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]

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).

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.

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. 

On June 16, 2022, the Commandant of the U.S. Coast Guard, Office of Design and Engineering Standards (ENG-3) published a Maritime Safety Information Bulletin No. 05-22 (MSIB) for tank vessels.¹ Specifically, the MSIB authorized and approved double block and bleed systems for the Inert Gas Systems on tanks vessels that are designed, installed, and operated in compliance with 74 Safety of Life at Sea Convention (SOLAS) (14) II-2/5.5 pursuant to 46 CFR §32.53-10(b). The significance of the MSIB is that shipowners and operators with SOLAS-compliant double block and bleed systems for Inert Gas Systems on tank vessels do not need approval for their system by the Coast Guard Marine Safety Center.

[On June 27, 2022 at ATLP’s 93rd Annual Meeting held in Kansas City, Missouri Jameson Rice passed the ATLP’s president’s gavel to Louis Amato-Gauci.  Louis delivered the following remarks to the assembled members.]]

I’m deeply honoured to serve as president of this venerable association, the oldest organization of its kind in North America. I am excited about this upcoming year, and confident that I can count on all of you to help make it a resounding success.

I joined ATLP as a relatively young lawyer, who was just beginning to explore the boundaries of transportation law. I attended the ATLP annual meeting in Memphis, met a few folks and marveled at the depth of their expertise in this niche area of practice, but really had no idea what it takes to make an organization like this run smoothly.

I quickly discovered that much of the credit for the continued success of ATLP is due to the efforts of Lauren Michalski, our Executive Director for many, many years, who has truly been the heartbeat, life and soul of the association. There is something magical about Lauren. I met her when she and I sat at the back of the bus – where all the rowdy kids sat – heading to the midnight tour of the FedEx Hub. By the time that trip ended she had me signed up as a speaker for the next event, followed in rapid succession by an invitation to: (i) publish a paper in the Journal; (ii) serve on the program committee for the next meeting; (iii) co-chair the committee with Jameson for another meeting; and the rest is history.

This article is intended as a strategy guide for in-house and outside general counsel but comments from the Plaintiffs bar are equally appreciated. It is intended to digest the Court’s thoughtful opinion into core decision points.

In this passenger rail update we cover the Federal Railroad Administration’s (“FRA”) new regulations concerning fatigue management and FRA’s introduction of the new intercity passenger Corridor Identification and Development Program. We also provide an update on the Amtrak Gulf Coast proceedings currently pending before the Surface Transportation Board (“STB” or “Board”).

FRA Amends Regulations to Implement Statutory Requirements for Fatigue Management

Pursuant to the requirements of Section 103 of the Rail Safety Improvement Act of 2008 (“RSIA”), 49 U.S.C. § 20156, on June 13, 2022, FRA issued a Notice of Final Rule in the Federal Register requiring that certain railroads include “fatigue management plans” in their safety risk reduction plans (87 Fed. Reg. 35,660).  This requirement applies specifically to Class I railroads, railroads that have been deemed by the Secretary of the Department of Transportation to have inadequate safety performance, and intercity passenger and commuter railroads.  Under current FRA regulations, Class I railroads and those deemed to have inadequate safety performance are required to submit Risk Reduction Program (“RRP”) plans to the FRA while intercity passenger and commuter railroads are required to submit System Safety Program (“SSP”) plans.  However, Section 20156 also requires that fatigue management plans be included in a railroad’s safety risk reduction plan (either an RRP or SSP), which had not previously been included in the applicable regulations (49 C.F.R. Part 270 and Part 271), thus prompting this rulemaking.

As many ATLP members are aware, Canadian Pacific Railway (“CP”) and Kansas City Southern Railway (“KCS”) filed a merger Application with the Surface Transportation Board (“STB”) on October 29, 2021, in Finance Docket 36500.  The transaction would involve CP acquiring KCS and its rail operations in the United States.  This blog post details the possible implications of the proposed merger on HazMat shipments.

The continuing armed conflict between Russia and Ukraine has disrupted commercial maritime trade and stranded ships as well as their crew in the Black Sea and the Sea of Azov.  This region historically has been an important area for maritime trade.

The Southwest Airlines Pilots Association (“SWAPA”) sued Boeing in late-2019 in the 160th District Court in Dallas County, Texas, seeking damages arising from the world-wide grounding of 737 MAX aircraft.  Southwest Airlines flies a fleet consisting exclusively of Boeing 737 aircraft, had already taken delivery of many MAX aircraft before the grounding, and was expecting to take delivery of a significantly greater number of MAX aircraft during the two-year grounding.  The grounding reduced Southwest’s fleet and thus its pilots’ opportunities to earn income, and based on that reduced income, reduced the revenue of the union, to which pilots pay dues as a percentage of income.