Staley v. BNSF Railway Company et al
Filing
14
OPINION AND ORDER GRANTING 2 Motion to Remand AND DENYING AS MOOT 8 Motion for Protective Order. Case will be REMANDED back to the Montana Sixteenth Judicial District Court, Treasure County. Signed by Judge Susan P. Watters on 2/27/2015. (EMH, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION
SAMUEL STALEY,
CV 14-136-BLG-SPW
Plaintiff,
OPINION and ORDER
vs.
BNSF RAILWAY COMPANY, a
Delaware corporation and LYNN
LUDWIG,
Defendants.
Plaintiff Samuel Staley ("Staley") initially filed this action in a Montana
state court. Defendants BNSF Railway Company ("BNSF") and Lynn Ludwig
("Ludwig") (collectively the "Defendants") removed the case to this Court on both
diversity and federal question grounds. Although Staley and Ludwig are both
Montana citizens, Ludwig contends that she was fraudulently joined and should
not be considered for diversity purposes. The Defendants also argue that Staley's
claims are completely pre-empted by federal law, even though Staley only alleges
Montana common law negligence in his Complaint. Staley filed a Motion for
Remand. BNSF has also filed a Motion for Protective Order Staying Discovery.
For reasons discussed below, the Court grants Staley's motion and remands this
case back to state court. Because this action is remanded to state court, the Motion
for Protective Order is moot.
1
I. Background
A. The accident
The following facts are taken from Staley's Complaint and are assumed true.
BNSF operates a railroad line that generally runs east/west through the town of
Hysham, Montana. In Hysham, the line consists of two tracks: one mainline track
and a parallel siding track. There are only two crossings that allow motorists to
cross the railroad line in Hysham. The west side crossing ("West Crossing") is
protected and guarded by automatic warning gates and lights. About one-quarter
mile to the east is the other crossing ("East Crossing"). The East Crossing is only
equipped with crossbuck signs.
In September 2012, BNSF designated Ludwig as the "point of contact" for
any issues that arose in Hysham. Soon after her appointment, Hysham town
officials began complaining to Ludwig that BNSF trains routinely were standing
unoccupied on the siding track for extended periods of time and blocking the West
Crossing. When a train blocked the West Crossing, motorists were forced to use
the East Crossing. Not only was the East Crossing unprotected, but the parked
trains blocked southbound motorists' view of any approaching eastbound trains
using the mainline. Despite these concerns, Ludwig and BNSF ignored the
Hysham officials and continued to block the West Crossing.
2
On October 13, 2013, Staley was driving a beet truck south through
Hysham. A BNSF train was standing unoccupied on the siding track in a manner
that completely blocked the West Crossing, forcing Staley to use the East
Crossing. As he approached the East Crossing, the parked train blocked Staley's
view of the mainline. When Staley began crossing the track, a previously unseen
eastbound train collided with his truck. Staley suffered severe injuries.
B. Procedural history
On September 15, 2014, Staley sued BNSF and Ludwig in the Montana
Sixteenth Judicial District, Treasure County. In his Complaint, Staley alleges that
he is a Montana citizen, Ludwig is also a Montana citizen, and that BNSF is a
foreign corporation. Staley also claims that BNSF and Ludwig's negligence
caused his injuries. Specifically, Staley contends that the Defendants breached
their standard of care by: (1) Repeatedly blocking the West Crossing and forcing
motorists to use the East Crossing; (2) Obstructing the view of oncoming
eastbound trains for southbound motorists at the East Crossing; (3) Arrogantly
ignoring the complaints about the unsafe practices at the crossings in Hysham; (4)
Failing to properly sound an audible warning at the East Crossing in violation of
Montana and federal law; (5) Failing to operate the train at a safe speed when
approaching the East Crossing, which "constituted a unique, specific, and
individual hazard;" (6) Failing to keep a proper lookout for vehicles approaching
3
the East Crossing; (7) Failing to install proper warning signs and signalization at
the East Crossing; and (8) The catch-all "otherwise failing to use due care under
the circumstances."
The Defendants removed the case to this Court on October 13, 2014. In
their Notice of Removal, the Defendants claim that complete diversity exists
among the parties. The Defendants acknowledge that both Staley and Ludwig are
Montana citizens. However, the Defendants contend that Staley fraudulently
joined Ludwig to avoid federal jurisdiction. In addition, BNSF claims that federal
jurisdiction exists as Staley's negligence claims are completely pre-empted by the
Interstate Commerce Commission Termination Act of 1995 ("ICCTA").
Staley moved to remand the case back to state court. Staley argues that he
pied sufficient facts to state a cause of action against Ludwig. If true, then Staley
did not fraudulently join Ludwig and diversity jurisdiction does not exist. Staley
also argues that his claims are not completely pre-empted by the ICCTA. He
contends that even if successful, his negligence claims will not unreasonably
burden BNSF's operations.
C. Supplemental Evidence
In support of their respective arguments, both Staley and the Defendants
have attached additional evidence to their briefs. See Morris v. Princess Cruises,
Inc., 236 F.3d 1061, 1068 (9th Cir. 2001) ("[F]raudulentjoinder claims may be
4
resolved by 'piercing the pleadings' and considering summary judgment-type
evidence such as affidavits and deposition testimony") (citation omitted).
Staley provides emails involving a Hysham town official and BNSF
employees. Prior to September 2012, Josh Capps served as the Supervisor of
Engineering Support and communicated with Hysham town official C. Robert
Keele, Jr. In an email to Capps, Keele raised the issue of rail traffic blocking the
West Crossing. Keele noted that, "One of [his] council members did speak with
the train master in Forsyth, and in response one train has been broken to allow
crossing at this intersection. This occurred about a month ago and has not been
done since." (Doc. 3-6). Keele asked BNSF to resolve the issue.
The same day, Capps forwarded Keele's email to Ludwig. Capps also
included the following message:
Lynn,
I sent an email to the trainmaster regarding this issue 2 weeks ago, so
if you and Rob make it into Forsyth please discuss this with him
because the last train that was there had more than enough room to cut
the crossing. Mr. Keele, Lynn Ludwig will now be your point of
contact for any issues in Hysham since I no longer work in Montana.
Thanks,
Josh Capps
(Doc. 3-7). However, according to Keele's later emails, BNSF did not resolve the
issue. In an email sent on September 7, 2012, Keele noted to Ludwig that although
5
he may have been "beating a dead horse," parked trains continued to block the
West Crossing. (Doc. 3-9). In one instance, a parked train blocked the West
Crossing for two and a half days. (Id.)
On October 14, 2013, the day after Staley's accident, Keele emailed Ludwig
that he could not "begin to express the level of frustration I have with you and
BNSF regarding this issue." (Doc. 3-10). Keele wrote that despite his requests
that BNSF modify its practice of blocking the West Crossing, "[t]hese requests
have gone largely unanswered and even more so, arrogantly ignored." (Id.).
Ludwig quickly responded to that email and claimed that she had been in contact
with the county' regarding the crossing and that she had not ignored Keele's
complaints.
To counter Staley's allegations, the Defendants attached an affidavit from
Ludwig. In Ludwig's affidavit, she claims that she did not have any involvement
in placing the trains at the West Crossing. (Doc. 7-1 at 2). Ludwig is a
Roadmaster for BNSF. (Id. at 1). As a Roadmaster, Ludwig claims that she only
supervises employees responsible for maintaining the track and coordinates work
to be done at crossings. (Id. at 3). In that capacity, Ludwig "had contact with
Treasure County officials on road and crossing surface issues." (Id.) Other BNSF
departments determined where to place trains. (Id. at 2). Ludwig states that she
1
Presumably Ludwig was referring to officials of Treasure County, in which
Hysham is located.
6
did not ignore Keele's complaints, but rather forwarded them to the proper
department. (Id. at 3). After that, Ludwig claims there was nothing more she
could do. (Id.). Ludwig also states that she had no authority regarding the
placement of warning signs or lookouts at the East Crossing. (Id. at 4).
II. Legal Standard for Removal
A defendant may remove a case to federal court ifthe federal court has
original jurisdiction over the case. 28 U.S.C. § 144l{a). Relevant here, there are
two grounds for federal original jurisdiction. First, federal courts have original
jurisdiction ifthere is complete diversity among the parties and the amount in
controversy is at least $75,000. 28 U.S.C. § 1332{a). Complete diversity means
that "each of the plaintiffs must be a citizen of a different state than each of the
defendants." Morris, 236 F.3d at 1067. Second, federal courts have original
jurisdiction ifthe action arises under federal law. 28 U.S.C. § 1331. The
defendant has the burden of overcoming a strong presumption against removal.
Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Any doubt should be
resolved in favor of remand to the state court. Durham v. Lockheed Martin Corp.,
445 F.3d 1247, 1252 (9th Cir. 2006).
III. Fraudulent Joinder
The Defendants' first argument is that Staley fraudulently joined Ludwig.
Given that Staley and Ludwig are both Montana citizens, complete diversity does
7
not exist on the complaint's face and remand is required unless the Court finds that
Ludwig was fraudulently joined. The Defendants contend that under Montana law,
Ludwig cannot be held responsible for Staley's accident. Staley counters that he
has stated a sufficiently cognizable claim against Ludwig to defeat the Defendants'
fraudulentjoinder argument. The Court agrees with Staley.
Fraudulentjoinder is a term of art. McCabe v. Gen. Foods Corp., 811 F.2d
1336, 1339 (9th Cir. 1987). "If the plaintiff fails to state a cause of action against a
resident defendant, and the failure is obvious according to the settled rules of the
state, the joinder of the resident defendant is fraudulent." Id. Fraudulentjoinder
only occurs when "a plaintiff has no possibility of bringing a cause of action
against a resident defendant, and therefore has no reasonable grounds to believe he
has such an action." IDS Prop. Cas. Ins. Co. v. Gambrell, 913 F. Supp. 2d 748,
752 (D. Ariz. 2012).
If the resident defendant's joinder was fraudulent, then that defendant's
presence is ignored for purposes of determining diversity. Morris, 236 F.3d at
1067. While the defendant may present summary judgment type evidence to show
fraudulent joinder, the "inquiry is far different from the summary judgment type
inquiry." Boyer v. Snap-on Tools Corp., 913 F.2d 108, 112 (3d Cir. 1990).
Instead, the test is akin to an analysis made in a Fed. R. Civ. P. 12(b)(6) motion to
dismiss. Sessions v. Chrysler Corp., 517 F.2d 759, 761 (9th Cir. 1975). Thus, this
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Court may only "look to material outside the pleadings for the limited purpose of
determining whether there are undisputed facts that negate the claim." Casias v.
Wal-Mart Stores, Inc., 695 F.3d 428, 433 (6th Cir. 2012) (internal quotation
omitted).
The defendant bears the burden of showing fraudulent joinder by clear and
convincing evidence. Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d
1203, 1206 (9th Cir. 2007). Any contradictory evidence should be resolved in
favor of the plaintiff. Anderson v. BNSF Ry. Co., No. CV 08-14-H-DWM, 2008
WL 5412454, at *2 (D. Mont. May 21, 2008). "In borderline situations, where it is
doubtful whether the complaint states a cause of action against the resident
defendant, the doubt is ordinarily resolved in favor of the retention of the cause in
the state court." Albi v. Street & Smith Publications, 140 F.2d 310, 312 (9th Cir.
1944).
Here, the Court finds that the Defendants have not met their burden of
showing that Staley cannot state a cause of action against Ludwig. Generally
speaking, under Montana law employees cannot be personally liable for acts taken
on behalf of a corporation. Sherner v. Nat'! Loss Control Servs. Corp., 124 P.3d
150, 155 (Mont. 2005). However, there is an exception ifthe employee commits a
tort within the scope of employment. Anderson, at* 1. To hold the employee
personally liable, the employee must be either personally negligent or have taken
9
"actions that were tortious in nature." Crystal Springs Trout Co. v. First State
Bank ofFroid, 732 P.2d 819, 823 (Mont. 1987). Where "there are allegations
against an employee personally, the Montana Supreme Court has allowed the
employee to be named as a defendant." Caven v. Burlington N. & Santa Fe Ry.
Co., No. CV 04-41-GF-SEH, 2004 WL 5704818, at *1 (D. Mont. Sept. 20, 2004)
(citing Dagel v. City of Great Falls, 819 P.2d 186, 195 (Mont.1991)).
Staley claims that Ludwig negligently ignored complaints and the alleged
unsafe conditions that existed at the West Crossing. Staley points out that Keele's
previous point of contact, Capps, apparently played some role in rearranging a
train that had been blocking the West Crossing. (Doc. 3- 7). Since he had moved
from Montana, Capps notified Keele that Ludwig would be the "point of contact
for any issues in Hysham." (Id.). According to Staley, Ludwig ignored Keele's
emails until after Staley's accident. Staley also claims that Ludwig never told
Keele to contact someone else regarding the trains blocking the West Crossing.
These allegations are sufficient to pursue a negligence claim against Ludwig
personally. The alleged lack of response and ignoring of safety complaints support
Staley's claim that Ludwig was personally negligent.
In response, Ludwig relies on her affidavit in which she claims to have
passed along Keele's complaints to the proper department within BNSF. Ludwig's
affidavit largely generally denies Staley's allegations that Ludwig ignored
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complaints about the West Crossing. This general denial is similar to an answer
and is insufficient to overcome the burden of showing fraudulent joinder. See
Mattress Warehousing, Inc. v. Power Mktg. Direct, Inc., No. 08-CV-141-LRR,
2009 WL 395162, at *6 (N.D. Iowa Feb. 17, 2009) ("Were courts to find
fraudulent joinder whenever presented with a defendant's self-serving affidavit,
few cases would ever be remanded and federal jurisdiction would greatly
expand"); Smith v. Smithkline Beecham Corp., No. CIV. A. 10-73, 2010 WL
3432594, at *4 (E.D. Ky. Aug. 30, 2010) ("A solitary self-serving affidavit cannot
eliminate the prospect of any dispute, particularly where the complaint is in direct
disagreement"); and Hampton v. Georgia-Pac. L.L.C., No. CIV.A. 11-0363-KD-N,
2011 WL 5037403, at *6 (S.D. Ala. Oct. 24, 2011) (Defendants' "denials of
responsibility are not sufficient to satisfy the 'clear and convincing' standard of
proof to carry defendants' burden of showing that plaintiff cannot possibly
establish a cause of action against the individual defendants"). Instead, Ludwig's
affidavit shows that there is contradictory evidence regarding Staley's claim that
safety complaints went "largely unanswered and ... arrogantly ignored." (Doc. 3 at
7).
Staley and the Defendants present conflicting claims and evidence as to
whether Ludwig was personally negligent. Accordingly, the Court finds that the
11
Defendants did not meet their burden of showing that Ludwig was fraudulently
joined. This Court does not have diversity jurisdiction.
IV. Complete Preemption
The Defendants argue that even if diversity jurisdiction does not exist, this
action presents a federal question because Staley's claims are completely
preempted by ICCTA. The Defendants contend that this action would have the
effect of impermissibly managing or regulating train operations. Staley argues that
BNSF would not be burdened, as they had previously separated trains to avoid
blocking the West Crossing. The Court finds that, as alleged, this action would not
have the effect of unreasonably burdening or regulating BNSF's operations.
Accordingly, because the ICCTA does not wholly displace Staley's negligence
claims, this action is not completely preempted.
Typically, the "well-pleaded complaint rule" determines the presence of
federal-question jurisdiction. Caterpillar Inc. v. Williams, 482 U.S. 386, 392
(1987). "For removal to be appropriate under the well-pleaded complaint rule, a
federal question must appear on the face of a properly pleaded complaint."
Ansley v. Ameriquest Mortgage Co., 340 F.3d 858, 861 (9th Cir. 2003). "As a
general rule, absent diversity jurisdiction, a case will not be removable ifthe
complaint does not affirmatively allege a federal claim." Beneficial Nat. Bank v.
Anderson, 539 U.S. 1, 6 (2003). A defense is not part of the "well-pleaded
12
complaint." Rivet v. Regions Bank ofLouisiana, 522 U.S. 470, 475 (1998).
Therefore, "a case may not be removed to federal court on the basis of a federal
defense, including the defense of preemption, even ifthe defense is anticipated in
the plaintiffs complaint, and even if both parties admit that the defense is the only
question truly at issue in the case." Franchise Tax Bd. ofState of Cal. v. Constr.
Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 14 (1983).
An exception to the "well-pleaded complaint rule" is the doctrine of
complete preemption. Ansley, 340 F.3d at 861. Complete preemption only occurs
when a "federal statute wholly displaces the state-law cause of action." Beneficial
Nat. Bank, 539 U.S. at 8. The statute must so completely preempt a particular area
of law that any civil complaint in that area necessarily presents a federal question.
Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987). In such "extraordinary
situations," Congress must have "clearly manifested an intent to convert state law
claims into federal-question claims." Ansley, 340 F.3d at 862.
Therefore, a removing defendant must go beyond showing that the merits of
the plaintiffs claims are preempted by federal law. Hunter v. Philip Morris USA,
582 F.3d 1039, 1045 (9th Cir. 2009). "The fact that preemption might ultimately
be proved does not allow removal." Ritchey v. Upjohn Drug Co., 139 F.3d 1313,
1319 (9th Cir. 1998). Instead, the preemptive force of a statute must be so strong
13
that it completely preempts the entire area of state law. Valles v. Ivy Hill Corp.,
410 F.3d 1071, 1075 (9th Cir. 2005).
Here, the Defendants argue that the ICCTA completely preempts Staley's
claims. The ICCTA, found at 19 U.S.C. § 10101, et seq., abolished the Interstate
Commerce Commission, established the Surface Transportation Board, and sought
to establish exclusive federal regulation of the railroads. Friberg v. Kansas City S.
Ry. Co., 267 F.3d 439, 442-43 (5th Cir. 2001). The ICCTA's preemption clause
provides that the Surface Transportation Board has exclusive jurisdiction 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,
49 U.S.C. § 1050l(b) (emphasis added). The remedies provided in the ICCTA
preempt any remedies provided by state law. Id.
In other words, the "ICCTA preempts all state laws that may reasonably be
said to have the effect of managing or governing rail transportation." Ass'n ofAm.
Railroads v. S. Coast Air Quality Mgmt. Dist., 622 F .3d 1094, 1097 (9th Cir.
2010). This preemptive effect is not limited to direct economic regulation. City of
Auburn v. US. Gov't, 154 F.3d 1025, 1031 (9th Cir. 1998). The ICCTA also
14
preempts state common law duties that impact how a railroad operates their lines.
Friberg, 267 F.3d at 444. However, the ICCTA does not preempt state laws "of
general applicability that do not unreasonably interfere with interstate commerce."
Ass'n ofAm. Railroads, 622 F.3d at 1097. The ICCTA allows the "continued
application oflaws having a more remote or incidental effect on rail
transportation." Id. (quoting NY Susquehanna & W Ry. Corp. v. Jackson, 500
F.3d 238, 252 (3d Cir.2007)).
This Court finds persuasive the Fifth Circuit's decision in Elam v. Kansas
City S. Ry. Co., 635 F.3d 796 (5th Cir. 2011). In Elam, the plaintiffs drove their
car into a train stopped at a crossing. Id. at 801. The plaintiffs sued the defendant
railroad in a Mississippi state court under two state law tort theories: (1) That the
railroad was negligent per se for violating Mississippi's antiblocking statute, which
limited the time a train may park at a road crossing; and (2) that the railroad
negligently failed to warn of the train's presence at the crossing. Id. at 802. After
the railroad removed the action to federal court, the plaintiffs moved to remand it
back to state court. Id. The district court found that the plaintiffs' claims were
completely preempted by the ICCTA and denied the motion to remand. Id.
The Fifth Circuit reversed. As to the plaintiffs' negligence per se claim, the
Fifth Circuit agreed that it was completely preempted. Id. at 803. The Fifth
Circuit found that Mississippi's antiblocking statute had the effect of managing
15
railroad operations by limiting train speed, length, and scheduling. Id. at 807. As
it directly reached into the area of economic regulation, the antiblocking statute
was completely preempted by the ICCTA. Id. Since the plaintiffs' negligence per
se was based solely on the antiblocking statute, it was also completely preempted.
Id.
The Fifth Circuit reached the opposite conclusion on whether the ICCTA
completely preempted the plaintiffs' simple negligence claim. Id. at 813. The
Fifth Circuit noted that "[a] typical negligence claim seeking damages for a typical
crossing accident ... does not directly attempt to manage or govern a railroad's
decisions in the economic realm." Id. The effect of state negligence claims "on
rail operations are merely incidental." Id. Therefore, the ICCTA did not
completely preempt the plaintiffs' negligence claim. Id.
Similar to the plaintiffs in Elam, Staley is asserting simple negligence claims
against the Defendants. Staley does not rely on Montana's antiblocking statute.
2
Instead, Staley alleges that BNSF created an unsafe condition that constituted a
"unique, specific and individual hazard." (Doc. 5 at 3). There were only two
crossings in Hysham - one guarded and one unguarded. According to Staley,
BNSF blocked the guarded crossing and forced motorists to use the unguarded
crossing without providing adequate warnings for unseen oncoming trains. The
2
Montana's antiblocking statute is found at Mont. Code Ann.§ 69-14-626.
16
Court agrees that as alleged in Staley's Complaint, the situation was unique and
not likely to be frequently replicated. Therefore, by looking at Staley's Complaint,
his action would not unreasonably burden BNSF's operations.
Staley does not plead facts that would "unreasonably interfere with interstate
commerce." Ass'n ofAm. Railroads, 622 F.3d at 1097. Nor has Congress
manifested an intent for the ICCTA to preempt all negligence claims against the
railroads. Elam, 635 F.3d at 813. Since ICCTA does not completely preempt a
negligence claim that would have "merely incidental" effects on a railroad's
operations, Id., Staley's claims are not completely preempted. This does not mean
that BNSF cannot raise a preemption defense before the state court. Rather, this
Court only concludes that the preemptive force of the ICCTA is not so strong that
it preempts the entire area of negligence law against the railroads. Therefore,
Staley's allegations are not "necessarily federal in character" and this Court does
not have federal question jurisdiction. Metro. Life Ins. Co., 481 U.S. at 63-64.
V. Conclusion
For the foregoing reasons, IT IS HEREBY ORDERED:
1. Staley's Motion to Remand (Doc. 2) is GRANTED.
2. BNSF's Motion for Protective Oder Staying Discovery (Doc. 8) is
DENIED as moot.
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3. The Clerk of Court shall remand this case to the Montana Sixteenth
Judicial District Court, Treasure County.
~
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