Courts

Supreme Court to hear FAAAA Preemption Challenge in Montgomery v. Caribe Transport II, LLC

John C. Lane

We reported on this Seventh Circuit case in April 2025. The Seventh Circuit, which has been a friendly venue for transportation brokers, held that a transportation broker is shielded by the Federal Aviation Administration Authorization Act (FAAAA) from liability for negligent selection of a motor carrier. Now the Supreme Court has agreed to hear an appeal and to address a conflict among the Circuit Courts on the issue of federal preemption of a claim against brokers and motor carriers. The Supreme Court has granted Montgomery’s petition for certiorari, in which The Question Presented is simply stated:

Does § 14501(c) preempt a state common-law claim against a broker for negligently selecting a motor carrier or driver?

That section provides protection to motor carriers and freight brokers and freight forwarders, and is the backbone of the “FAAAA Preemption” argument:

. . . a State . . . may not enact or enforce a law, regulation or other provision having the force and effect of a law related to price, route, or service of any motor carrier . . . broker, or freight forwarder with respect to the transportation of property [emphasis added].

In Montgomery, a plaintiff severely injured in a trucking accident brought a negligence claim against the broker, arguing that it should be held liable because it was negligent in selecting the motor carrier, and that it was vicariously liable for the trucker’s negligence because it so controlled the trucker that the carrier became the broker’s agent. The Court of Appeals ruled for the broker on both theories. It specifically held that the minimal requirements the broker placed on the motor carrier did not arise to operational control. Relevant to the impending Supreme Court review, however, the Seventh Circuit held that the broker is protected by the language in the FAAAA, at 49 U.S.C. § 14501(c)(1), quoted above.

The Seventh Circuit held that the negligent hiring claim has a direct relationship to the broker’s services in hiring the motor carrier. Thus, it is expressly preempted by Section 14501(c)(1).

In a similar case in the Sixth Circuit, Cox v. Total Quality Logistics, Inc., the Court of Appeals reversed the district court’s decision, favorable to the broker, and held that preemption was unavailable to the broker because of the “safety exception” found in Section 14502(c)(2)(A). That section holds that the preemption of Section 14501(c)(1):

shall not restrict the safety regulatory authority of a State with respect to motor vehicles, the authority of a State to impose highway route controls or limitations based on the size or weight of the motor vehicle or the hazardous nature of the cargo, or the authority of a State to regulate motor carriers with regard to minimum amounts of financial responsibility relating to insurance requirements and self-insurance authorization.

Although the “safety exception” makes no mention of brokers, the Sixth Circuit in Cox held that the work of transportation brokers is sufficiently related to motor carriers’ work to bring the broker’s work within the exception. The case involved a wrongful death tort action brought by Robert Cox, as Administrator of the estate of his wife, Greta Cox.

Following Supreme Court precedent, the Sixth Circuit held that “State regulatory authority” includes a State’s power to create common-law duties that involve safety. It held that the Cox Estate’s common-law claims “are part of the regulatory authority of a State,” satisfying the first prong of Section 14501(c)(2)(A). The second prong, whether the state law must be “with respect to motor vehicles,” is the “vigorously disputed” issue and the source of the split among the circuits. The Court ruled that the statutory definitions of “motor vehicle” “make it clear that such motor vehicles are the core to the services provided by brokers” even if that relation is not direct. Unlike the decisions in the Seventh and Eleventh Circuits, the Sixth Circuit in Cox concludes succinctly:

We therefore hold that, where a negligent hiring claim against a broker substantively concerns motor vehicles and motor vehicle safety, that claim is within “the safety regulatory authority of a State with respect to motor vehicles.”

Total Quality Logistics’ petition to the Supreme Court for certiorari has been fully briefed and awaits a decision whether the Court will take up that case. The Question Presented there is different from that in Montgomery and raises the application of the so-called “safety exception”:

Whether a common-law negligence claim alleged against a freight broker, based on the broker’s selection of a motor carrier to provide transportation of cargo, is preempted because it does not fall within the safety exception to Section 14502(c)(2)(A).

If the Supreme Court grants certiorari in Total Quality Logistics and consolidates the two appeals, it will have the opportunity to clarify the long-debated issue of FAAAA preemption for transportation brokers.

New Jersey Appellate Court Explains General Contractor Liability Defenses

John C. Lane

The case arises from a ship-maintenance contract, but its principles apply equally “on land.”

USNS Red Cloud

Williams Savaria lost his life onboard the U.S.N.S Red Cloud when he fell into the ship’s 30-foot deep anchor chain locker. Bayonne Dry Dock & Repair Corp. was contracted to perform maintenance on the ship and retained 5 Seasons LSB Corporation as a subcontractor. Savaria was employed by 5 Seasons. His estate’s lawsuit against Bayonne Dry Dock was dismissed because, as the appellate court affirmed, Bayonne was under no contractual duty to ensure that 5 Seasons employed proper safety protocols in performing its sub-contractor work on the Red Cloud.

Bayonne Dry Dock, a general contractor, had hired 5 Seasons on four previous occasions to perform similar work, all with good results. 5 Seasons was engaged to paint the inside of the anchor chain locker on the Red Cloud and was contractually required to observe all OSHA and state safety regulations. Prior to the painting, Bayonne made sure through atmospheric testing that entry to the anchor chain locker was “safe and permitted.” A notice to that effect was posted. The 5 Seasons workers built a scaffold to enable entry into the locker.

The 5 Seasons supervisor, who speaks Korean, needed to delay entry to the locker until he could fetch “fall protection.” Using hand signals, he instructed the workers to rest until he returned with that safety equipment. Savaria’s first language was Spanish although he spoke some English. A co-worker ignored this warning and descended into the locker before the supervisor returned. Savaria followed, using a rope attached to a pipe to assist him. During his descent, he was heard to exclaim, either in Spanish or English, that he could not “hold on any longer.” He fell 30 feet to the bottom and was declared deceased at the scene.

The court examined possible exceptions to the rule of non-liability, surveying past legal precedent. It found that Bayonne Dry Dock did not control the means and manner of 5 Seasons’ work. It hired a reputable subcontractor of known good reputation. 5 Seasons was contractually obligated to provide its workers’ safety equipment. Bayonne had no duty to ensure that 5 Seasons provided the safety procedures required of it. Nor was Bayonne required to determine whether language barriers precluded the following of instructions. Those duties all lay with 5 Seasons.

Facts of individual cases will be important, but the legal principles apply to all work settings. If no exception applies, the New Jersey courts will not impose a duty of care upon the general contractor to ensure that its subcontractors’ employees “safely perform their work.” The case is Estate of Savaria v. Bayonne Dry Dock & Repair Corp., in a per curiam opinion of the Appellate Division of the Superior Court of New Jersey rendered on August 13, 2024.

Supreme Court to Handle Another Arbitration Dispute: Are Bakery-Product Delivery Drivers Transportation Workers or Bakery Workers?

John C. Lane

And why does it matter? Because if they are transportation workers, their putative class action under the FLSA must proceed in court, not by contracted-for arbitration. But if they are bakery workers, they must submit to arbitration. The Second Circuit held they are not transportation workers and therefore must submit to arbitration. The Supreme Court has agreed to hear the workers’ further appeal, in Bissonnette v. LePage Bakeries Park St., LLC.

Certainly Section 1 of the Federal Arbitration Act forbids a transportation worker, even an independent contractor, to be compelled to arbitrate a claim against an employer. That was settled by the Court in its 2019 decision in New Prime, Inc. v. Oliveira. The unusual setting in Bissonnette raises the issue for the Court of whether the workers are transportation workers or, perhaps, bakery workers.

The workers entered into distributor agreements with defendant bakery companies. In a putative class action, they alleged they were misclassified as independent contractors rather than employees, in violation of the FLSA and Connecticut law, seeking reclassification and damages. The bakery defendants moved to compel arbitration under a contractual provision that also excluded class or other representative actions. But what was their job?

Under the agreements, plaintiffs purchased their own service territories, identified new customers, developed relationships with existing customers, ordered and delivered products, stocked and replenished products in customers’ locations, and otherwise promoted sales and customer service. Plaintiffs purchased bakery goods from defendants and sold them to the customers at a profit, which they kept.  They increased profits by increasing business. The goods came from outside Connecticut and were transported by the workers to their final destinations in Connecticut, using their own vehicles.

Plaintiffs claimed they were transportation workers, transporting bakery products on the intrastate leg of interstate commerce. In contrast, the bakery companies focused on the business aspect of the work, to say that plaintiffs are not transportation workers because their primary activities are in the bakery industry, not the transportation industry. They are more akin to sales workers or managers responsible for all aspects of a bakery products distribution business. Thus, they argue, the Section 1 exception is no impediment to the application of the full Federal Arbitration Act.

The Connecticut district court agreed with the defendant bakeries, ordering the workers to arbitration. The Second Circuit affirmed. The Supreme Court recently granted certiorari to decide whether these distributors of bakery products are in the bakery industry or the transportation industry. And that determination will decide whether their employment claims will be resolved in court or in arbitration.

Complacency Can Cost You Federal Removal

John C. Lane

Removal to federal court requires defendants to turn square corners. A slip-up can cost federal jurisdiction. In Reyes v. Hess Retail Stores, a federal judge in Brooklyn, New York, showed how a clever plaintiff’s attorney outwitted the defense and precluded removal, from the moment the complaint was filed in state court. Here is a lesson for us all.

Ajay Suresh from New York, NY, USA, CC BY 2.0 https://creativecommons.org/licenses/by/2.0, via Wikimedia Commons

The 30-day time limit to remove a case from state court to federal court commences when the defendant receives a written demand that exceeds the federal jurisdictional minimum of $75,000. Typically, that demand is found in plaintiff’s complaint. But not in New York. By statute, state-court complaints may not include a specific monetary demand. The complaint may state that the amount demanded exceeds the jurisdictional limits of all lower courts. The statute permits a defendant to request a supplemental written demand for damages, which is exchanged between counsel but not filed in court. The 30-day removal period begins when defendant receives a responding demand in excess of $75,000, or any other written statement of damages.

But when the defendant in Reyes removed the case to federal court within that later time period, the district court ruled the removal was too late. Why?

Mr. Reyes’ complaint in state court made no specific monetary demand and stated the usual phrase that the demand exceeded the jurisdictional limits of all lower courts. But plaintiff’s attorney added one more critical phrase: “including the minimum threshold for federal jurisdiction under 28 U.S.C. § 1332a) [the $75,000 requirement, softly spoken]. And that made the difference.

The defense had waited until it received a bill of particulars from plaintiff listing special damages totaling over $200,000 and then filed its notice of removal. The district court ruled that federal removal should have been filed within thirty days of service of the complaint: Any lawyer should know that alleging that plaintiff’s demand “exceeds the minimum threshold for federal jurisdiction under 28 U.S.C. §1332(a)” is no different than alleging the demand “exceeds $75,000.”

This court remanded the case to state court with this admonition from the court: “If plaintiff sought to capitalize on the possibility of defendant’s complacency, he was entitled to find a way to put explicit language in the complaint starting the removal period. That is what he did.” And that decision to remand is not appealable.

Don’t be complacent on federal removal issues. Read the complaint carefully.

NJ: Eve of Trial Motion to Bar Expert Risks Rejection by Court

John C. Lane

A new court practice rule will affect the timing of motions to bar crucial expert testimony. A motion in limine is commonly brought shortly before trial to allow a trial judge to trim issues of evidence to be admitted and streamline the actual trial. But a motion to bar an expert from testifying can be distinctly different. If the adversary’s case will fail without the expert, the motion is tantamount to a dispositive motion for summary judgment and must be made well ahead of trial.

Under the new court rule such a motion must now be made within the time frame for summary judgment motions, usually at least 30 days before trial. And if counsel waits until the eve of trial to file the motion as a motion in limine, the court may refuse to hear it. The reason, according to a 2015 Appellate Division case that spawned the new rule, is that such a motion made just before trial denies the adversary due process of law.

In Cho v. Trinitas Regional Med. Center, an appellate court grappled with a motion brought one day before jury selection, to bar plaintiff’s medical-malpractice expert witness from testifying. The witness was needed to sustain plaintiff’s burden of proof. So, as the court stated, this motion was really one for summary judgment because it could end the case, which should have been brought well ahead of trial to permit the adversary time to respond. The trial court granted the motion as one in limine, and dismissed the complaint. The Appellate Division reversed. Disguising a motion for summary judgment as a motion in limine denied plaintiff a fair opportunity to respond to the complaint-killing motion. Thus, the trial court’s ruling denied plaintiff fundamental due process. The Appellate Division stressed that the timing and sequence of a motion for summary judgment gives a reasonable framework to ensure due process.

The new rule applies to plaintiffs and defendants, and refers broadly to all types of expert witnesses, such as doctors, engineers, architects, accountants, economists, contractors, insurance and accident-reconstruction experts, to name a few, and without regard to the nature of the case. If a successful motion to bar an expert, such as an engineer in a product liability case, would lead to summary judgment, then the motion must be as one for summary judgment.

The rule can also be a blessing for defendants. A successful motion to bar expert testimony can lead to summary judgment well before trial. Judges hearing motions to bar critical expert testimony may no longer refer them to the time of trial as motions in limine, a frequent practice. These motions must be addressed when made, just as are motions for summary judgment. This is a good development for defendants.

So when your attorney asks authority to make an early motion to bar plaintiff’s expert, that just may be very good advice.

New Jersey’s First COVID-19 Era Jury Trial Stayed Over Jury Pool Concerns

Peter C. Bobchin

New Jersey commenced its first COVID-19 era criminal jury trial in September in Bergen County, and an emergent application to the Appellate Division was filed even before opening statements began. The criminal defense attorneys raised a concern as to whether the resulting jury pool represented a cross-section of the community at large. The outcome of the Appellate Division’s decision could impact civil jury trials as they also begin.

To comply with social distancing rules and to curb the chance of spreading the virus, the New Jersey courts implemented a virtual preliminary screening process for prospective jurors in civil and criminal cases. In the criminal case before the Appellate Division, defense lawyers argued that the process excludes those jurors who do not have access to a computer or the internet. The trial judge denied defendant’s motion, but the Appellate Division granted a stay of the trial until defense counsel’s emergent application could be heard. The matter is to be fully submitted to the court by October 7th.

The Association of Criminal Defense Lawyers of New Jersey was granted leave to file an amicus curiae brief. The court also invited the Office of the Public Defender to appear as amicus. The court has not yet decided whether to grant oral argument on the application.

The court’s decision could affect the jury selection process in both civil and criminal cases moving forward, especially if the court rules in favor of the defense. The decision may likely be followed in neighboring states, including New York. New Jersey has commenced limited jury trials in three counties. The five counties that make up New York City are advising attorneys that no civil jury trials will be being commenced until 2021, and possibly not until the summer.

We will follow this story and its implications on the jury selection process moving forward.

Does Spoliation of Evidence Also Apply to Plaintiffs?

John C. Lane
Photo by freestocks.org on Pexels.com

It certainly does, as Sofya Reznik learned when she sued American Honda in New Jersey for alleged product liability and personal injuries. She claimed the company defectively designed and manufactured her Acura’s seatbelt and airbag, which in turn exacerbated injuries she sustained in an accident with another vehicle. That collision resulted when Sofya made an unsafe left turn, according to the court, leaving her with little claim against the other driver. She immediately contemplated a lawsuit against Honda, yet she did not preserve the car or the seatbelt as evidence or for inspection by Honda. The lower court dismissed her lawsuit, and the appellate court affirmed. Here’s why.

After the accident Sofya was transported for medical care. Her friend retrieved her personal items from the Acura, and claims to have noticed the driver’s side seatbelt was torn and hanging from the driver’s side window. An EMT who assisted Sofya stated that if he had seen a torn seatbelt, it would be mentioned in his report. It was not. Nor could he say whether a first responder cut the belt to help extricate her from the car. He did observe that the driver’s airbag had deployed. No photographs were taken of the Acura or the allegedly defective seatbelt.

Then Sofya made it worse. She accepted a “total loss” payment from her insurance company but took no steps to preserve the Acura or the seatbelt. Eventually it was sent out of the country and could not be retrieved. As her lawsuit proceeded, Honda moved for dismissal, both because Sofya could not prove any defect, and the failure to preserve the evidence warranted sanctions for spoliation of evidence. The trial court found that Sofya had a duty to preserve the evidence. That duty arose the day after the accident, when she determined to sue Honda. The Acura was needed to prove her case and to allow Honda to inspect it and defend the case. The trial court held that the absence of the evidence was probably fatal to her case, ordering dismissal of the lawsuit. Sofya appealed.

The appellate court took spoliation a step further. It held that it does not matter that Sofya may not have intended to frustrate Honda’s defense. It was enough that she was negligent in failing to preserve the Acura, as she knew she planned to sue Honda and gave no explanation for doing nothing to preserve it. The prejudice to Honda’s defense “was so significant that dismissal was the only option.” The dismissal was with prejudice.

The case of Reznik v. American Honda Motor Co., decided September 1, 2020, reminds us that principles of spoliation of evidence apply to defendants and plaintiffs alike. The obligation to preserve evidence arises as soon as one has reason to believe that a claim or litigation may result, for or against that party, from an event, breach of contract, or other potentially culpable conduct or omission.

“A Complaint by a Dead Person is a Nullity,” says a New Jersey Appellate Court

John C. Lane

It should be obvious. This is as much a lesson for personal-injury attorneys as it is a lecture in the law. The case and the lesson grow out of a slip-and-fall injury in September 2016. Carolyn took the fall on the steps of a hospital where her son-in-law had just had surgery. She suffered a broken nose and cuts above the eye, among other injuries. Three days later Carolyn hired a lawyer to pursue a claim against the hospital. Fifteen months later, with no lawsuit yet filed, Carolyn died of unrelated causes. The lawyer had no idea that she had died.

Nine months passed. Then, in September 2018, and just before the running of the statute of limitations, the lawyer filed Carolyn’s lawsuit against the hospital. He still did not know of her death. Discovery began in the suit, and the lawyer wrote to his client to discuss the discovery. Carolyn, of course, did not respond. In time the lawyer searched public records and discovered, at last, that his client had died over a year before. He had filed a court complaint for a dead person. What was he to do?

In March and April 2019, the lawyer wrote to Carolyn’s son, who agreed to continue the personal-injury suit in the name of her estate, under the Survivor’s Act. The lawyer asked the hospital to consent to an amended complaint naming the estate as plaintiff, and having it relate back to the September 2018 filing. The hospital refused, and in October 2019 the lawyer filed a motion asking the court for the same amendment and grace period. Otherwise, the complaint would be time-barred and dismissed. But would the court agree?

This was now three years after the accident, fifteen months after Carolyn’s death, and thirteen months after the end of the statute of limitations. Had Carolyn died after filing suit, the substitution of her estate would be no problem. But a dead person has no standing to file a lawsuit. The appellate court quoted from a 1945 Chancery case: “an earthly court has no jurisdiction over the dead. Only the living can litigate here.”

And so it was. The original complaint was a nullity, ruled the court, “leaving nothing for the amended complaint to ‘relate back’ to.” The court denied the motion and ordered the original complaint dismissed with prejudice.

The lesson is clear: make sure your client is living before filing her lawsuit.

William J Brennan Courthouse, Jersey City, NJ, photo by Jim.henderson / CC BY-SA (https://creativecommons.org/licenses/by-sa/4.0)

Is a Contract’s Forum-Selection Clause Enforceable in Federal Court?

John C. Lane

Of course it is, if it meets three tests:

  1. The clause must be reasonably communicated to the other party;
  2. The clause must make the forum selection mandatory, not merely permissive; and
  3. The claims and the parties involved in the lawsuit must be subject to the forum-selection clause.

If these three tests are met, the forum-selection clause will be presumptively enforceable. The opposing party can overcome this presumption only by a sufficiently strong showing that the clause is unreasonable or unjust, or is invalid because of fraud or overreaching. These “public interest” considerations will rarely defeat a forum-selection clause that is presumptively valid.

Photo by Pixabay on Pexels.com

The operation of these rules was recently demonstrated clearly in Jones v. Povant USA LLC, in a decision by Judge Naomi Reice Buchwald of the Southern District of New York. Plaintiff Kimberly Moffitt Jones, of California, booked round-trip ocean passage for herself, her two daughters, and her autistic son, from Ushuaia, Argentina, to Antarctica, from December 20, 2018, to January 5, 2019. The total cost for the ocean voyage for the four family members was $125,028, which Ms. Jones paid in advance. Because the autistic son was not able to fly commercially, Ms. Jones chartered a private jet to fly the family, and the son’s therapist, from California to Argentina. She paid $355,000 for the private round-trip air travel. She alleges that she told Povant about this necessary additional cost in order for the family to go on the trip to Antarctica.

Problems and delays arose after the family arrived in Argentina. An issue with the ship’s propeller not only caused delays, but it also resulted in a change of the port of embarkation. Frustrated, Ms. Jones canceled the trip and demanded return of both the ocean fare and the air fare. Povant agreed to return the ocean fare but refused to pay Ms. Jones for the private jet travel from California to Argentina. Ms. Jones brought suit against Povant in federal court in New York, with allegations including intentional and negligent misrepresentation. Povant moved to dismiss based upon the forum-selection clause in the line’s General Terms and Conditions, which states that “only” the courts in Marseilles, France, have jurisdiction to hear any proceeding initiated against the line.

Judge Buchwald analyzed and followed precedent from the Supreme Court and the Second Circuit Court of Appeals governing the enforcement of forum-selection clauses. She first found the existence of the clause was properly communicated to Ms. Jones in the line’s General Terms and Conditions, not only to Ms. Jones but also to her travel agents. The payment of the ocean fare is deemed to signify agreement to the terms and conditions. Second, Judge Buchwald found that the clause was mandatory: only the courts in Marselles, France, would have jurisdiction over disputes arising from the ocean contract. Finally, the court concluded that Ms. Jones’s claims, and the parties to the lawsuit, were subject to the forum-selection clause.

Thus, the forum-selection clause was presumptively enforceable. “If a forum-selection clause is valid, then the only remaining inquiry is whether certain public interest considerations outweigh its enforcement.” Judge Buchwald found that Ms. Jones raised no public interest considerations, such as fraud in the contracting, unavailability of a convenient forum in France, or fundamental unfairness of the application of French law militating against enforcement of the clause.

The court dismissed the New York complaint without prejudice to refiling in France.

Palais de justice de Marseille Photo by Philippe Alès / CC BY-SA (https://creativecommons.org/licenses/by-sa/3.0)

Our Courts Are Closed But We Will Be Working

The Lane Law Letter

The courts in New York and New Jersey have closed for hearings, conferences, and jury trials.  Our friends in Pennsylvania report many similar closings.  We even had a Philadelphia mediation postponed. Meetings of 50 or more are prohibited in New York and New Jersey, restaurants and bars are closed, and other non-essential businesses are encouraged to follow suit.  We will continue to work in the office unless ordered to stay home. We are fully able to work remotely without interruption.  Court filings in most of our courts are done electronically, and we receive orders and notifications from the courts in the same manner.  We will receive our emails, of course.  If we are out, or at night, our phones will route your calls to John (Press 2) or Peter (Press 3) at any time, with immediate connection to our cell phones.

We hope this will not last long.  Most important, we hope you all remain safe and healthy.