695 F.3d 175
1st Cir.2012Background
- MBR hauled stone for Granite State Concrete and pooled Trackage rights on Pan Am's tracks via the Agreement.
- NORAC Rule 138(e) required an on-ground designated employee at highway crossings when trains are not led from the leading end; Pan Am disciplined Leishman for allegedly violating this rule.
- An accident occurred when a crossing was approached and a truck crossed; Leishman activated a brake but a collision and derailment occurred.
- Pan Am held hearings, found Leishman violated NORAC Rule 138(e), and later concluded Leishman was not properly stationed; Pan Am excluded Leishman from its trackage.
- MBR and Leishman sued in state court, removed to federal court on ICCTA preemption grounds, and the district court ultimately held Pan Am’s exclusion did not breach the duty of good faith and fair dealing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does exclusion of an employee under a contract right violate good faith and fair dealing? | MBR argues exclusion undermines the contract's value and is exercised in bad faith. | Pan Am contends the contract grants a discretionary right to exclude for rule violations, not subject to a good-faith limit. | No breach; exclusion reasonable under the circumstances. |
Key Cases Cited
- Centronics Corp. v. Genicom Corp., 562 A.2d 187 (N.H. 1989) (implied good-faith limits on discretionary contract performance)
- Olbres v. Hampton Coop. Bank, 698 A.2d 1239 (N.H. 1997) (bad-faith motive patterns in contract termination)
- McAdams v. Massachusetts Mutual Life Insurance Co., 391 F.3d 287 (1st Cir. 2004) (application of good-faith principles in contract performance (Mass./federal))
- Amoche v. Guarantee Trust Life Ins. Co., 556 F.3d 41 (1st Cir. 2009) (burden to show jurisdictional threshold when preemption absent)
- Beneficial Nat'l Bank v. Anderson, 539 U.S. 1 (S. Ct. 2003) (complete preemption and federal-question removal standards)
- García-Velázquez v. Frito Lay Snacks Caribbean, 358 F.3d 6 (1st Cir. 2004) (subject-matter jurisdiction and preemption considerations)