Deweese v. National R.R. Passenger Corp. (Amtrak)

• Decision Date: 22 December 2009
• Docket Number: No. 09-1569.,09-1569.
• Citation: 590 F.3d 239
• Parties: Richard DEWEESE v. NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK); Southeastern Pennsylvania Transportation Authority; Commonwealth of Pennsylvania Department of Transportation Southeastern Pennsylvania Transportation Authority, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

590 F.3d 239

Richard DEWEESE v. NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK); Southeastern Pennsylvania Transportation Authority; Commonwealth of Pennsylvania Department of Transportation Southeastern Pennsylvania Transportation Authority, Appellant.

No. 09-1569.

United States Court of Appeals, Third Circuit.

Argued November 2, 2009.

Filed December 22, 2009.

Thomas S. Biemer, [Argued], Matthew A. Foley, Dilworth Paxson, Philadelphia, PA, for Appellant Southeastern Pennsylvania Transportation Authority ("SEPTA").

William G. Ballaine, [Argued], Landman, Corsi, Ballaine & Ford, New York, NY, Paul F.X. Gallagher, Gallagher & Rowan, Philadelphia, PA, for Appellee National Railroad Passenger Corporation.

Before: SCIRICA, Chief Judge, JORDAN and GREENBERG, Circuit Judges.

OPINION OF THE COURT

JORDAN, Circuit Judge.

The Southeastern Pennsylvania Transportation Authority ("SEPTA") appeals from an order of the United States District Court for the Eastern District of Pennsylvania granting summary judgment to the National Railroad Passenger Corporation ("Amtrak") on its cross-claim against SEPTA. The District Court determined that SEPTA's state-law sovereign immunity defense is preempted by Amtrak's federal enabling statute and that an indemnity contract between SEPTA and Amtrak is therefore enforceable. For the following reasons, we will affirm.

I. Background

A. The Accident

This dispute arises out of an accident on October 28, 2004, in which plaintiff Richard Deweese was struck by an Amtrak train. The day of the accident, Deweese was waiting for a Philadelphia-bound SEPTA train at the Crum Lynne, Pennsylvania train station, which is adjacent to tracks used by both Amtrak and SEPTA. Someone at the station told Deweese that the platform from which to board the Philadelphia-bound trains was located on the opposite side of the tracks. Rather than using the stairs available to him to safely cross to the other side, Deweese took it upon himself to descend from the platform and walk directly across the tracks. While doing so, he was struck by an oncoming Amtrak train. Deweese filed suit in state court against Amtrak, SEPTA, and the Commonwealth of Pennsylvania to recover damages resulting from injuries he sustained as a result of the accident. Amtrak removed the action to federal court, and the Commonwealth was subsequently dismissed as a defendant. Prior to trial, Deweese settled his claims with SEPTA and Amtrak for $200,000, with each defendant paying Deweese $100,000.¹ The settlement left unresolved Amtrak's cross-claim against SEPTA for contractual indemnity which was based on two separate indemnity agreements between Amtrak and SEPTA.

B. The Indemnity Agreements

Amtrak owns the Crum Lynne train station as well as the adjacent tracks. SEPTA leases the station from Amtrak pursuant to a 1987 agreement entitled "Lease Agreement between National Railroad Passenger Corporation and Southeastern Pennsylvania Transportation Authority Covering 47 Commuter Stations in southeastern Pennsylvania" (the "Lease Agreement"). The Crum Lynne station is serviced exclusively by SEPTA, although SEPTA shares use of the railroad tracks with Amtrak pursuant to a 1982 agreement called the "Agreement between National Railroad Passenger Corporation and Southeastern Pennsylvania Transportation Authority for Northeast Corridor Access and Services" (the "NEC Agreement").

Both the Lease Agreement and the NEC Agreement contain indemnity provisions. Section 5 of the NEC Agreement includes a "Risk of Liability" clause stating that,

SEPTA agrees to indemnify and save harmless Amtrak, its officers, agents, employees, and subsidiaries, irrespective of any fault of Amtrak or such persons, for all damage or for liability for personal injury or property damage which would not have been incurred but for the existence of the commuter service provided for SEPTA....

(App. at A155.) The Lease Agreement contains similar language.²

Relying on both the Lease Agreement and the NEC Agreement, Amtrak, as already noted, filed a cross-claim³ against SEPTA in the lawsuit that Deweese brought. Amtrak's claim, consistent throughout this litigation, is that SEPTA is obligated to indemnify Amtrak for its settlement payment to Deweese. SEPTA responded by asserting sovereign immunity, stating in its reply to the cross-claim that "[a]ny obligations on SEPTA's part under the applicable [L]ease [A]greement and [NEC Agreement] to indemnify, save and hold harmless AMTRAK from plaintiff's claims are limited, restricted, and conditioned by, and subject to, SEPTA's immunity as a Commonwealth party...." (App. at A29.)

Amtrak and SEPTA both moved for summary judgment. SEPTA argued in its summary judgment motion that, despite its clear contractual indemnity obligation to Amtrak under the NEC Agreement,⁴ it is barred from indemnifying Amtrak because of the sovereign immunity conferred upon it by Pennsylvania state statute, 1 Pa. Cons.Stat. Ann. § 2310 and 42 Pa. Cons. Stat. Ann. § 8521-25.⁵ SEPTA conceded that, were it not for its state-law sovereign immunity defense, it would be required under the NEC Agreement to "hold [Amtrak] harmless against plaintiff's claims." (App. at A168.)

In its own motion for summary judgment, Amtrak contended that any state-law sovereign immunity defense proffered by SEPTA is preempted by Amtrak's enabling statute, 49 U.S.C. § 28103, enacted as part of the Amtrak Reform and Accountability Act of 1997 (the "Reform Act"). The Reform Act states, among other things, that "a provider of rail passenger transportation may enter into contracts that allocate financial responsibility for claims." 49 U.S.C. § 28103(b). To support its position, Amtrak relied on a recent decision from the United States Court of Appeals for the Second Circuit, O & G Industries, Inc. v. National R.R. Passenger Corp., 537 F.3d 153 (2d Cir. 2008), which held that the Reform Act preempted a Connecticut state statute governing indemnity contracts, to the extent that the two laws conflicted. SEPTA argued in response that Congress, in enacting 49 U.S.C. § 28103, did not intend "to preclude the application of state law on indemnity clauses."⁶ (App. at A 185.)

C. The District Court Opinion

The District Court granted Amtrak's motion for summary judgment and denied SEPTA's, finding that SEPTA's state-law sovereign immunity defense was preempted by the Reform Act under the doctrine of implied conflict preemption. The Court began by noting that Supreme Court precedent dictates a finding of preemption when "the challenged state law stands as an obstacle to the accomplishment and execution of the full purposes ... of Congress." (App. at A16-A17.) The Court then explained that, because the Reform Act was enacted in part to ensure the enforceability of indemnification agreements between Amtrak and other parties, a state-law sovereign immunity defense stood as an impermissible obstacle to that objective. The Court supported its holding by analogizing to the Second Circuit's reasoning in O & G Industries, 537 F.3d at 153, and concluded that, "[t]o the extent that the Pennsylvania sovereign immunity statute conflicts with the Reform Act, it is preempted."⁷ (App. at A17.)

II. Discussion⁸

SEPTA presents a two-fold argument, focused on the breadth of the preemption effected by the District Court's decision and what it contends is an improperly retroactive consequence of such preemption in this case. In advancing its argument, SEPTA, recognizing the importance of the Second Circuit's O & G Industries opinion in the District Court's analysis, frames its discussion around issues addressed in that opinion and asserts that the District Court failed to account for two critical distinctions between that case and this one. First, SEPTA argues, the Pennsylvania sovereign immunity statute is a law of general applicability, whereas the Connecticut statute preempted in O & G Industries was a law specifically enacted to govern the enforceability of indemnification contracts, voiding indemnification agreements to the extent they would cover gross negligence by the party seeking to be indemnified. Thus, SEPTA says, preempting the application of Pennsylvania's statute would result in a dramatically broader application of preemption than occurred in O & G Industries.

Second, SEPTA argues that, even if such a broad application of preemption were warranted in general, it cannot be justified in this particular case because allowing preemption here would give retroactive effect to the Reform Act. While the indemnity agreement in O & G Industries was implemented after the passage of the Reform Act, the NEC Agreement was executed a decade prior to the passage of the Reform Act. By SEPTA's reasoning, applying the Reform Act to indemnity agreements entered into prior to the enactment of that statute would give the statute an impermissible retroactive effect because Congress did not expressly provide for retroactive application.

Amtrak responds that the District Court properly found preemption because "Congressional history makes abundantly clear that [the Reform Act] ... applies broadly to assure that Amtrak's indemnity agreements with any other party are fully enforceable without regard to any state law or public policy." (Appellee's Ans. Br. at 12.) Amtrak further argues that finding preemption will not, in fact, result in an impermissible retroactive application of the Reform Act because the important event for purposes of a retroactivity analysis is not the parties' execution of the NEC Agreement in 1992 but rather the accrual of Amtrak's right to indemnification for the Deweese claim in 2004, which occurred several years after the Reform Act was passed in 1997.

A. Preemption

The primary focus of the parties' attention, as it was of the District Court opinion, is whether Pennsylvania's sovereign immunity statute, 1 Pa. Cons.Stat. Ann. § 2310 and 42 Pa. Cons.Stat. Ann. §§ 8521-25, is preempted by...