Franks Inv. Co. LLC v. Union Pacific R. Co.

Citation593 F.3d 404
Decision Date06 January 2010
Docket NumberNo. 08-30236.,08-30236.
PartiesFRANKS INVESTMENT COMPANY LLC, Plaintiff-Appellant, v. UNION PACIFIC RAILROAD CO., Defendant-Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

Warren W. Harris (argued), J. Brett Busby, Jeffrey L. Oldham, Bracewell & Giuliani, L.L.P., Houston, TX, John M. Madison, Jr., Wiener, Weiss & Madison, Shreveport, LA, Scott C. Sinclair, Sinclair Law Firm, Bossier City, CA, for Plaintiff-Appellant.

William Hector Howard, III (argued), Alissa Jean Allison, Kathlyn G. Perez, Paul Lee Peyronnin, Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., New Orleans, LA, Richard P. Bress, Maureeen E. Mahoney, Latham & Watkins, L.L.P., Washington, DC, for Defendant-Appellee.

Evelyn G. Kitay (argued), Surface Transp. Bd., Washington, DC, for Amicus Curiae, Surface Transp. Bd.

Douglas G. Caroom, Bickerstaff, Heath, Delgado & Acosta, L.L.P., Austin, TX, for Amicus Curiae, Texas Farm Bureau.

Garrick Brandon Pursley, University of Texas School of Law, Austin, TX, for Amicus Curae, Constitutional Law Scholars.

Appeal from the United States District Court for the Western District of Louisiana.

Before JONES, Chief Judge, and KING, JOLLY, DAVIS, SMITH, BARKSDALE, GARZA, BENAVIDES, STEWART, CLEMENT, PRADO, OWEN, ELROD, SOUTHWICK and HAYNES, Circuit Judges.1

LESLIE H. SOUTHWICK, Circuit Judge:

The question before the en banc court is whether the preemption provision of a federal statute preempts a state law possessory action filed by a landowner to preserve a long-existing crossing over railroad tracks. We conclude that this landowner's state law action, removed to federal court based on diversity of citizenship, is not preempted. Consequently, we REVERSE the district court and REMAND for adjudication of the merits of the state law claims.

I. BACKGROUND

Franks Investment Company owns a large tract of land in Louisiana. It leases portions of that land for farming. One boundary of the Franks land is parallel to Louisiana Highway 1 for about two miles. The tracks of the Union Pacific Railroad are laid on a 100-foot-wide strip of land it owns between the Franks property and Highway 1. The Union Pacific operates freight service on this line between Shreveport and Alexandria.

For decades, four private railroad crossings provided access to the Franks property from Highway 1. Wooden planks were laid between the rails, while the approaches consisted of dirt and gravel. In 2005, the Union Pacific posted notices of intent to close two of the four crossings that accessed Franks's property. Franks and the railroad entered negotiations, but there was no satisfactory resolution.

In December 2007, the Union Pacific closed and removed two of the crossings. It then threatened to remove the other two. In January 2008, Franks filed suit in state court under Louisiana Code of Civil Procedure Article 3655, claiming that it possessed a real right to use the four crossings. Franks sought an injunction to prevent the Union Pacific from closing the two remaining crossings and to compel it to replace the two crossings it removed.

The Union Pacific removed the case to federal court, as there was diversity of citizenship. Following a two-day bench trial, the district court ruled in favor of the railroad. The court found that Franks's state law action was preempted by a federal statute that we will discuss. A unanimous panel of this court affirmed, agreeing that Franks's possessory action was expressly preempted. Franks Inv. Co., LLC v. Union Pac. R.R. Co., 534 F.3d 443 (5th Cir.2008). Franks's petition for rehearing en banc was granted, causing the panel opinion to be withdrawn. Franks Inv. Co., LLC v. Union Pac. R.R. Co., 562 F.3d 710 (5th Cir.2009). We now address the preemption issues anew.

II. DISCUSSION

The statutory provisions at the center of this dispute are in the Interstate Commerce Commission Termination Act ("ICCTA"). Pub.L. 104-88, 109 Stat. 803. In one of its sections, the jurisdiction of the Surface Transportation Board ("STB") is defined and the preemptive effect of the statute is declared.

The jurisdiction of the 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).

We will explore this language at length. First, we review some basics.

The preemptive effect of a federal statute is a question of law that we review de novo. Friberg v. Kan. City Southern Ry. Co., 267 F.3d 439, 442 (5th Cir.2001).

In determining the existence and reach of preemption, Congress's purpose is "the ultimate touchstone" to use. Medtronic, Inc. v. Lohr, 518 U.S. 470, 485, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996) (quoting Retail Clerks v. Schermerhorn, 375 U.S. 96, 103, 84 S.Ct. 219, 11 L.Ed.2d 179 (1963)). Congress can show its purpose in one of two ways. First, it may "indicate pre-emptive intent through a statute's express language." Altria Group, Inc. v. Good, ___ U.S. ___, 129 S.Ct. 538, 543, 172 L.Ed.2d 398 (2008). However, even when there is an express preemption clause in a statute, "the question of the substance and scope of Congress' displacement of state law still remains." Id. Second, Congress may impliedly preempt state law "if the scope of the statute indicates that Congress intended federal law to occupy the legislative field, or if there is an actual conflict between state and federal law." Id.; see Friberg, 267 F.3d at 442.

There is also a presumption that the "historic police powers of the States [are] not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress." Altria Group, 129 S.Ct. at 543 (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447 (1947)). The presumption is relevant even when there is an express pre-emption clause. That is because "when the text of a pre-emption clause is susceptible of more than one plausible reading, courts ordinarily `accept the reading that disfavors pre-emption.'" Id. (quoting Bates v. Dow Agrosciences LLC, 544 U.S. 431, 449, 125 S.Ct. 1788, 161 L.Ed.2d 687 (2005)). Thus, the presumption operates both to prevent and to limit preemption.

This court has explained that the presumption against preemption is applicable to "areas of law traditionally reserved to the states, like police powers and property law ...." Davis v. Davis, 170 F.3d 475, 481 (5th Cir.1999) (en banc). More recently and topically, we discussed the presumption against preemption in another railroad crossing case. New Orleans & Gulf Coast Ry. Co. v. Barrois, 533 F.3d 321 (5th Cir.2008). We found the no-preemption presumption to apply "with full force to this generally applicable state property law, even if applied to permit a private, at-grade railroad crossing." Id. at 334.

However, the specific preemption issue in Barrois was different. We considered whether there was "complete preemption" under the ICCTA. Under that doctrine, a state law claim will be transformed into one that arises under federal law when a federal statute commands the entire legal arena and in effect displaces any competing state law. Id. at 331. Such preemption actually creates federal jurisdiction by its domination of the arena. Id. We found no complete preemption. Id. at 338. Today we address the more common, indeed, the ordinary category of preemption.

We conclude, though, that the presumption need not be invoked in this case. Even without analyzing how that presumption might limit the preemptive effect of this enactment, we decide that preemption does not apply.

Today's dispute was created by the physical intersection of railroad operations and an owner's access to its land. Consequently, the law to be applied, absent preemption, is that which Louisiana applies to real property disputes.

A. Express Preemption

Because the relevant statute contains a preemption clause, statutory construction analysis begins with "the plain wording of the clause, which necessarily contains the best evidence of Congress' pre-emptive intent." CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664, 113 S.Ct. 1732, 123 L.Ed.2d 387 (1993).

The parties disagree over the meaning of the text. The entire relevant section of the statute is only two, though lengthy, sentences. A structural issue is the relationship between the two sentences. The Union Pacific argues, first, that what controls is the section's first sentence, namely, that jurisdiction of the STB over "transportation by rail carriers" is exclusive. Next, the power of the word "exclusive" leads to federal preemption of all state court proceedings affecting rail transportation. In the railroad's view, because the present dispute concerns either transportation by rail carriers under Section 10501(b)(1) or rail facilities under Section 10501(b)(2), the STB is the only venue.

Conversely, Franks insists that we should focus on the second sentence of Section 10501(b)(2), as it contains the preemption clause. That sentence states that "the remedies provided under this part with respect to regulation of rail transportation are exclusive," a clause that contains several words important to our interpretation. The sentence closes by saying that the provided remedies "preempt the remedies provided under Federal or State law." To Franks, use of the word "regulation" indicates that only laws that specifically regulate railroad transportation...

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