FAYUS ENTERPRISES v. BNSF Ry. Co.

• Decision Date: 16 April 2010
• Docket Number: No. 09-7023.,09-7023.
• Citation: 602 F.3d 444
• Parties: FAYUS ENTERPRISES, On behalf of itself and all others similarly situated, et al., Appellants v. BNSF RAILWAY COMPANY, et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

602 F.3d 444

FAYUS ENTERPRISES, On behalf of itself and all others similarly situated, et al., Appellants v. BNSF RAILWAY COMPANY, et al., Appellees.

No. 09-7023.

United States Court of Appeals, District of Columbia Circuit.

Argued February 9, 2010.

Decided April 16, 2010.

Christopher Lovell argued the cause for appellants. With him on the briefs were Gary E. Mason, Jared B. Stamell, and Richard J. Schager, Jr.

Alan M. Wiseman argued the cause for appellees. With him on the brief were Thomas A. Isaacson, Peter A. Barile III, Tyrone R. Childress, David G. Meyer, John M. Nannes, Tara L. Reinhart, Saul P. Morgenstern, Richard J. Favretto, Robert M. Jenkins III, Gary A. Winters, Richard McMillan Jr., Kent Alan Gardiner, and Kathryn D. Kirmayer. Linda S. Stein entered an appearance.

Before: ROGERS and TATEL, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge WILLIAMS.

WILLIAMS, Senior Circuit Judge.

Plaintiff-appellants are firms that have indirectly purchased rail freight service from one or more of the defendant railroads. The traffic moves under railroad-shipper contracts that, pursuant to 49 U.S.C. § 10709, are generally not subject to challenge before the Surface Transportation Board ("STB" or "Board").¹ Plaintiffs allege that since 2003 the railroads conspired to impose fuel surcharges on the freight in a way that raised the shipping rates above competitive levels. Plaintiffs seek a judicial remedy for contract traffic that would match — and extend — the remedy that the Board gave common carrier traffic in Rail Fuel Surcharges, Ex Parte No. 661, 2007 WL 201205 (S.T.B. Jan.25, 2007), but which it explicitly withheld from contract traffic, see id. at *10.

Plaintiffs' antitrust allegations are part of at least eighteen separate class actions, consolidated before the district court, involving various putative classes of direct and indirect purchasers of rail freight services. In re Rail Freight Fuel Surcharge Antitrust Litig., 593 F.Supp.2d 29, 32 (D.D.C.2008). (The direct purchasers raise only federal antitrust claims, which are still pending before the district court. Id. at 35-36.) The indirect purchasers sought injunctive relief for their antitrust claims under federal law; in addition, in order to secure damages precluded under federal law, see Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), they asserted various state law claims under theories of antitrust, consumer protection, unfair competition, and unjust enrichment and disgorgement of profits.

The district court dismissed the indirect purchasers' state law claims as preempted by the Interstate Commerce Commission Termination Act of 1995, 49 U.S.C. §§ 701-727, 10101-16106 ("ICCTA").²In re Rail Freight Fuel Surcharge Antitrust Litig., 593 F.Supp.2d at 40. In the district court's view, "permitting plaintiffs to pursue their state law claims ... would require the application of different state antitrust and consumer protection laws to decide what defendants' fuel surcharges should have been — creating just the patchwork of railroad regulation that ICCTA sought to preempt." Id. at 38. The district court allowed the indirect purchaser plaintiffs to pursue their federal antitrust claim for injunctive relief, id. at 43, a claim still pending along with that of the direct purchasers. At the request of the parties, the court entered a final judgment for defendants on the state law claims under Fed.R.Civ.P. 54(b), thereby enabling an immediate appeal that would otherwise have been impermissibly interlocutory. This appeal duly followed.

The statute's express pre-emption clause obviously is the best available reflection of Congress's intent on the subject. Sprietsma v. Mercury Marine, 537 U.S. 51, 62-63, 123 S.Ct. 518, 154 L.Ed.2d 466 (2002). The section reads as follows:

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) (2006). In this opinion, we will refer to the first sentence (ending with "is exclusive") as the exclusive jurisdiction clause, and to the second sentence (beginning with "Except as otherwise provided") as the exclusive remedies clause.

* * *

In an argument that would, if it were sound, likely apply to all elements of their statutory analysis, plaintiffs invoke the following sentence uttered by the Board: "When Congress removed rail transportation contracts from the Board's regulatory purview, it expressly stated that not only state contract laws but also federal and state antitrust laws would apply fully to those agreements." Kan. City Power & Light Co. v. Union Pac. R.R. Co., No. 42095, 2007 WL 934378, at *3 (S.T.B. Mar.26, 2007). Plaintiffs argue in a footnote that we should defer to this statement under Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).

Lest there be any confusion on the point, we note at the outset that Congress did not "expressly state" what the Board said it had. The Board in fact cited only the House committee report, which on the page referred to by the Board merely stated, "If anti-competitive behavior is alleged, under this section, the antitrust laws are the appropriate and only remedy available." Comm. on Interstate & Foreign Commerce, Staggers Rail Act of 1980, H.R.Rep. No. 96-1035, at 58 (1980), as reprinted in 1980 U.S.C.C.A.N. 3978, 4003.

In any event plaintiffs' conclusory assertion that we owe the statement Chevron deference encounters insuperable hurdles. First, we've several times noted that whether an agency decision against preemption of a state or local law receives Chevron deference is an open question in this circuit. See Riffin v. Surface Transportation Bd., 592 F.3d 195, 197 (D.C.Cir. 2010); Albany Eng'g Corp. v. FERC, 548 F.3d 1071, 1074-75 (2008). Yet plaintiffs offer no argument on the question; we commonly treat such an omission as a waiver. See, e.g., United States v. Hughes, 514 F.3d 15, 18 (D.C.Cir.2008). The Supreme Court's recent treatment of the issue in Wyeth v. Levine, ___ U.S. ___, 129 S.Ct. 1187, 173 L.Ed.2d 51 (2009), declaring that "agencies have no special authority to pronounce on preemption absent delegation by Congress," id. at 1201, which several circuits have invoked in declining deference, see, e.g., Franks Inv. Co. v. Union Pac. R.R. Co., 593 F.3d 404, 414 (5th Cir.2010); Barrientos v. 1801-1825 Morton LLC, 583 F.3d 1197, 1214 (9th Cir.2009), obviously puts the Chevron deference claim in further doubt.

But assuming in plaintiffs' favor that agencies are due Chevron deference for their rulings on preemption of state law, the Board's inaccurate remark in Kansas City Power & Light would not be due such deference. The Board was engaged in resolving whether it had jurisdiction over a shipper's complaint: it would if the rates in question were common carrier tariff rates subject to 49 U.S.C. § 10701(d)(1) (2006); id. § 10702, but would not if they were "contract rates" under § 10709. Because the rates fell into the common carrier classification under Board precedent, and the parties had reasonably relied thereon, it found jurisdiction but started a rulemaking to clarify the boundary between the two. It made the quoted observation about state antitrust claims only to illustrate the undisputed proposition that the classification had consequences. Such a dictum is plainly not entitled to Chevron deference. See United States v. Mead Corp., 533 U.S. 218, 228, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001). What we have just said also disposes of any possible claim that we owe the remark deference under Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944).

Thus we address the parties' arguments de novo.

* * *

Plaintiffs object to the district court's preemption decision on two principal grounds. First, they say that § 10501(b)'s preemption provisions do not apply at all to freight transported pursuant to private contracts that are not generally subject to challenge before the Board. Second, they say that even if those provisions apply to such transportation, the state law remedies they seek are not remedies "with respect to regulation of rail transportation" and are therefore not the sort of remedies that § 10501(b) preempts.

Plaintiffs' argument that the preemption language of § 10501(b) does not apply to freight transported under private rail contracts has two related aspects: First, in plaintiffs' view, only the exclusive remedies clause is relevant to ICCTA preemption analysis; they criticize the district court for relying on cases discussing the exclusive jurisdiction clause to support its preemption holding, noting that the clause does not use the word "preemption." Second, the exclusive remedies clause has an express provision for exceptions "as otherwise provided in this part," and plaintiffs argue that their state law claims fall within that exception. We will start with § 10709(c)'s provision of an exception:

(1) A contract that is authorized by this section, and transportation under such contract, shall not be subject to this part, and may not be subsequently challenged before the Board or in any court on the grounds that such contract violates a provision of this part.

(2) The exclusive remedy

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