On August 22, 2022, the United States Court of Appeals for the Tenth Circuit held that personal injury claims sustained by passengers on domestic flights, and specifically ones arising from a passenger being struck by a beverage cart, are not preempted by the Airline Deregulation Act (“ADA”).[1]  As frequent readers of this blog will recall, the ADA expressly preempts state laws (and thus common law claims) relating to a “price, route, or service of an air carrier.”[2]

            The International Maritime Organization (“IMO”) Maritime Safety Committee (“MSC”) convened November 2 – 11, 2022, to consider important amendments to the Convention for the Safety of Life at Sea (“SOLAS”) concerning safety measures for industrial personnel and compliance with the minimum threshold flashpoint for fuel oil carried by ships.  In addition, the MSC adopted the new mandatory International Code of Safety for Ships Carrying Industrial Personnel (“IP Code”).[1]    

On October 19, 2022, the Surface Transportation Board (Board) issued a decision accepting the post-remand briefs and comments filed in a declaratory order proceeding involving Soo Line Railroad Company (CP) and Wisconsin Central, Ltd. (CN) and soliciting public comments regarding the broad legal issues presented by the proceeding.  Wisconsin Central, Ltd.—Pet. for Declaratory Order—Interchange with Soo Line R.R. Co., FD 36397 (STB served Oct. 19, 2022). 

On October 28, 2022, the Surface Transportation Board (Board) announced the final evidentiary hearing dates – November 17 and November 18, 2002 – for the March 16, 2021 application by the National Railroad Passenger Corporation (Amtrak) requesting an order that allowed additional Amtrak train operations over CSX Transportation, Inc. (CSXT) and Norfolk Southern Railway Company (NSR) lines along the Gulf Coast.  Application of the Nat’l Passenger R.R. Corp. Under 49 U.S.C. § 24308(E)—CSX Transp., Inc. & Norfolk S. Ry. Co., FD 36496 (STB served Oct. 28, 2022).  The Board also announced that it would hold a voting conference on December 7, 2022.  Id.

On September 28, 2022, the Surface Transportation Board (Board) commenced a public hearing in the proposed Kansas City Southern (KCS) and Canadian Pacific (CP) merger proceeding.  See Canadian Pac. Ry. Ltd.—Control—Kansas City S., FD 36500 (STB served September 21, 2022).

Practitioners in the modes are familiar with the role administrative agencies can alter the shape of compliance obligations through administrative decisions and rulemakings. The National Labor Relations Board (NLRB) is similar in most respects. One of these is the authority of the Board to assess part decisional practice and, in a decision, issued a new rule, as a case holding, without the necessity for formal rulemaking. The most well-known example is the case of John Deklewa & Sons, Inc. https://www.nlrb.gov/case/06-RC-012417 (creating a new test for when a collective bargaining agreement is revokable).

This edition of the Passenger Rail Update highlights how the Surface Transportation Board (STB) has come to serve as an increasingly important venue for the National Railroad Passenger Corporation (“Amtrak”) to assert federal statutory rights and obligations aimed at improving intercity passenger rail service across the country. The shift can be seen in the STB’s establishment of a new Office of Passenger Rail and in Amtrak’s ongoing bid to restart its Gulf Coast service.

The possibility of an imminent rail labor strike has created uncertainties for rail shippers and receivers, of course for the railroads themselves, this autumn.  Shippers of hazardous materials (HazMat) have been particularly affected by preemptive measures taken by carriers to limit their exposure to risks of HazMat being delayed in transit on the rail network.  These include curtailing shipments of chlorine and other HazMat, suspending freight train service, and repositioning locomotives, as reported by the Association of American Railroads and the online service advisories of various Class I railroads.

U.S. District Court Denies Boeing Motion to Dismiss Fraud and Misrepresentation Claims Arising from the 737 MAX Grounding

On September 30, 2022, the U.S. District Court for the Western District of Washington issued an Order denying The Boeing Company’s (“Boeing”) motion to dismiss Polskie Linie Lotnicze LOT S.A.’s a/k/a LOT Polish Airlines (“LOT”) fraud and misrepresentation claims arising from the approximately two-year grounding of Boeing’s 737 MAX aircraft (the “Order”). The decision is significant because Boeing had previously succeeded in having fraud and misrepresentation claims brought by lessors and operators dismissed, notwithstanding the two fatal 737 MAX crashes, the grounding, Boeing’s Deferred Prosecution Agreement with the U.S. Department of Justice arising from Boeing’s misconduct during the Federal Aviation Administration’s certification of the MAX, the many other governmental investigations of Boeing’s misconduct, and Boeing’s settlement of shareholder, carrier, and lessor claims arising from the MAX grounding.

The Federal Motor Carrier Safety Administration (FMCSA) has requested public comment on an application for exemption submitted by The Trucking Alliance that would allow trucking companies to use hair testing in addition to urine testing for random drug tests and pre-employment screenings. The exemption also asks that carriers be allowed to publish the results of those tests into the FMCSA’s Drug and Alcohol Clearinghouse, a database that employers must review when hiring a driver and annually during employment.

In August, a panel of the Fifth Circuit Court of Appeals held that the time charterer of a bulk carrier, did not exercise operational control over the vessel to be deemed either a de facto vessel owner or bareboat charterer.  Further, in Grand Famous Shipping Limited v. China Navigation Company PTE., Limited, — 45 F.4^th – (5^th Cir. 2022), 2022 WL 3351781, the Court held that the time charterer was not required to investigate either the vessel owner’s finances or its safety management system before executing the time charter.  

On August 17, 2022, the Supreme Court of Ohio issued a decision finding that Ohio’s antiblocking statute cannot be enforced against CSX Transportation, Inc. (CSX) on preemption grounds, reversing a Third District Court of Appeals decision.  State v. CSX Transp., Inc., 2022-Ohio-2832, 2022 WL 3372044 (Ohio 2022).

In 2018, the State of Ohio charged CSX with violating a state statute, R.C. 5589.21, five times in Union County, Ohio.  Id. at *1. The statute prohibits a stopped train from blocking a railroad crossing for more than five minutes, with limited exceptions.  Id.  A violation of the statute is a first-degree misdemeanor.  Id.  The Ohio General Assembly enacted the statute “to enhance public safety by ensuring the unhindered flow of emergency responders across railroad crossings.”  Id.  

Introduction

Recent developments have put labor issues front and center for passenger railroads this past summer. First, the Federal Railroad Administration’s (“FRA”) proposed rule regarding train crew size safety imposes two-person crews for passenger operations, with limited exceptions. Second, federal intervention has not stopped ongoing contract disputes between most major railroads and the labor unions representing their employees, which continue to risk impacting passenger railroads that share tracks with freight operations or that are directly involved in the union disputes.

This article is intended as a part of an ongoing strategy guide for in-house and outside general counsel that provides a primer on the growing union friendly changes in federal and state labor Relations. We shall cover three topics: (1) union organizing models under the National Labor Relations Act and the Railway Labor Act – the primary statutes applicable to the modes; (2) the impact of federal project labor agreements on Transportation Industry Construction and (3) a look into what’s new, focusing on first steps towards mandating so-called “sectoral collective bargaining.”

• ATLP’s Fall Forum is scheduled to be an in-person event this year in Washington D.C.  The forum is to be held in November – details will be forthcoming.  After our successful Kansas City meeting, we are excited to get together again!
• The Federal Maritime Commission establishes a website to report its progress implementing the Ocean Shipping Reform Act of 2022.
• The Presidential Emergency Board recommends wage increases to resolve contract talks between major railroads and labor.  Read the entire report here or the Reuters summary here.
• DOT issues a proposed rule to strengthen consumer protections for ticket refunds.
• Chairman Oberman appoints Janie Sheng as Director of the STB’s Office of Public Assistance, Governmental Affairs and Compliance.  Ms. Sheng has been Acting Director since August 2021. 
• Harvest Season is Coming and the STB wants to know if the Class I carriers are ready.
• California to ban the sale of new gasoline powered automobiles by 2035.  Washington State intends to do so as well.

On July 28, 2022, the U.S. Department of Transportation’s Federal Railroad Administration (FRA) published a Notice of Proposed Rulemaking to establish minimum train crew sizes and other requirements related to train crew staffing (87 Fed. Reg. 45564).  The Proposed Rule would require a minimum of two crewmembers on most trains traveling on the interstate rail network.  It would, however, provide ten categorical exceptions for circumstances in which the FRA has deemed one-person crew operations to pose a low risk to railroad employees, the public, and the environment.  The Proposed Rule would also allow railroads to seek approvals for legacy one-person crew operations on a case-by-case basis.

On May 6, 2022, the Surface Transportation Board (Board) issued a decision ordering certain reporting from Class I carriers, in response to concerns raised at the public hearing held on April 26 and 27, 2022 on urgent issues in freight rail service.  Urgent Issues in Freight Rail Service, EP 770 (Sub-No. 1) (STB served May 6, 2022).

On July 1, 2022, the Board issued a decision accepting for consideration the responsive applications filed by Canadian National Railway Company (CNR) and its rail carrier affiliate, Illinois Central Railroad Company (ICRR) (collectively, CN), and by Norfolk Southern Railway Company (NSR), in the CP/KCS merger proceeding.  Canadian Pac. Ry. Ltd.—Control—Kansas City S., FD 36500 (STB served July 1, 2022).

The U.S. Supreme Court recently denied the California Trucking Association’s (CTA) petition for certiorari related to a case involving federal preemption of California Assembly Bill 5 (AB-5), a law that changed the legal requirements for independent contractor status in California that was targeted in large measure at the trucking industry’s use of independent contractor owner-operator drivers.  There are approximately 70,000 independent owner-operators within California who will be impacted by the law, which could cause additional supply chain disruptions at a time in which the industry is already facing challenges.  The decision spurred protests that shut down the Port of Oakland for 5 days, and the future of the prominent use of independent contractor drivers in the trucking industry faces a grim future in California. 

As brief background, AB-5 went into effect Jan. 1, 2020. AB-5 codified the "ABC" test for employee versus independent contractor classification adopted by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (Dynamex), 4 Cal. 5th 903 (2018).  It is very common in the trucking industry for independent owner-operator drivers to drive their own truck for a motor carrier under the motor carrier’s operating authority.  AB-5 makes it very challenging for an independent driver to work for a motor carrier without being considered an employee.  This is because under the “B” prong of the ABC test, in order to be an independent contractor, the driver must “perform work that is outside the hiring entity's business.”  It is hard – if not impossible – for a driver for a motor carrier to satisfy this standard.

In an unusual action, the U.S. District Court for the Eastern District of New York recently held that the Airline Deregulation Act of 1978 (“ADA”) preempted and barred an action by a passenger on a Caribbean Airlines (“CAL”) flight, wherein the passenger claimed that CAL had negligently allowed someone to plant two kilograms of cocaine in his luggage.¹  The passenger traveled from Guyana to New York on a CAL flight in 2018.  After passing through security, he turned over his suitcase to Guyanese officials and boarded the subject flight without incident.  When he arrived in New York, he retrieved his suitcase and went through U.S. Customs, where he was selected for inspection.  Customs found two kilograms of cocaine in his suitcase.