cir. 2013). However, these decisions have raised additional questions. For example, if there is no federal cause of action to recover freight charges, freight charges are presumably recoverable under state common law breach of contract and related theories. If that's true, though, does the 18-month statute of limitations in 49 U.S.C. § 14705 apply to limit the filing period for a state law cause of action? If not, when does it ever apply outside of the interstate, household goods context?
The Indiana Supreme Court worked its way through these issues in Kennedy Tank & MFG Co., Inc. v. Emmert Industrial Corp., 67 N.E.3d 1025 (Ind. 2017). In this case, Kennedy Tank hired Emmert, a specialized heavy haul carrier, to move a process tower vessel from Indianapolis, Indiana, to Clarksville, Tennessee. The vessel was about 280 feet long, 18 feet wide, and 16 feet tall, and it weighed about 360,000 pounds. The contract required Kennedy to pay $197,650 in freight charges plus additional unforeseen costs that arose. During the course of transportation, unforeseen costs arose in the amount of an additional $691,301.03. After the freight was delivered, Emmert tried to collect the additional costs from Kennedy, but ultimately, Kennedy refused to pay. When Emmert filed suit, Kennedy raised the 18-month statute of limitations in 49 U.S.C. § 14705 as a defense to the action. Emmert, in turn, responded that the federal statute of limitations did not preempt the 10-year statute of limitations in Indiana Code § 34-11-2-11. The trial court agreed with Emmert and found that the state statute of limitations controlled, but the Court of Appeals reversed. The Supreme Court then granted review of the case.
The Indiana Supreme Court engaged in an extended analysis of whether the federal statute of limitations preempts Indiana's 10-year state statute of limitations. While noting that there are three types of federal preemption (express preemption, field preemption, and conflict preemption), the Court found that only conflict preemption was at issue in the case. Examining conflict preemption, the Court first concluded that it was not physically impossible for Emmert to apply with both the federal and state statutes of limitation and that the application of the Indiana statute of limitations did not do major damage to Congress' purpose in enacting the federal statute of limitations. In deciding that the application of the state statute of limitations did not do major damage to Congress' purpose, the Court first held that Congress did not attempt to create a uniform national standard when it enacted 49 U.S.C. § 14705. The Court found that this was true because the statute was part of the Interstate Commerce Commission Termination Act ("ICCTA") which, as its name suggests, significantly reduced federal regulation of interstate commerce. Contrasting the statute of limitations found in 49 U.S.C. § 14705 with the statute of limitations provided in CERCLA, 42 U.S.C. § 9658, the Court found that Congress could clearly indicate an intent to create a national uniform standard statute of limitations that preempts state law (as it did in CERCLA) and that it had not done so in § 14705. The Court next held that state collections actions are unlikely candidates for federal regulation because there is no uniformity vital to national interests. The Court based this conclusion on the fact that ICCTA removed the federal cause of action for collection of freight charges and that breach of contract collection cases do not demand exclusive federal regulation merely because they involve interstate transportation. The Court noted that when it imposed deregulation Congress foresaw and acquiesced to the application of both federal and state law in the interstate transportation context, which indicated that Congress no longer desired to preempt the field of economic regulation of motor carriers.
Lastly, the Court distinguished cases from other jurisdictions that have applied the 18-month statute of limitations as either applying the statute without considering whether it preempts an otherwise applicable state statute or as holding that § 14705 preempts a state law statute but providing little or no analysis or support for that decision.
In sum, the Court concluded that Congress did not intend to preempt state law statutes of limitations applicable to actions for the collection of freight charges. Kennedy Tank, then, proves to be the rare case in which a holding that federal preemption does not apply in the interstate transportation context is of benefit to motor carriers. Most states will have statutes of limitation that are longer than the 18-month federal statute, allowing motor carriers more time to file suits to collect freight charges and reducing the ability of shippers to raise the federal statute of limitations as a defense. Nonetheless, because the case was decided by the Indiana Supreme Court, it remains to be seen how widely its holding will be adopted.