983 F.3d 112
4th Cir.2020Background
- Lumberton, NC sits along the Lumber River; a gap where I-95 overpass and CSX’s rail line intersect creates a low opening through an otherwise earthen levee protecting south and west Lumberton from floods.
- In 1978 the City, Robeson County Drainage District No. 1, and Seaboard Coast Line (CSX’s predecessor) executed a Tri-Party Agreement permitting the City to construct/maintain dikes on the railroad right-of-way and to close the gap with at least 12 hours’ notice when flooding was imminent.
- The City adopted Operational Procedures (1979) describing sandbagging the gap to protect South and West Lumberton; Plaintiffs allege the City intended those measures to protect those neighborhoods specifically.
- CSX denied access to its right-of-way during Hurricane Matthew (2016), leading to extensive flooding; during Hurricane Florence (2018) CSX initially refused then (after a gubernatorial order) allowed a hastily built berm that failed.
- Plaintiffs brought consolidated putative class actions asserting (1) breach of contract (as third-party beneficiaries of the Tri-Party Agreement and an alleged separate agreement for a permanent floodgate) and (2) tort claims (negligence, nuisance, trespass). The district court dismissed all claims; the Fourth Circuit affirmed tort dismissals as preempted but reversed dismissal of the contract claim as premature (limited to the Tri-Party Agreement).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs are intended third-party beneficiaries of the Tri-Party Agreement | Tri-Party Agreement and surrounding circumstances show it was made to directly benefit South and West Lumberton residents/businesses | Agreement contains no express reference to plaintiffs or the public; only parties intended to benefit were signatories | Reversed dismissal: plaintiffs plausibly alleged third-party-beneficiary status at the 12(b)(6) stage for the Tri-Party Agreement |
| Whether a separate agreement requiring CSX to build a permanent floodgate was pleaded/enforceable | Plaintiffs point to a 2017 state report saying “agreements were reached” for permanent improvements | No written agreement produced; complaint lacks essential terms and parties — insufficiently pleaded | Affirmed dismissal as to any alleged separate floodgate agreement (not plausibly alleged) |
| Whether plaintiffs’ tort claims (negligence/nuisance/trespass) are preempted by the ICCTA/Surface Transportation Board jurisdiction | Claims concern landowner harms and are not attempts to regulate railroad operations | Claims target CSX’s decisions about allowing closures, constructing tracks/fill, and materials — matters within STB’s exclusive jurisdiction | Affirmed: tort claims expressly preempted because they would directly govern/manager rail transportation and track construction/operation |
| Whether the contract claim is preempted by the ICCTA | Contract is a voluntary agreement and therefore not subject to ICCTA regulation | (CSX did not press implied-preemption below) | Contract claim is not expressly preempted; dismissal on other grounds was premature as to the Tri-Party Agreement; implied preemption not decided |
Key Cases Cited
- PCS Phosphate Co., Inc. v. Norfolk S. Corp., 559 F.3d 212 (4th Cir. 2009) (distinguishes voluntary agreements from regulatory measures and analyzes ICCTA preemption scope)
- Franks Inv. Co. LLC v. Union Pac. R.R. Co., 593 F.3d 404 (5th Cir. 2010) (tort suits that directly manage train operations are preempted)
- Emerson v. Kan. City S. Ry. Co., 503 F.3d 1126 (10th Cir. 2007) (discusses when common-law claims fall outside ICCTA because they are not related to rail transportation)
- Elam v. Kansas City S. Ry. Co., 635 F.3d 796 (5th Cir. 2011) (distinguishes claims directly implicating scheduling/operations from those with incidental effects)
- Kurns v. R.R. Friction Prods. Co., 565 U.S. 625 (2012) (payment liability can serve to govern conduct; preemption analysis extends to common law)
- Cipollone v. Liggett Grp., Inc., 505 U.S. 504 (1992) (preemption of state law should not be limited to statutes where federal scheme displaces remedies)
- Norfolk S. Ry. Co. v. City of Alexandria, 608 F.3d 150 (4th Cir. 2010) (ICCTA preemption analysis and limits on local regulation affecting railroads)
- Matternes v. City of Winston-Salem, 209 S.E.2d 481 (N.C. 1974) (municipal contracts generally do not create enforceable third-party beneficiary rights absent clear intent)
- DeMent v. Nationwide Mut. Ins. Co., 544 S.E.2d 797 (N.C. Ct. App. 2001) (elements for third-party beneficiary claim under North Carolina law)
- Raritan River Steel Co. v. Cherry, Bekaert & Holland, 407 S.E.2d 178 (N.C. 1991) (distinguishes incidental beneficiaries from intended third-party beneficiaries)