784 F.3d 367
7th Cir.2015Background
- Three Illinois motor carriers (Nationwide Freight, Stott Contracting, Leader U.S. Messenger) were cited for operating intrastate without ICC licenses; civil fines were imposed and investigations followed.
- ICC demanded business records (bills of lading, driver logs, invoices) covering several months to determine dates, origins/destinations, cargo, and revenues to establish the extent and duration of unlicensed (and potentially uninsured) operations.
- Carriers refused to produce records, arguing the requests would reveal rates, routes, and services and thus were preempted by the FAAAA, 49 U.S.C. § 14501(c). ICC fined them for noncompliance and denied rehearing.
- Carriers sued in federal court seeking a declaratory judgment and injunction asserting FAAAA preemption; district court granted summary judgment to ICC, holding (1) documents’ incidental disclosure of rates/routes/services lacked significant economic impact and (2) the insurance-related exception to preemption applied.
- The Seventh Circuit affirmed, finding the document requests did not have a substantial economic effect on rates/routes/services and, alternatively, that the records-seeking fell within the FAAAA exemption preserving state regulation of insurance/financial responsibility for motor carriers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ICC document requests are preempted by the FAAAA as "related to" rates, routes, or services | Any state inquiry that touches or discloses rates/routes/services is preempted; ICC requests necessarily disclose such information | Requests only seek existing business records to determine duration/extent of unlicensed (and uninsured) operations and have no significant economic impact on rates/routes/services | Not preempted: incidental disclosure is insufficient; preemption requires a significant economic impact on rates/routes/services |
| Whether the ICC’s investigatory enforcement is protected by the FAAAA insurance exception (§ 14501(c)(2)(A)) | Even if insurance is the stated purpose, the breadth of records exceeds what’s needed and thus is not sheltered by the exception | Licensing is the state’s means to ensure minimum financial responsibility; records are relevant to prove duration of unlicensed/uninsured operation and to set proportionate penalties | Held within the insurance/financial-responsibility exception: records reasonably needed to assess insurance compliance and appropriate penalties are exempt from preemption |
Key Cases Cited
- Dan’s City Used Cars, Inc. v. Pelkey, 133 S. Ct. 1769 (U.S. 2013) (statutory text is best evidence of Congress’s preemptive intent)
- Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364 (U.S. 2008) (preemption applies where state law has a significant impact on carrier rates, routes, or services)
- Morales v. Trans World Airlines, Inc., 504 U.S. 374 (U.S. 1992) ("related to" language interpreted broadly but not to include tenuous or peripheral effects)
- Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423 (7th Cir. 1996) (preemption requires either express reference or significant economic effect on rates/routes/services)
- S.C. Johnson & Son, Inc. v. Transp. Corp. of Am., Inc., 697 F.3d 544 (7th Cir. 2012) (tangential effects on rates/services insufficient to trigger preemption)
- Ace Auto Body & Towing, Ltd. v. City of New York, 171 F.3d 765 (2d Cir. 1999) (licensing/recordkeeping/insurance requirements are peripheral and fall within § 14501(c)(2)(A) exceptions)