Delaware & Hudson Railway Co. v. Knoedler Manufacturers, Inc.
781 F.3d 656
| 3rd Cir. | 2015Background
- Canadian Pacific (railroad) settled FELA claims by employees injured when defective Knoedler seats installed in locomotives failed; it then sued Knoedler (seat manufacturer) and Durham (repair contractor) for indemnification, contribution, and breach of contract to recoup about $2.7 million.
- GE installed the Knoedler seats under contract with Canadian Pacific; Knoedler had introduced Durham to refurbish seats and had promised LIA-compliant seats/repairs.
- Canadian Pacific alleged the defendants breached duties to provide seats compliant with the Locomotive Inspection Act (LIA), and asserted state-law indemnity/contribution and breach-of-contract claims (as third-party beneficiary).
- District Court dismissed the indemnity/contribution and later the breach-of-contract claims as preempted by the LIA; Canadian Pacific appealed.
- Third Circuit majority reversed: held state-law claims premised on violations of federal LIA standards, and breach-of-contract claims enforcing voluntarily assumed contractual duties to meet federal standards, are not preempted and remanded. A dissent would have applied field preemption broadly under Kurns to bar these claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether indemnification and contribution claims based on alleged violations of the LIA are preempted | Canadian Pacific: claims enforce federal LIA standards via state-law remedies to recoup FELA settlements; preemption does not bar enforcement of federal standards through state claims | Appellees: LIA field preempts any state-law claims about design/manufacture/maintenance of locomotive equipment (citing Napier and Kurns) | Not preempted — state claims premised on violation of federal LIA duties may proceed; field preemption bars state-imposed duties/standards, not enforcement of federal standards via state law |
| Whether breach-of-contract claims (as third-party beneficiary) requiring LIA-compliant seats are preempted | Canadian Pacific: contract claims enforce voluntarily assumed duties to meet federal law; enforcing contracts does not impose state standards | Appellees: allowing contract claims would circumvent LIA’s lack of private cause of action and undermine preemption | Not preempted — voluntarily assumed contractual duties to comply with federal standards are enforceable and are not displaced by LIA field preemption |
Key Cases Cited
- Urie v. Thompson, 337 U.S. 163 (recognizing LIA supplements FELA and provides no private right of action)
- Napier v. Atlantic Coast Line R.R., 272 U.S. 605 (LIA occupies field re: design/construction/material of locomotives)
- Kurns v. Railroad Friction Prods. Corp., 132 S. Ct. 1261 (LIA preempts state common-law duties and standards of care directed at locomotive equipment)
- Crane v. Cedar Rapids & Iowa City Ry. Co., 395 U.S. 164 (state common-law remedies may enforce federal railroad safety statutes such as the Safety Appliance Acts)
- Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (state-law remedies based on violation of federal statute not necessarily preempted)
- Norfolk & W. Ry. Co. v. Ayers, 538 U.S. 135 (FELA defendants may seek indemnity/contribution from third parties under state or federal law)
- Engvall v. Soo Line R.R. Co., 632 N.W.2d 560 (Minn. 2001) (state-law indemnity/contribution based on LIA violations not preempted)