Shupp et al v. Reading Blue Mountain and Northern Railroad Company

Filing 12

MEMORANDUM & OPINION - For the reasons set forth in this Memorandum, Plaintiffs' Motion to Remand shall be granted. An appropriate Order will follow. Signed by Honorable Robert D. Mariani on 2/7/12. (jfg)

THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

DALE F. SHUPP and JUDITH A. SHUPP
Plaintiffs

v.

3:11·CV·2137
(JUDGE MARIANI)

READING BLUE MOUNTAIN &
NOR'rHERN RAILROAD COMPANY
Defendant
MEMORANDUM OPINION
This matter comes before the Court on Plaintiffs' Motion to Remand (Doc. 4) pursuant to
28 U.S.C. § 1447. Plaintiffs initially filed this action in the Court of Common Pleas of Wyoming
County, Pennsylvania, and Defendant removed to this Court pursuant to 28 U.S.C. §§ 1441
and 1446. The pertinent events concern adispute over land used by a railroad company and
century-old restrictive covenants allegedly governing the use of this land. Pursuant to FED. R.
CIV. P. 79(b), the Court makes its present ruling based upon the written submissions of the
parties. For the reasons set forth below, Plaintiffs' motion will be granted, and the matter will be
remanded to the Court of Common Pleas of Wyoming County, Pennsylvania; however,
Plaintiffs' application for an award of attorneys' fees, expenses, and costs will be denied.
I.

BACKGROUND
In their state-court complaint ("Complaint"), Plaintiffs Dale F. Shupp and Judith A.

Shupp ("Plaintiffs") allege that they are the owners of two parcels of real property located in
Tunkhannock Township, Wyoming County, Pennsylvania. The Deed to Plaintiffs recites that

their property includes acertain parcel of land (the "Soybean Fields") laying between State
Route 92 to the North, the Susquehanna River to the South, a private road known as "Black
Diamond Beach Road" to the West, and the land of a neighbor to the East. Plaintiffs maintain
that the Soybean Fields are bisected East to West by a railroad bed and railroad tracks now
owned by Reading Blue Mountain and Northern Railroad Company ("Defendant"). One of the
bisected portions is bounded by the railroad tracks to the North, the Susquehanna River to the
South, and private lands to the East and West. Plaintiff asserts that the portion of rail line
described above was transferred by Deed in 1911, between the Commonwealth of
Pennsylvania, as Grantor, and The Sunbury and Erie Rail Road Company, as Grantee.
Plaintiffs aver that with regard to the tracks bisecting the Soybean Fields, Defendant is the
successor-in-interest to the Sunbury and Erie Rail Road Company. Plaintiffs further maintain
that as successor-in-interest, Defendant Reading Blue Mountain and Northern Railroad
Company ("Defendant") is owner in fee of the lands supporting the tracks that bisect the
Soybean Fields subject to the railroad deed.
Plaintiffs maintain that there is a restrictive covenant in the railroad deed preventing any
future owner of the railroad property from removing any crossing then in existence or
performing any act as a result of this ownership interest which would be contrary to law.
Furthermore, Plaintiffs aver that at the time the railroad deed came into existence, a crossing of
the canal existed that provided unrestricted access from the Northerly portion of the Soybean
Fields to the Southerly portion of the Soybean Fields. Plaintiffs assert that the crossing
remained until it was removed in the 1990s. Plaintiffs argue that a private road named Black
2

Diamond Beach Road also was in existence at the time the railroad was created and contained
a rail crossing parallel to and bordering the Western boundary line of the Soybean Fields. The
rail crOSSing at Black Diamond Beach Road provided an additional access to the Southerly
parcel of the Soybean Fields. It is alleged that after the removal of the original rail crossing,
Black Diamond Beach Road became the exclusive access point for the Plaintiffs to reach the
Southerly portion of the Soybean Fields. Then, in July 2011, Plaintiffs claim that Defendant
removed the crossing at Black Diamond Beach Road. Plaintiffs argue that they did not give
permission for Defendant to remove the crossing, Defendant did not have the authority to
remove it, and Defendant did not provide notice of the removal, so that, as a result, their
Southerly parcel is now landlocked.
Plaintiffs filed suit in the Court of Common Pleas seeking, inter alia, Defendant's
ejection from the railroad tracks on Plaintiffs' property and a mandatory injunction requiring
Defendant to reconstruct certain railroad crossings. Defendant maintains that the Soybean
Fields are not landlocked by virtue of a crOSSing at the Northem part of the parcel. Defendant
further avers that the state court has no jurisdiction over this matter under the Interstate
Commerce Commission Termination Act ("ICCTA"), 49 U.S.C. § 10501, et seg., the Federal
Rail Safety Act ("FRSA"), 49 U.S.C. § 20101, et ~., or the Railroad Safety Improvement Act
of 2008, ("RSIA"), 49 U.S.C. § 10101, et ~., and that the matter is properly before the District
Court.

3

II.

DISCUSSION

A. Subject Matter Jurisdiction
A federal court has an obligation to ensure that it possesses the requisite subject matter
jurisdiction to hear a particular matter, even if the propriety of that jurisdiction is not raised by
the parties. See Employers Ins. of Wausau v. Crown Cork &Seal Co., Inc., 905 F.2d 42, 45
(3d Cir. 1990). Parties are unable to waive a lack of subject matter jurisdiction or confer it upon
the court by consent. See Brown v. Phila. Hous. Auth., 350 F.3d 338,346 (3d Cir. 2003). In
removal cases, "[i]f at any time before final judgment it appears that the district court lacks
subject matter jurisdiction, the case shall be remanded." See Meritcare Inc. v. St. Paul Mercury
Ins. Co., 166 F.3d 214, 217 (3d Cir. 1999)(citing 28 U.S.C. § 1447(c)), overruled on other
grounds by Exxon Mobil Corp. v. Allapattah Svcs.! Inc., 545 U.S. 546, 125 S.Ct. 2611, 162
L.Ed.2d 502 (2005).

1. Removability Under Complete Preemption Corollary to the Well-Pleaded

Complaint Rule

Adefendant may remove an action originally instituted in state court whenever the federal
court would have original jurisdiction over the matter. See Caterpillar, Inc. v. Williams, 482 U.S.
386,392, 107 S.Ct. 2425,96 L.Ed.2d 318 (1987). The moving party possesses the burden of
showing that removal was proper and that "the action is properly before the federal court." See
Sikirica v. Nationwide Ins. Co., 416 F.3d 214, 219 (3d Cir. 2005); see also Boyer v. Snap-on
Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990). Section 1441(a) must be "strictly construed
against removal" with all doubts resolved in favor of remand. See Sikirica, 416 F.3d at 219.
4

In matters in which plaintiffs and defendants lack complete diversity, federal jurisdiction is
predicated solely upon the existence of a federal question as defined by 28 U.S.C. § 1331.
That statute holds, in pertinent part, that "[t]he district courts shall have original jurisdiction of all
civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. §
1331. The question of what constitutes an action "arising under" federal law is a well-trodden
path, buttressed by black-letter rules.
An action "arises" under federal law when "the plaintiff's statement of his own cause of
action shows that it is based upon [federal law]." Louisville & N.R. Co. v. Mottley, 211 U.S. 149,
152 (1908). To satisfy § 1331's "arising under" requirement, a plaintiff's well-pleaded complaint
must raise a federal question, but because the plaintiff is the master of the claim, it is possible
that he may intentionally "avoid federal jurisdiction by exclusive reliance on state law." See
Caterpillar, 482 U.S. at 392 (internal citations omitted). In this case, Defendant contends that
federal question jurisdiction exists because its rights are governed by the ICCTA, afederal
statute. The Complaint, however, does not seek relief under the laws of the United States, and
instead, pleads for condemnation and a mandatory injunction under Pennsylvania and common
law.
Plaintiff cannot use artful pleading as a means to circumvent removal jurisdiction by
cloaking afederal claim in the fabric of state law. Thus, even when a cause of action is created
by state law, the matter may nonetheless "arise" under federal law if "some substantial,
disputed question of federal law is a necessary element of one of the well-pleaded state claims,
or that one [of the] claim[s] is 'really' one of federal law." See Franchise Tax Bd. Of State of
5

Cal. v. Constmction Laborers, 463 U.S. 1, 13, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). In such
an instance, however, the federal question must be necessary to the claim, as it is "settled law
that a case may not be removed to federal court on the basis of a federal defense, including the
defense of preemption, even if the defense is anticipated in the plaintiff's complaint, and even if
both parties concede that the federal defense is the only question truly at issue." See
Caterpillar, 482 U.S. at 393 (citing Franchise Tax Bd., 463 U.S. at 12).
Defendant posits that Plaintiffs' claims arise under federal law because a vindication of its
rights to prevent Plaintiff from using a variety of state law claims, including ejectment of
Defendant from tracks on Plaintiffs' property rests, in actuality, entirely upon afederal statue.
Specifically, Defendant argues that Plaintiffs' state law causes of action are preempted by the
ICCTA, RSIA, and the FRSA, and that removal is proper given Congress's intent to prevent
states from interfering with railroad operations that affect interstate commerce. Such an
assertion is incorrect. Although the Court understands that in certain cases federal question
jurisdiction may exist when a "substantial, disputed question of federal law is a necessary
element of one of the well-pleaded state claims," Franchise Tax Bd., 463 U.S. at 23, such
instances are limited.
Accordingly, removal to Federal Court is proper under the complete preemption corollary to
the well-pleaded complaint rule. See Caterpillar, 482 U.S. at 393. "The complete preemption
doctrine permits removal to afederal court under federal question jurisdiction under the
rationale that 'if afederal cause of action completely pre-empts a state cause of action any
complaint that comes within the scope of the federal cause of action necessarily 'arises under'
6

federal law.'" City of Paterson v. Shannon G., LLC and U.S. Rail Corp., 07-6065, 2008 WL
1995146 (D.N.J. May 5,2008) (Chesler, J.), *3 (quoting Franchise Tax Bd., 463 U.S. at 23).
"Once an area of state law has been completely pre-empted, any claim purportedly based on
that pre-empted state law is considered, from its inception, a federal claim, and therefore arises
under federal law." Caterpillar, 482 U.S. at 393. The Defendant has not provided, and the
"Court is not aware," see City of Patterson, 2008 WL 1995146, at *3, of any binding authority
that indicates that the ICCTA presents complete preemption of state law. In fact, the reported
cases weigh heavily against this proposition.
The Supreme Court's holding in Beneficial Nat. Bank v. Anderson instructed that "the
proper inquiry focuses on whether Congress intended the federal cause of action to be
exclusive rather than on whether Congress intended that the cause of action be removable."
Beneficial Nat. Bank, 539 U.S. 1,9 n.5 (2003). Accordingly, the conversion of state law claims
into de facto federal claims is not warranted unless the defendant relies upon astatute that
contains "civil enforcement provisions within the scope of which the plaintiffs state claim falls."
Ry. Labor Execs. Ass'n v. Pittsburgh &Lake Erie RR Co., 858 F.2d 936, 942 (3d Cir. 1988).
The statute must vindicate the "same interest the plaintiffs state cause of action seeks to
vindicate," or "recharacterization as a federal claim is not possible" and removal is unwarranted.
Seeid.
Complete preemption is a jurisdictional concept originating in Congress's intent to wholly
govern a particular area of law. See In re U.S. Healthcare, Inc., 193 F.3d 151,160 (3d 1999)
("Unlike ordinary preemption, which would only arise as a federal defense to a state-law claim,
7

complete preemption operates to confer original federal subject matter jurisdiction
notwithstanding the absence of a federal cause of action on the face of the complaint."). As the
Third Circuit Court of Appeals explained in Joyce v. RJR Nabisco Holdings Con2., complete
preemption:
occurs when federal law so completely preempts an entire area of law that the
state cause of action is entirely displaced by federal law. If this doctrine applies,
the district court has removal jurisdiction, even if the well-pleaded complaint rule
is not satisfied. However, if a state claim does not come within this doctrine, the
well-pleaded complaint rule still applies, and the district court does not have
removal jurisdiction unless a federal cause of action is pled.
Joyce, 126 F.3d 166, 171 (3d Cir. 1997) (internal citations omitted). The complete preemption
doctrine is premised, therefore, upon the idea that some state law claims are, in reality, federal
claims. Complete preemption implicitly mandates the existence of an exclusive federal cause
of action requiring a state law claim to be re-characterized as a federal action. See Beneficial
Nat'lBank, 539 U.S. at 9 n.5.
Given the lack of complete preemption, as demonstrated by the absence of any case law
holding that the ICCTA completely preempts state law, and the Supreme Court's holding in
Caterpillar, 482 U.S. at 393, that acase may not be removed to federal court even on the
defense of preemption, the Court is required to remand the present action. The same is true
with regard to Defendant's appeals to the RSIA and the FRSA. Nevertheless, this opinion
should not be construed to indicate that Defendant lacks a viable preemption argument as a
defense employable in astate court proceeding; however, Defendant's defense is precisely
that-a defense. The circumstances underlying this particular case preclude the Court from

8

'finding that Defendant's invocation of the ICCTA forms the basis of an action "arising under"
federal law. It is raised as a defense, and forms no part of Plaintiffs claim.
2. "As Applied" Analysis is Inapplicable to Determination of Whether Preemption
Serves as a Basis for Removal, But Confirms Lack of Complete Preemption
In making a determination as to whether a claim "arises under" federal law in the context of
preemption, courts must draw a distinction between ordinary preemption and complete
preemption. Ordinary preemption occurs when afederal statute supersedes a state statute by
virtue of the Supremacy Clause. It is the most common form of preemption, and allows federal
law to preempt state or local laws without raising the inference that the underlying cause of
action "arises under" federal law for the purpose of removal. Simply put: ordinary preemption is
not ajurisdictional concept and does not confer any authority lIpon the federal court to hear
matters on removal that would otherwise be appropriate for adjudication in astate forum.
Ordinary preemption occurs when a state or local law, order, or regulation conflicts with
federal law. The Supremacy Clause mandates that in such circumstances, federal law prevails.
See Cipollone v. Liggett Group. Inc., 505 U.S. 504, 516 (1992) (internal citations omitted). A
federal defense to the enforcement of a state law can potentially overcome the subject state
law claim. Adetermination as to whether a particular federal law preempts the state law is not
in itself a federal question; accordingly, the mere possibility of preemption does not constitute a
basis for federal jurisdiction. See Ry. Labor Execs Ass'n, 858 F.2d at 941-42. Given the
jurisdictional prohibition that chastens federal tribunals, state courts are empowered to resolve
preemption issues through the application of relevant federal law raised as defenses. See id.

9

at 942. As the Third Circuit held in Dukes v. U.S. Healthcare. Inc., 57 F.3d 350 (3d Cir. 1995),
"[t1he difference between preemption and complete preemption is important. When the doctrine
of complete preemption does not apply, but the plaintiffs state claim is arguably preempted ...
the district court, being without removal jurisdiction, cannot resolve the dispute regarding
preemption."

kL. at 355; see also Rosenkrans v. Wetzel, 131 F. Supp. 2d 609, 613 (M.D. Pa.

2001 )(remand is necessary when the state law claim is arguably preempted). The Dukes
Court continued: "It lacks power to do anything other than remand to the state court where the
preemption issue can be addressed and resolved." Id. (citations excluded).
Defendant urges that an "as applied" framework should govern this Court's analysis as to
whether complete preemption supports original jurisdiction for the purpose of determining the
propriety of removal. An examination of the case law provides a labyrinth of rules and
conflicting holdings. Ultimately, however, the question of whether "complete preemption" exists
under the ICCTA, FRSA, and RSIA is the only relevant inquiry.
The few cases treating this topic within the Third Circuit provide less than complete
guidance. In City of Patterson, 2008 WL 1995146 (D.N.J. May 5,2008, Chesler, J.), at *2-3,
the District of New Jersey declined to exercise jurisdiction because federal preemption under
the ICCTA was raised as a defense, and not "as a necessary element of Plaintiffs eminent
domain claim." Similarly, in Railroad Const. Co. of South Jersey v. A.P. Const.. Inc., 2011 WL
2975204 (D.N.J. July 21,2011, Rodriguez, J.), the District of New Jersey found that removal
was improper because Plaintiffs claims were based on common law and because although the

to

claims might "implicate" the ICCTA, they did not "arise under" the ICCTA as required by 28
U.S.C. § 1337.
Other circuits adhere to differing views as to whether the ICCTAcompletely preempts state
law. The First Circuit has specifically recognized the confusion which surrounds "complete
preemption" as applied to the ICCTA throughout the federal courts. See Fayard v. Northeast
Vehicle Serv., LLC, 533 F.3d 42 (1st Cir. 2008). In Fayard, the court held that the ICCTA did
not "completely preempt" a nuisance claim, thus precluding the defendant's attempt at removal.
See id. at 48. Importantly, the court noted that the "lower courts are divided over [the] specific
applications" of complete preemption to the ICCTA, see id. at 46, but the court further
recognized that "one circuit has already held that the ICCTAcan sometimes support complete
preemption."

kL. (citing PCI Transp.! Inc. V. Fort Worth & W. RR Co., 418 F.3d 535 (5th Cir.

2005)(emphasis added). Later in its opinion, the First Circuit also makes the observation that
"if this were asuit under state law to hold a railroad rate unlawful, complete preemption might
be arguable, given the ICCTA's exclusive federal regulation of such rates and its explicit
damages remedy."

kL. at 48 (emphasis added).

The fact that the First Circuit hints that

complete preemption "might be arguable," as opposed to providing a more forceful rule, is
revealing in that it demonstrates the significant lack of clarity surrounding this area of law.
In a series of recent cases the Fifth Circuit provides acorpus of seemingly contradictory
holdings. In Franks Investment Company LLC V. Union Pacific RR Co., 593 F.3d 404 (5th Cir.
2010), the court, sitting en banc, recognized that complete preemption under the ICCTA does
not exist. The rest of the court's analYSis involved the "more common, indeed, the ordinary
11

category of preemption."

kL. at 408.

When the court adopted the STB's as·applied preemption

analysis, it did not do so for a determination as to whether complete preemption, for
jurisdictional purposes, was appropriate. It did so only in the context of ordinary preemption.
Furthermore, much of the court's decision was based upon the Fifth Circuit's prior holding in
New Orleans &Gulf Coast Railway Co. v. Barrois, 533 F.3d 321 (5th Cir. 2008). In Barrois, the
court held that U[t]he STB has articulated acomprehensive test for determining the extent to
which a particular state action or remedy is preempted by § 10501(b). However, the STB's test
applies to ordinary preemption analysis under § 105101 (b); the test does not necessarily apply
to complete preemption." Id. at 332 (emphasis added). The Court then considered the test
articulated in the STB's Maumee &W. RR Corp. and RMW Ventures. LLC-Petition for
Declaratory Order, STB Finance Docket No. 34354, 2004 WL 395835 (S.T.B. March 2, 2004),
in which the STB held that "[R]outine, non-conflicting uses, such as non-exclusive easements
for at-grade road crossings, wire crossings, sewer crossings, etc., are not preempted so long
as they would not impede rail operations or pose undue safety risks."

kL. at *2.

The Fifth

Circuit's use of this STB matter in Barrois, however, is restricted to an ordinary preemption
analysis.
In declining to exercise federal jurisdiction the Barrois court noted that the railroad raised an
"as-applied" challenge'to the Louisiana state law at issue; however, the railroad did "not argue
why the STB's test for ordinary preemption under the ICCTA should also govem or help define
the scope of the distinct jurisdictional doctrine of complete preemption." Id. at 333. "More
specifically, the Railroad fails to explain whether and why the fact-intensive inquiry for as­
12

applied preemption challenges should be considered as part of acomplete preemption analysis
under § 10501 (b)." & Nevertheless, the court declined to "define the precise contours of the
complete preemption doctrine under the ICCTA." & at 334.
The Fifth Circuit's most recent treatment of complete preemption deviated somewhat from
its earlier cases in the matter of Elam v. Kansas City Southern Railway Co., 635 F.3d 796 (5th
Cir. 2011). Without explicitly abrogating Franks, supra, or Barrois, supra, the court used an
"as-applied" analysis to determine the appropriateness of complete preernption. See Elam, 625
F.3d at 808. Specifically, the court held that "[c]omplete preemption applies only when a
plaintiffs claim directly attempts to manage or govern a railroad's decisions in the economic
realm." Id. In Elam, the court engaged in the fact intensive analysis eschewed in its previous
holdings. The court ultimately found, after engaging in this factual analysis that the complete
preemption corollary applied to some of the claims, but not to others. Accordingly, the court
held that federal jurisdiction was proper, and thus removal was proper, under the complete
preemption corollary to the well-pleaded complaint rule. Several district courts within the Fifth
Circllit have followed this test, although others have expressed hesitation. See, e.g., St.
Bernard Port, Harbor & Terminal Dist. V. Violet Dock Port, Inc., LLC, 2011 WL 3746418, at *10
(E.D. La. Aug. 25, 2011)(citing City of Paterson, 2008 WL 1995146, at *2~3 (D.N.J. 2008)(citing
City of Patterson with approbation).
Several district courts in other circuits have indicated awillingness to engage in an "as­
applied" analysis as suggested by the Fifth Circuit in Elam. In particular, in City of Lincoln v.
Lincoln Lumber Co., 2006 WL 1479043 (D. Neb. May 23,2006), the District of Nebraska
13

engaged in an "as-applied" analysis to determine whether complete preemption served as a
basis for removal. Although the court ultimately remanded the matter to the state court, the
very analysis it used is that suggested by Elam.
In Allied Indus. Dev. Corp. v. Ohio Cent. RR, Inc., 2010 WL 987156 (N.D. Ohio March 15,
2010), the Northern District of Ohio confronted a removal action from astate court suit
concerning a plaintiffs request that the defendant railroad abandon service over rail lines
running over specific parcels. The court remanded the case to the state court because it did
not find that the facts alleged triggered preemption.

kL. at *3.

Thus, although finding removal

inappropriate, the court engaged in a factual analysis, "as-applied," to determine whether the
particular circumstances underlying the matter warranted "complete preemption."
In Rawls v. Union Pacific RR Co., 2010 WL 892115 (W.D. Ark. Mar. 9, 2010), Judge Harry
Barnes held that Fayard, supra, stood for the proposition that complete preemption could be
found after a court engages in an analysis of the facts underlying an action. See id. at 4.
Furthermore, Judge Barnes wrote that "the Court recognizes that preemption under the ICCTA
is afactual issue that is determined on a case-by-case basis."

kl at 4.

Again, this follows the

logic of Elam (although Elam was issued later) permitting a case-by-case, "as-applied" analysis.
In Canadian Nat. Railway Co. v. Montreal, Maine &Atlantic Railway, Inc., 750 F. Supp. 2d
189 (D. Me. 2010), the District of Maine held that removal of a claim concerning an easement
over railroad lands was proper under the complete preemption corollary. Adopting the
framework set forth by the First Circuit in Fayard, supra, the Court made a substantial
assumption based upon the Circuit's dicta that the ICCTA "can sometimes support complete
14

preemption." Canadian Nat. Railway Co., 750 F. Supp. 2d at 194. It followed a line of analysis
that assumed that the First Circuit had definitively ruled on complete preemption, even though
the Fayard court expressly declined to set-out a bright line rule.
The adoption of a case-by-case, "as-applied" analysis presents a logical conundrum in
application of the "complete preemption" doctrine in that an area of law cannot be "completely"
preempted when complete preemption can be found to be present or absent based on an
individualized, case-by-case analysis. When acourt recognizes that a broad policy of
"complete preemption" does not exist with regard to a particular area of law, such as the
ICCTA, RSIA, or FRSA, then no amount of factual analysis, in particular circumstances, should
be able to create complete preemption. Complete preemption exists or it does not. See, e.g.,
the complete preemption under Section 301 of the Labor Management Relations Act, 29 U.S.C.

§ 185, as stated in Allis Chalmers Corp. v. Lueck, 471 U.S. 202 (1985). Complete preemption
does not arise in some circumstances while retreating when the facts of a particular case
arguably support a finding of "ordinary preemption." Having to engage in an "as-applied"
analysis is inherently antithetical to the concept of complete preemption.
The "as-applied" analysis is appropriate when trying to determine whether ordinary
preemption applies to particular facts in an ICCTA matter; however, when exceptions to
preemption such as routine at-grade crossings and utility easements are recognized by a
variety of district and circuit courts, as well as by the STB, it is difficult, if not impossible, to
reconcile such exceptions with a "complete preemption" policy that, by definition, displaces all
conflicting state and common laws.
15

Upon remand, it is incumbent upon the state court to determine whether the railroad's
defense of preemption exists under an "as applied" analysis as a matter of ordinary preemption.
ll

Defendant's contention that an "as applied analysis is necessary to determine complete
preemption for the purpose of remand poses an inherent contradiction; the fact that Defendant
makes this argument in the first place demonstrates the inappropriateness of removal. If the
Court has to make adetermination as to the degree to which the railroad is burdened, then, by
definition, there can be no complete preemption. The ICCTA does not completely preempt
state law, and accordingly, does not provide abasis for removal.
It is clear that the ICCTA broadly governs rail transportation, and provides the Surface
Transportation Board ("STBII) with 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. § 10501 (b). The straightforward text of the ICCTA indicates that the STB's
jurisdiction over railroad activity is broad; however, as many courts note, it is not absolute.
"Under the ICCTA, the STB has exclusive jUrisdiction over 'transportation by rail carrier' and its
regulation of rail carriers preempts state regulation with respect to rail transportation. Hi Tech
1I

Trans, LLC v. New Jersey, 382 F.3d 295, 305 (3d Cir. 2004). Nevertheless, the STB's own
16

decision in Maumee &Western Railroad Corp. and RMW Ventures, LLC Petition for
Declaratory Order, demonstrates that "broad Federal preemption does not completely remove
any ability of state or local authorities to take action that affects railroad property." STB
FINANCE 34354,2004 WL 395825 at *1 (S.T.B. March 3, 2004). "To the contrary, state and
local regulation is permissible where it does not interfere with interstate rail operations...." ki
at *1-2. As the Third Circuit explained in New York Susquehanna and Western Railway Corp.
v. Jackson, 500 F.3d 238 (3d Cir. 2007), the ICCTA preempts all "state laws that may
reasonably be said to have the effect of managing or governing rail transportation, while
permitting the continued application of laws having a more remote or incidental effect on rail
transportation." Id. at 252. "What matters is the degree to which the challenged regulation
burdens rail transportation...."

ki The Third Circuit's decision in New York Susquehanna and

Western Railway Corp., supra, quoted above, indicates to this Court that the ICCTA does not
present complete preemption of all state law, requiring, as it does, a determination in each case
of the "degree to which the challenged regulation burdens rail transportation." That decision,
together with the rule announced in Catterpillar, supra, that a federal defense of preemption
does not present a basis for removal, compels this Court's decision to remand this matter to
state court.
While the text of ICCTA § 10501 (b) specifically mandates that jurisdiction for all matters
"managing or governing rail transportation" is vested in the STB, this language does not vest
original jurisdiction in the federal district court for the purpose of removal. When the ICCTA is
raised as a defense to acause of action founded on state law, the ICCTA requires that any
17

action "that may reasonably be said to have the effect of managing or governing rail
transportation" be referred to the STB. Nothing in the text of the ICCTA vests exclusive
jurisdiction in the federal district court. To the contrary, state courts are competent to render
decisions with regard to the preemption issue. If astate court makes a determination that a
particular cause of action is preempted by the ICCTA, or any other federal statute, then that
court should dismiss the action and the parties can raise the matter before the STB.
III.

EXPENSES, COSTS, AND ATTORNEYS' FEES
District courts have broad discretion to determine whether an award of expenses, costs,

and attorneys' fees are appropriate following a motion to remand. See Mints v. Educ. Testing
Serv., 99 F.3d 1253,1260 (3d Cir. 1996). Pursuantto 28 U.S.C. § 1447(c), "an order
remanding the case may require payment of just costs and any actual expenses, including
attorney fees, incurred as a result of the removaL" The Court need not determine whether the
parties acted in bad faith, but must use its discretion to determine whether the substantive
basis for the petition was "frivolous" or "insubstantiaL" See Mints, 99 F.3d at 1261.
In the present matter, all parties and their counsel engaged in fair and honest
arguments concerning the merits of their respective positions; accordingly, the Court finds that
an award of expenses, costs, and attorneys' fees is inappropriate.

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IV.

CONCLUSION
For the reasons set forth in this Memorandum, Plaintiffs' Motion to Remand shall be

granted. An appropriate Order will follow.

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