the Kansas City Southern Railway Company v. Angela Horton and Kevin Houser

Dissenting Opinion Filed March 11, 2021

In the Court of Appeals Fifth District of Texas at Dallas No. 05-19-00856-CV

KANSAS CITY SOUTHERN RAILWAY COMPANY, Appellant

V. ANGELA HORTON AND KEVIN HOUSER, Appellees

On Appeal from the 68th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-17-06507

DISSENTING OPINION Before Chief Justice Burns, Justice Myers, and Justice Carlyle

Dissenting Opinion by Justice Carlyle The majority’s express-preemption conclusion is based on an analysis that both conflates the standards for express and implied preemption and relies on factually distinguishable, non-binding authority. There is no express preemption here because Texas negligence law and its remedies do not “directly attempt” to regulate rail transportation. The majority’s focus on the effect of these particular claims in its express-preemption analysis is inappropriate, as such focus is specific to implied (or “as-applied”) preemption. And to the extent Texas negligence law— as applied through the claims in this case—affects rail transportation, KCSR has not conclusively shown this constitutes an “unreasonable burden or interference,” a requirement for implied preemption. Thus, implied preemption is not applicable either and I must respectfully dissent.

LEGAL PRINCIPLES

Where a state law conflicts with, or frustrates, federal law, the former must give way. U.S. CONST. art. VI, cl. 2. “In the interest of avoiding unintended encroachment on the authority of the States, however, a court interpreting a federal statute pertaining to a subject traditionally governed by state law will be reluctant to find pre-emption. Thus, pre-emption will not lie unless it is ‘the clear and manifest purpose of Congress.’” CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 663–64 (1993).

Preemption can be express, when it is Congress’s clear and manifest purpose, or it can be implied in certain circumstances, including when, as is alleged here, Texas negligence law, applied to the facts, would “have the effect of unreasonably burdening or interfering with” a railroad’s operations. Elam v. Kan. City S. Ry. Co., 635 F.3d 796, 805 (5th Cir. 2011). The party asserting federal preemption has the burden of persuasion. Id. at 802 (citing Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 255 (1984)). EXPRESS PREEMPTION1

I reject the majority’s conclusion that KCSR sustained its burden to demonstrate the ICCTA expressly preempts these unfortunately typical state law negligence claims. Even when Congress includes an express preemption clause, as it did in the ICCTA, “the question of the substance and scope of Congress’ displacement of state law still remains.” Altria Grp., Inc. v. Good, 555 U.S. 70, 76 (2008).

First, the ICCTA’s text:

(b) The jurisdiction of the [Surface Transportation] Board over—

(1) transportation by rail carriers, and the remedies provided in this part with respect to rates, classifications, rules (including car service, interchange, and other operating rules), practices, routes, services, and facilities of such carriers; and

(2) the construction, acquisition, operation, abandonment, or discontinuance of spur, industrial, team, switching, or side tracks, or facilities, even if the tracks are located, or intended to be located, entirely in one State, is exclusive. Except as otherwise provided in this part, the remedies provided under this part with respect to regulation of rail transportation are exclusive and preempt the remedies provided under Federal or State law.

49 U.S.C. § 10501(b).2

The express preemption analysis examines whether the claims “fall squarely” under section 10501(b), meaning the state law—here, Texas negligence law— “directly attempts” to regulate rail transportation in the “economic realm.” Elam, 635 F.3d at 806–08. Nothing in section 10501(b)’s text mentions state law negligence claims, and state negligence law does not have a purpose to directly regulate rail transportation. See Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat’l Dev. & Research Corp., 299 S.W.3d 106, 122 (Tex. 2009) (“A negligence claim . . . is about compensating an injured party.”). Section 10501(b) “does not expressly preempt generally applicable laws”—like state negligence laws—“that have a mere ‘remote or incidental effect on rail transportation.’” Elam, 635 F.3d at 805; see also id. at 805 n.5 (quoting an ICCTA House Conference report “stating that ‘exclusivity is limited to remedies with respect to rail regulation—not State and Federal law generally’”); Gallo v. Union Pac. R.R. Co., 372 F. Supp. 3d 470, 480 (W.D. Tex. 2019) (“Although [state common law] tort claims may still affect the management or governance of railroads if the railroad company is the tortfeasor, these claims arise under state common law and are not intended to regulate railroad transportation even if they may incidentally affect it. . . . Accordingly, the ICCTA does not expressly preempt state law negligence claims.” (citing Guild v. Kan. City S. Ry. Co., 541 F. App’x 362, 367–68 (5th Cir. 2013))); Union Pac. R.R. Co. v. Taylor Truck Line, Inc., No. 15-0074, 2018 WL 1750516, at *6–7 (W.D. La. Apr. 10, 2018) (finding no express preemption as to general state negligence law but concluding implied preemption applied based on facts). From the ICCTA’s text then, it appears Congress did not contemplate preempting state law negligence claims.3

The jury here awarded damages based on one or both of two negligence theories. The plaintiffs-appellees sought damages based first on a past failure to adequately warn drivers approaching the crossing. The Fifth Circuit has had little problem dispensing with express preemption as to that theory, stating,

A typical negligence claim seeking damages for a typical crossing accident . . . does not directly attempt to manage or govern a railroad’s decisions in the economic realm. Like state property laws and rules of civil procedure that generally “have nothing to do with railroad crossings,” the effects of state negligence law on rail operations are merely incidental.

Elam, 635 F.3d at 813 (citing Franks Inv. Co. LLC v. Union Pac. R.R. Co., 593 F.3d 404, 414 (5th Cir. 2010)).

The plaintiffs’ other theory, that the crossing here is too steep, is based on industry standards, not any state or federal regulation.4 Specifically, KCSR has cited no part of Chapter 49 that regulates crossing grades, and I have found no part governing this topic, either in the United States Code or the accompanying regulations.5 Further, though the majority attempts to define what a “routine” or “typical” crossing claim is in a way that excludes this very straightforward negligence claim, the courts and the STB have come close to defining what routine crossing claims are and these discussions do more to include the simple negligence claims here as “routine” rather than exclude them.6

Nor does our A&W Properties case, which found preemption and which KCSR cites, meaningfully support the majority’s conclusion here. See A&W Props., No. 1:17cv106-HSO-JCG, 2018 WL 1546373, at *5 (S.D. Miss. Mar. 29, 2018); Voigt v. CSX Transp., Inc., No. 3:17-cv-01018-N (N.D. Tex. June 19, 2017).

Inc. v. Kan. City S. Ry. Co., 200 S.W.3d 342 (Tex. App.—Dallas 2006, pet. denied). We focused there on preemption relating to “potential flooding” claims and specifically distinguished precedent (more like this case) that concluded “that the regulation of rail-highway crossings has been specifically reserved to the states.” Id. at 348 (citing Wheeling & Lake Erie Ry. Co. v. Pa. Pub. Util. Comm’n, 778 A.2d 785, 792 (Pa. Commw. Ct. 2001)).

Second, the regulation cases the majority cites have little to do with the ultimate conclusion as to express preemption here. While those cases’ discussion of the legal standard for preemption may be instructive, the ultimate conclusion that the ICCTA preempts a claim based on a regulation does not add much to our analysis of a routine negligence claim. Unlike local regulations seeking to directly manage rail transportation by prohibiting trains from blocking crossings for specified periods of time7 or claims based on a railroad’s usage or non-usage of particular tracks,8 these state law negligence claims do not fit the mold for express preemption.

KCSR and the majority ignore that the case before us does not involve a state or local law targeted at the railroads. The majority relies heavily on CSX Transportation, Inc. v. City of Sebree, 924 F.3d 276 (6th Cir. 2019), which involved a local ordinance purporting to control how local railroad track embankments were to be constructed. Unlike in Sebree, the plaintiffs here relied on industry standards to support a negligence theory but never proceeded on a negligence per se theory dependent on a state, county, or city law. The Sebree ordinance required the city council to approve the railroad’s grade change projects, and contained no “standards cabining the city council’s discretion” and no “restrictions on how long the city council could take to decide” whether to allow the railroad “to conduct necessary maintenance or construction.” Id. at 284. Sebree demonstrates just how different this routine negligence claim is from most, if not all, of the majority’s regulation-based cases.9

Also, KCSR’s argument has no obvious limit. To extrapolate ICCTA express preemption of state negligence law solely because a railroad might be held liable in a crossing case is contrary to the way the Supreme Court has told the lower courts to analyze preemption. See Easterwood, 507 U.S. at 663–64; Emerson v. Kan. City S. Ry. Co., 503 F.3d 1126, 1132 (10th Cir. 2007).

Finally, I disagree with the conclusions reached in the Waneck and Voigt cases the majority relies on. Notably, I am joined by the STB itself, which issued guidance in these cases and specifically stated the Federal Railroad Safety Act, not the ICCTA, applied. And we are not alone. See Minton v. Paducah & Louisville Ry. Inc., 423 F. Supp. 3d 375, 383 (W.D. Ky. 2019) (granting motion to remand and specifically disagreeing with conclusion in Voigt and Waneck that ICCTA completely preempts state law negligent design claims centering on humped crossings).

The STB set forth its conclusion that ICCTA preemption did not govern the Waneck/Voigt cases in its May 23, 2018 decision10—after the Waneck court decision—and fortified this conclusion by its October 31, 2018 opinion on the railroad’s motion for reconsideration.11 In these matters, the plaintiffs made “rail safety-related claims, stemming from a train’s collision with a bus” that was high- centered on a humped crossing. The STB specifically stated that because the ICCTA preemption provision can be read to cover virtually everything related to rail transportation and because rail safety-related claims will almost always touch on rail transportation and operations, interpreting ICCTA preemption to apply generally to safety regulations and safety-related claims would amount to a repeal by implication of the savings provision of FRSA.

2018 WL 5723286, at *5 (citations omitted). The STB went on: “regulation of rail safety, which Congress explicitly permitted under FRSA, is not inconsistent with regulation of interstate rail transportation under ICCTA” and “to give effect to both statutes, safety regulations and related claims are generally not subject to ICCTA preemption.” Id. at *7. The STB’s views deserve deep consideration, especially when they involve the very cases on which the majority founds its most important points. For all of the above reasons, I would conclude there is no express preemption here.

IMPLIED PREEMPTION (ALSO CONFLICT OR AS-APPLIED PREEMPTION)

Because the ICCTA does not expressly preempt the plaintiffs’ simple negligence claim, the next inquiry would be implied preemption—whether Texas negligence law, applied to the facts, would “have the effect of unreasonably burdening or interfering with” KCSR’s operations. See Elam, 635 F.3d at 805; Franks, 593 F.3d at 413. This inquiry is fact-based and here KCSR, the proponent of preemption, must show conclusive evidence of the “specific” burdens imposed. Elam, 635 F.3d at 813. The Fifth Circuit adopted this analysis from the STB itself. See Franks, 593 F.3d at 413 (quoting CSX Transp., Inc.–Petition for Declaratory Order, STB Finance Docket No. 34662, 2005 WL 1024490, at *2–3 (S.T.B. May 3, 2005)). Economic regulation of railroads is the core of implied ICCTA preemption. Elam, 635 F.3d at 806.

We begin again with the assumption that Congress did not intend to supersede the historic police powers of the states “to protect the health and safety of their citizens.” See Elam, 635 F.3d at 813 (quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 475 (1996)). As the Fifth Circuit has recognized, “the care of grade crossings is peculiarly within the police power of the states.”12 New Orleans & Gulf Coast Ry. Co. v. Barrois, 533 F.3d 321, 330 (5th Cir. 2008) (quoting Lehigh Valley R.R. Co. v. Bd. of Pub. Util. Comm’rs, 278 U.S. 24, 35 (1928), for the historical understanding of “routine crossing cases” underpinning ICCTA). And that court instructs us that general evidence that rail crossings affect rail transportation is insufficient. Elam, 635 F.3d at 813 (citing Franks, 593 F.3d at 415, which discusses why general evidence as to crossings like those at issue in the case would not mandate implied or as-applied preemption of claims based on four specific crossings when the railroad failed to present evidence specific to those crossings).

As an initial matter, for the same reasons the Fifth Circuit expressed in Elam, the inadequate-warning negligence theory here is not impliedly preempted. See id. (simple negligence claim based on failure to warn arising from railway crossing accident not preempted by ICCTA).

But the plaintiffs also claimed KCSR was negligent because it failed to lower this humped crossing by at least 32 inches, a height they arrived at based on a set of industry standards. Even engaging KCSR’s evidence provides it no quarter. KCSR’s evidence that it would not be feasible to remove the hump included an initially vague “several hundred thousand dollar” removal estimate and, notably, no estimates of the length of time the crossing would be closed for repairs and no testimony regarding the disruption, if any, to rail transportation. Cf. A&W Props., Inc., 200 S.W.3d at 344–45. KCSR’s expert later gave a potential maximum cost, $300,000, but even with this, I would not agree KCSR presented the proper quantum of evidence to meet its burden. The as-applied analysis courts must undertake requires more. At that cost and without significantly more evidence to support the time and disruption, KCSR cannot even begin to show that the traditional exercise of state negligence law to provide a vehicle for compensating victims of its negligence constitutes an attempt to economically regulate it. See Elam, 635 F.3d at 814 (concluding railroad’s evidence did not demonstrate an unreasonable burden on or interference with railroad operations).

On this record, I would conclude KCSR failed to meet its implied-preemption burden to conclusively demonstrate that Texas negligence law, applied to the facts, would “have the effect of unreasonably burdening or interfering with” its operations. See Elam, 635 F.3d at 805; Franks, 593 F.3d at 413. Thus, I would conclude the ICCTA does not impliedly preempt appellees’ claims.13 CONCLUSION

Having considered and rejected KCSR’s position that the ICCTA expressly and impliedly preempts the negligence claims here, I would see no basis for Casteel error and would affirm the verdict the jury rendered.

/Cory L. Carlyle/ CORY L. CARLYLE JUSTICE

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