Argument preview: The elusive limits of Congress’s broad preemption regime for transportation deregulation

At first glance, the plight of New Hampshire resident Robert Pelkey may not seem to have much to do with Congress’s efforts to deregulate the national airline and trucking industries. But when Mr. Pelkey sought compensation from a used car dealer that towed his car away from his home and refused to give it back, he wound up mired in one of the most indeterminate areas of federal preemption jurisprudence – preemption under the Federal Aviation Administration Authorization Act (FAAAA) and its close cousin, the Airline Deregulation Act.

When the Justices take up Dan’s City Used Cars v. Pelkey on the morning of Wednesday, March 20, they’ll be searching for the elusive line between what gets preempted under those statutes and what doesn’t. They’ll find few clear answers in the FAAAA’s text, which (subject to a few exceptions) preempts state laws “related to a price, route, or service of any motor carrier … with respect to the transportation of property.” The Court’s previous cases have articulated no obvious limits to this preemption regime and the lower court cases are, frankly, a mess.

In Pelkey’s favor: an appearance by the federal government, also opposing preemption, and facts that a majority of Justices may deem a good vehicle to put the brakes on the preemption train. In Dan’s City’s favor: an open-ended statutory text that the Court’s previous cases have read to broadly support preemption at every turn.

Pelkey’s plight

There’s no denying that the facts of Pelkey’s case are sympathetic. While Pelkey was confined to bed with a serious medical condition, petitioner Dan’s City Used Cars towed his car away because he failed to move it before a snowstorm, as the rules of his apartment complex required. Soon after, Pelkey was admitted to the hospital, had his foot amputated, and suffered a heart attack. While Pelkey was in the hospital, Dan’s City sought permission from the state to sell his car at auction. This required Dan’s City to certify that the car – a fully operational 2004 Honda Civic with less than eight thousand miles on the odometer – was worth less than five hundred dollars and wasn’t fit for use.

It wasn’t until Pelkey left the hospital two months later that he discovered his car was missing. Pelkey’s attorney asked Dan’s City to give the car back, but the company went ahead with a scheduled auction, at which the car failed to sell. There’s a dispute about what happened next: the lower courts found, and Pelkey claims, that Dan’s City falsely informed him that the car had been sold at public auction; Dan’s City denies that. But nobody disputes that the company (which runs a used-car lot) traded the car to a third party without compensating Pelkey.

(These facts may remind some readers of the Steve Goodman song, “Lincoln Park Pirates,” written about a Chicago company known for its towing practices. You can watch Goodman perform the song here.)

Pelkey has two claims, under the common law of negligence and the state’s consumer protection law. He claims Dan’s City made false statements about the car’s condition, whether the car had been abandoned, and whether Dan’s City made an attempt to find the car’s owner. His consumer-protection claim piggybacks on a state statute governing the disposition of abandoned vehicles.

Reversing a trial-court decision and explicitly parting ways with the Alabama Supreme Court, the New Hampshire Supreme Court held that Pelkey’s state-law claims are not preempted because they don’t relate to “the transportation of property” but are instead concerned with “the collection of debts” and “the rights of property owners to recover their property.” Alternatively, the court concluded that the state law at issue isn’t sufficiently “related” to a towing company’s “service” to be preempted because the service of a towing company is “the moving of vehicles” while the state law here relates to “post-service debt collection.”

A “frustrating” phrase: “Everything is related to everything else”

For much of the twentieth century, the American transportation industry was subject to extensive public-utility-like regulation by the federal government – regulation deemed necessary to stabilize industry during the Depression. By the 1970s, however, these New Deal-style reforms seemed outdated; they locked in high prices, prevented market entry, and insulated carriers from competition – especially in the airline industry.

When Congress deregulated the airlines in the late 1970s and again when it deregulated trucking in 1990s, it wanted to make sure that the states couldn’t thwart those federal efforts through re-regulation. So it enacted broad preemption provisions that trump state laws “relating to” the “price[s], route[s], or service[s]” of motor carriers and airlines. Because Congress did little to spell out the scope of its intended preemption, figuring out the meaning of those words turns to some degree on figuring out what Congress had in mind when it deregulated the transportation industries.

(An aside: Although you may find the history of transportation deregulation unimaginably dry, Justice Breyer doesn’t. As a Senate lawyer in the 1970s, he worked closely with the late Senator Ted Kennedy to pass the Airline Deregulation Act, whose preemption provision is nearly identical to the FAAAA’s. As a law professor, he wrote a book that delved into great detail about regulating competition in the airline and trucking industries. And he’s the author of the Court’s only previous opinion explicating the scope of FAAAA preemption. It’s a pretty good bet that Justice Breyer will be an active questioner on Wednesday.)

So what did Congress have in mind? The FAAAA’s legislative history shows that it was mainly concerned with getting rid of classic economic regulation – stuff like entry controls, tariff filing and price regulation, and regulation of the types of commodities carried. But many state laws can easily be characterized as classic economic regulation, and limiting principles are in short supply in this context. Lower courts have struggled with cases over everything from consumer, labor, and antidiscrimination protections to bribery laws, finding preemption in unexpected places. The big problem here is that the key term – “related to” – doesn’t provide any guidance. In the ERISA preemption context, where the phrase also appears, no less a committed textualist than Justice Scalia has observed that “applying the ‘relate to’ provision according to its terms” is “a project doomed to failure” because “everything is related to everything else.”

Dan’s City is not the only FAAAA case on the Court’s docket this Term. In American Trucking Associations v. City of Los Angeles, which is scheduled for oral argument in April, the Court will confront the question whether the FAAAA contains an unexpressed “market participant” exception. In that case, the Solicitor General has filed a brief supporting preemption.

Arguments and analysis

Given the difficulty of figuring out what the phrase “related to” means, the parties in this case wisely seek to focus their disagreement over other words in the statute. So it’s entirely possible that the decision here will turn less on general principles of preemption jurisprudence and more on the unusual nature of the non-consensual towing business in New Hampshire.

As to the common-law negligence claim, Pelkey and the government argue that that Congress was focused on positive enactments, not common law. Here, the act’s language may help them. It preempts only “a law, regulation, or other provision having the force and effect of law” and contains a separate savings clause for “remedies existing under another law or common law.” In Sprietsma v. Mercury Marine, the Court read somewhat similar preemption language to exclude common-law claims. On the other hand, as Dan’s City’s reply brief points out, Pelkey’s reading risks rendering the phrase “or other provision having the force and effect of law” superfluous.

Pelkey and the Solicitor General both argue that Dan’s City wasn’t acting as a “motor carrier” when it disposed of his car and that the conduct at issue didn’t involve “transportation,” which is defined as “services related to the “movement of passengers or property.” Dan’s, on the other hand, contends that Pelkey’s claims are related to its “services” in both a logical and practical sense because the company towed the car, stored it, and expected to be paid for doing so. It urges the Court not to draw an “artificial distinction” between its towing and storage services, on the one hand, and the process of disposing of abandoned vehicles following that service, on the other.

These arguments present the hardest line-drawing problems in the case. Does transportation include storing something after shipping it but before delivery? When we’re talking about non-consensual towing, what exactly is the “service” and for whom is it being performed? How do we know when a motor carrier is acting as a motor carrier and when it switches into some other capacity?

Dan’s City says that the only way it can be paid for non-consensual towing is by selling the abandoned cars that it tows, so that Pelkey’s claims about the company’s disposal of his car actually go to the heart of the service provided and the payment obtained for performing it. This highlights the oddity that, in the business of non-consensual towing, the person who pays for the services never actually contracted for the service. Strangely, this line of argument could bring Dan’s City into the teeth of another provision of the statute, which specifically excludes a state’s authority to enact laws “relating to the price” of “vehicle transportation by a tow truck” if the towing is conducted without the vehicle owner’s prior consent. Pelkey isn’t arguing that his claims fall within that savings clause, though, so this exception presents interpretive difficulties for both sides.

What will the Court do in this case? “While the FAAAA’s preemption provision is broad,” the Solicitor General’s brief points out, “it is not limitless.” My prediction is that the majority of the Court will view this case as an opportunity to set down some clear limits.

Deepak Gupta is the founding principal of Gupta Beck PLLC, a national appellate litigation boutique based in Washington, DC. He specializes in Supreme Court and appellate litigation on behalf of plaintiffs, with an emphasis on class actions, consumers’ and workers’ rights, and constitutional law. He is also an Adjunct Professor of Law at both Georgetown and American Universities. Deepak previously served as Senior Litigation Counsel and Senior Counsel for Enforcement Strategy at the Consumer Financial Protection Bureau during the agency’s founding in 2011-2012 and, before that, was an attorney for seven years at Public Citizen Litigation Group.