Justia U.S. Supreme Court Opinion Summaries

Articles Posted in Transportation Law
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CARCO sub-chartered an oil tanker from tanker operator Star, which had chartered it from Frescati. During the tanker’s journey, an abandoned ship anchor punctured the tanker’s hull, causing 264,000 gallons of heavy crude oil to spill into the Delaware River. The 1990 Oil Pollution Act, 33 U.S.C. 2702(a), required Frescati, the vessel’s owner, to cover the cleanup costs. Frescati’s liability was limited to $45 million. The federal Oil Spill Liability Trust Fund reimbursed Frescati for an additional $88 million in cleanup costs. Frescati and the government sued, claiming that CARCO had breached a clause in the subcharter agreement that obligated CARCO to select a berth that would allow the vessel to come and go “always safely afloat,” and that obligation amounted to a warranty regarding the safety of the selected berth. Finding that Frescati was an implied third-party beneficiary of the safe-berth clause, the Third Circuit held that the clause embodied an express warranty of safety. The Supreme Court affirmed. The safe-berth clause's unqualified plain language establishes an absolute warranty of safety. That the clause does not expressly invoke the term “warranty” does not alter the charterer’s duty, which is not subject to qualifications or conditions. Under contract law, an obligor is strictly liable for a breach of contract, regardless of fault or diligence. While parties are free to contract for limitations on liability, these parties did not. A limitation on the charterer’s liability for losses due to “perils of the seas,” does not apply nor does a clause requiring Star to obtain oil-pollution insurance relieve CARCO of liability. View "CITGO Asphalt Refining Co. v. Frescati Shipping Co." on Justia Law

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Batterton was working on a Dutra vessel when a hatch blew open and injured his hand. Batterton sued Dutra, asserting various claims, including unseaworthiness, and seeking general and punitive damages. The Ninth Circuit affirmed the denial of Dutra’s motion to dismiss the claim for punitive damages: The Supreme Court reversed. A plaintiff may not recover punitive damages on a claim of unseaworthiness. Precedent establishes that the Court “should look primarily to . . . legislative enactments for policy guidance” when exercising its inherent common-law authority over maritime and admiralty cases. Overwhelming historical evidence suggests that punitive damages are not available for unseaworthiness claims. The Merchant Marine Act of 1920 (Jones Act) codified the rights of injured mariners by incorporating the rights provided to railway workers under the Federal Employers’ Liability Act (FELA); FELA damages were strictly compensatory. The Court noted that unseaworthiness in its current strict-liability form is the Court’s own invention, coming after enactment of the Jones Act. A claim of unseaworthiness is a duplicate and substitute for a Jones Act claim. It would exceed the objectives of pursuing policies found in congressional enactments and promoting uniformity between maritime statutory law and maritime common law to introduce novel remedies contradictory to those provided by Congress in similar areas. Allowing punitive damages on unseaworthiness claims would also create bizarre disparities in the law and would place American shippers at a significant competitive disadvantage and discourage foreign-owned vessels from employing American seamen. View "Dutra Group v. Batterton" on Justia Law

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The State of Washington taxes “motor vehicle fuel importer[s]” who bring large quantities of fuel into the state by “ground transportation,” Wash. Code 82.36.010(4), (12), (16). Cougar, a wholesale fuel importer owned by a member of the Yakama Nation, imports fuel over Washington’s public highways for sale to Yakama-owned retail gas stations located within the reservation. In 2013, the state assessed Cougar $3.6 million in taxes, penalties, and licensing fees for importing motor vehicle fuel. Cougar argued that the tax, as applied to its activities, is preempted by an 1855 treaty between the United States and the Yakama Nation that reserves the Yakamas’ “right, in common with citizens of the United States, to travel upon all public highways,” 12 Stat. 953. The Washington Supreme Court and the U.S. Supreme Court agreed. The statute taxes the importation of fuel, which is the transportation of fuel, so travel on public highways is directly at issue. In previous cases involving the treaty, the Court has stressed that its language should be understood as bearing the meaning that the Yakamas understood it to have in 1855; the historical record adopted by the agency and the courts below indicates that the treaty negotiations and the government’s representatives’ statements to the Yakamas would have led the Yakamas to understand that the treaty’s protection of the right to travel on the public highways included the right to travel with goods for purposes of trade. To impose a tax upon traveling with certain goods burdens that travel. View "Washington State Department of Licensing v. Cougar Den, Inc." on Justia Law

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Loos sued BNSF under the Federal Employers’ Liability Act for injuries he received while working at BNSF’s railyard. A jury awarded him $126,212.78, ascribing $30,000 to lost wages. BNSF asserted that the lost wages constituted “compensation” taxable under the Railroad Retirement Tax Act (RRTA) and asked to withhold $3,765 of the $30,000. The district court and the Eighth Circuit rejected the requested offset. The Supreme Court reversed. A railroad’s payment to an employee for work time lost due to an on-the-job injury is taxable “compensation” under the RRTA. RRTA refers to the railroad’s contribution as an “excise” tax, 26 U. S. C. 3221, and the employee’s share as an “income” tax, section 3201. Taxes under the RRTA and benefits under the Railroad Retirement Act, 45 U.S.C. 231, are measured by the employee’s “compensation,” which both statutes define as “any form of money remuneration paid to an individual for services rendered as an employee.” The Court noted similar results under the Federal Insurance Contributions Act and the Social Security Act. View "BNSF Railway Co. v. Loos" on Justia Law

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The National Railroad Passenger Corporation (Amtrak) has priority to use track systems owned by the freight railroads for passenger rail travel, at agreed rates or rates set by the Surface Transportation Board. In 2008, Congress gave Amtrak and the Federal Railroad Administration (FRA) joint authority to issue “metrics and standards” addressing performance and scheduling of passenger railroad services, 122 Stat. 4907, including Amtrak’s on-time performance and delays caused by host railroads. The Association of American Railroads sued. The District of Columbia Circuit accepted a separation of powers claim, reasoning that Amtrak is a private corporation and cannot constitutionally be granted regulatory power. The Supreme Court vacated. For purposes of determining the validity of the standards, Amtrak is a governmental entity. The D.C. Circuit relied on the statutory command that Amtrak “is not a department, agency, or instrumentality of the United States,” 49 U.S.C. 24301(a)(3), and “shall be operated and managed as a for profit corporation,” but independent inquiry reveals that the political branches control most of Amtrak’s stock and its Board of Directors, most of whom are appointed by the President. The political branches exercise substantial, statutorily mandated supervision over Amtrak’s priorities and operations: Amtrak is required to pursue broad public objectives; certain day-to-day operations are mandated by Congress; and Amtrak has been dependent on federal financial support during every year of its existence. Amtrak is not an autonomous private enterprise and, in jointly issuing the metrics and standards with the FRA, Amtrak acted as a governmental entity for separation of powers purposes. Treating Amtrak as governmental for these purposes is not an unbridled grant of authority to an unaccountable actor. On remand, the court may address any remaining issues respecting the lawfulness of the metrics and standards. View "Dep't of Transp. v. Ass'n of Am. Railroads" on Justia Law

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Alabama imposes sales and use taxes on railroads purchasing or consuming diesel fuel, but exempts their competitors: trucking companies and companies that transport goods interstate through navigable waters. Motor carriers pay an alternative fuel-excise tax on diesel, but water carriers pay neither sales tax nor excise tax. CSX, an interstate rail carrier, alleged discrimination against a rail carrier under the Railroad Revitalization and Regulation Reform Act, 49 U.S.C. 11501(b)(4). The Supreme Court held that a tax “discriminates” when it treats “groups [that] are similarly situated” differently without sufficient justification. On remand, the Eleventh Circuit held that CSX could establish discrimination by showing that Alabama taxed rail carriers differently than their competitors, but rejected Alabama’s argument that the fuel-excise tax on motor carriers justified the sales tax on rail carriers. The Supreme Court reversed and remanded. CSX’s competitors are an appropriate comparison class; the class need not consist of “general commercial and industrial taxpayers.” The Act’s subsections (b)(1) to (b)(3), addressing property taxes, limits the comparison class to commercial and industrial property in the same assessment jurisdiction. Subsection (b)(4) contains no such limitation, so the comparison class is based on the claimed theory of discrimination. When a railroad alleges discrimination compared to transportation industry competitors, its competitors in that jurisdiction are the comparison class. The comparison class must consist of individuals similarly situated to the claimant. Discrimination in favor of competitors frustrates the Act’s purpose of restoring railways’ financial stability while fostering competition among all carriers. The Eleventh Circuit erred in refusing to consider Alabama’s proposed justification. An alternative, roughly equivalent tax is one possible justification. On remand, the court is to consider whether Alabama’s fuel-excise tax is the rough equivalent of sales tax on diesel fuel and whether any alternative rationales justify the water carrier exemption. View "Ala. Dep't of Revenue v. CSX Transp., Inc." on Justia Law

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Using FOIA requests directed to the South Carolina DMV, attorneys obtained names and addresses, then sent letters to more than 34,000 individuals, seeking clients for a lawsuit against car dealerships for violation of a state law. The letters were headed “ADVERTISING MATERIAL,” explained the lawsuit, and asked recipients to return an enclosed card to participate in the case. Recipients sued the attorneys, alleging violation of the Driver’s Privacy Protection Act of 1994 (DPPA), 18 U.S.C. 2721(b)(4), by obtaining, disclosing, and using personal information from motor vehicle records for bulk solicitation without express consent. The district court dismissed, based on a DPPA exception permitting disclosure of personal information "for use in connection with any civil, criminal, administrative, or arbitral proceeding," including "investigation in anticipation of litigation." The Fourth Circuit affirmed. The Supreme Court vacated and remanded. An attorney’s solicitation of clients is not a permissible purpose under the (b)(4) litigation exception. DPPA’s purpose of protecting privacy in motor vehicle records would be substantially undermined by application of the (b)(4) exception to the general ban on disclosure of personal information and ban on release of highly restricted personal information in cases there is any connection between protected information and a potential legal dispute. The Court noted examples of permissible litigation uses: service of process, investigation in anticipation of litigation, and execution or enforcement of judgments and orders. All involve an attorney’s conduct as an officer of the court, not a commercial actor, seeking a business transaction. A contrary reading of (b)(4) could affect interpretation of the (b)(6) exception, which allows an insurer and certain others to obtain DMV information for use in connection with underwriting, and the (b)(10) exception, which permits disclosure and use of personal information in connection with operation of private tollroads. View "Maracich v. Spears" on Justia Law

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Northwest terminated plaintiff’s membership in its frequent flyer program. A provision in the frequent flyer agreement gave Northwest sole discretion to determine whether a participant had abused the program. Plaintiff claimed that Northwest breached its contract by revoking his membership without valid cause and violated the duty of good faith and fair dealing because it terminated his membership in a way that contravened his reasonable expectations. The district court dismissed, holding that the Airline Deregulation Act of 1978 pre-empted the breach of the duty of good faith and fair dealing claim. The Ninth Circuit reversed, finding that claim “too tenuously connected to airline regulation to trigger” ADA pre-emption. A unanimous Supreme Court reversed. The Act pre-empts a state-law claim for breach of the implied covenant of good faith and fair dealing if it seeks to enlarge contractual obligations that the parties voluntarily adopted. The Act prohibits states from “enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to [an air carrier’s] price, route, or service,” 49 U.S.C. 41713(b)(1). The phrase “other provision having the force and effect of law” includes state common-law rules like the claimed implied covenant. Exempting common-law claims would disserve the Act’s central purpose: to eliminate federal regulation of rates, routes, and services so they could be set by market forces. Northwest’s program connects to “rates” by awarding credits redeemable for tickets and upgrades, thus eliminating or reducing ticket prices. It also connects to “services,” i.e., access to flights and higher service categories. Because the implied covenant claim sought to enlarge contractual agreement, it is pre-empted. Under controlling Minnesota law, parties may not contract out of the implied covenant; when state law does not authorize parties to free themselves from the covenant, a breach of covenant claim is pre-empted. Participants in frequent flyer programs can protect themselves by avoiding airlines with poor reputations and enrolling in more favorable rival programs; the Department of Transportation has authority to investigate complaints about frequent flyer programs. The Court also noted that the plaintiff did not appeal his breach of contract claim. View "Northwest, Inc. v. Ginsberg" on Justia Law

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The General Railroad Right-of-Way Act of 1875 provides railroad companies “right[s] of way through the public lands of the United States,” 43 U.S.C. 934. One such right of way, created in 1908, crosses land that the government conveyed to the Brandt family in a 1976 land patent. That patent stated that the land was granted subject to the right of way, but it did not specify what would occur if the railroad relinquished those rights. A successor railroad abandoned the right of way with federal approval. The government sought a declaration of abandonment and an order quieting its title to the abandoned right of way, including the stretch across the Brandt patent. Brandt argued that the right of way was a mere easement that was extinguished upon abandonment. The district court quieted title in the government. The Tenth Circuit affirmed. The Supreme Court reversed. The right of way was an easement that was terminated by abandonment, leaving Brandt’s land unburdened. The Court noted that that the government had argued the opposite position in an earlier case. In that case, the Court found the 1875 Act’s text “wholly inconsistent” with the grant of a fee interest. An easement disappears when abandoned by its beneficiary. View "Marvin M. Brandt Revocable Trust v. United States" on Justia Law

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Northwest terminated plaintiff’s membership in its frequent flyer program. A provision in the frequent flyer agreement gave Northwest sole discretion to determine whether a participant had abused the program. Plaintiff claimed that Northwest breached its contract by revoking his membership without valid cause and violated the duty of good faith and fair dealing because it terminated his membership in a way that contravened his reasonable expectations. The district court dismissed, holding that the Airline Deregulation Act of 1978 pre-empted the breach of the duty of good faith and fair dealing claim. The Ninth Circuit reversed, finding that claim “too tenuously connected to airline regulation to trigger” ADA pre-emption. A unanimous Supreme Court reversed. The Act pre-empts a state-law claim for breach of the implied covenant of good faith and fair dealing if it seeks to enlarge contractual obligations that the parties voluntarily adopted. The Act prohibits states from “enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to [an air carrier’s] price, route, or service,” 49 U.S.C. 41713(b)(1). The phrase “other provision having the force and effect of law” includes state common-law rules like the claimed implied covenant. Exempting common-law claims would disserve the Act’s central purpose: to eliminate federal regulation of rates, routes, and services so they could be set by market forces. Northwest’s program connects to “rates” by awarding credits redeemable for tickets and upgrades, thus eliminating or reducing ticket prices. It also connects to “services,” i.e., access to flights and higher service categories. Because the implied covenant claim sought to enlarge contractual agreement, it is pre-empted. Under controlling Minnesota law, parties may not contract out of the implied covenant; when state law does not authorize parties to free themselves from the covenant, a breach of covenant claim is pre-empted. Participants in frequent flyer programs can protect themselves by avoiding airlines with poor reputations and enrolling in more favorable rival programs; the Department of Transportation has authority to investigate complaints about frequent flyer programs. The Court also noted that the plaintiff did not appeal his breach of contract claim. View "Northwest, Inc. v. Ginsberg" on Justia Law