Fayard v. Northeast Vehicle Services, LLC

United States Court of Appeals
For the First Circuit

No. 07-2222

LEO E. FAYARD and SARA K. FAYARD,

Plaintiffs, Appellants,

v.

NORTHEAST VEHICLE SERVICES, LLC, EAST BROOKFIELD & SPENCER
RAILROAD, LLC, HOLSTON LAND COMPANY, INCORPORATED, CSX REAL
PROPERTY, INC., STEVEN M. PUGLIESE, and GEORGE W. BELL, II,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. F. Dennis Saylor, U.S. District Judge]

Before
Boudin, Circuit Judge,
O'Connor,* Associate Justice (Ret.),
and Selya, Senior Circuit Judge.

David A. Wojcik with whom Donald C. Keavany, Jr. and
Christopher, Hays, Wojcik & Mavricos were on brief for appellants.
Ralph T. Lepore, III with whom Michael T. Maroney, Elizabeth
A. Mulcahy and Holland & Knight LLP were on brief for appellees.

July 14, 2008

*
The Hon. Sandra Day O'Connor, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
 BOUDIN, Circuit Judge. Defendants Northeast Vehicle

Services, LLC, East Brookfield & Spencer Railroad, LLC ("EB&SR");

Holston Land Company, Inc., CSX Real Property, Inc., Steven

Pugliese, and George Bell all play various roles in the ownership

and operation of an automobile distribution facility located in the

towns of East Brookfield and Spencer, Massachusetts.1 Plaintiffs,

Leo and Sara Fayard, own a seventeen-acre farm in East Brookfield

that abuts the rail line that services the facility.

In December 2006, the Fayards filed suit in Massachusetts

state court asserting claims against the defendants based on

defendants' operation of the rail line and distribution facility.

They said that defendants' practices violated representations made

to the Fayards and state and local environmental and zoning

authorities as to various limits on the hours and volume of the

operation, and interfered with the Fayards' use and enjoyment of

their property--in particular, through noise, bright lights and the

emission of diesel fumes.

Based on these events, the Fayards asserted in their

complaint claims against the defendants under Massachusetts law for

1
Holston owns the land on which the facility is located; CSX
Real Property leases the land from Holston; EB&SR operates the rail
line that transports automobiles from the CSX railroad mainline to
the distribution facility; and Northeast Vehicle offloads the
vehicles from the rail cars and prepares them for distribution to
car dealerships. Steven Pugliese and George Bell own a majority
interest in both Northeast Vehicle and EB&SR. Pugliese is now
deceased and his executrix is in the process of being substituted
as a party pursuant to Fed. R. App. P. 43.

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nuisance, misrepresentation and civil conspiracy. The Fayards

asked for monetary and injunctive relief--including limits on the

facility's hours and methods of operation in accordance with

alleged prior representations by the defendants. These limits,

according to the railroad, would make operations at the facility

unworkable.

Defendants removed the case to federal court pursuant to

28 U.S.C. § 1441(b) (2000). Defendants contended that removal was

proper because the primary federal statute governing regulation of

railroads--the Interstate Commerce Commission Termination Act

("ICCTA"), Pub. L. No. 104-88, 109 Stat. 803 (codified in scattered

sections of 11, 45, and 49 U.S.C. (2000))--"completely preempted"

plaintiffs' state law claims against EB&SR, transforming the

Fayards' suit into a federal action. See generally Negron-Fuentes

v. UPS-SCS, ___ F.3d ___ (1st Cir. 2008).

The Fayards in turn sought a remand to state court,

arguing that the doctrine of complete preemption was not applicable

and that the district court therefore lacked subject matter

jurisdiction to entertain the case. After briefing and a hearing,

the district court denied the Fayards' motion, holding that the

ICCTA "completely preempted" their nuisance claim, which the

district court characterized--based largely on the relief sought by

plaintiffs--as an attempt to regulate the railroad.

Plaintiffs moved for reconsideration, arguing for the

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first time that EB&SR was not a "rail carrier" under the ICCTA, 49

U.S.C. § 10102(5), and so not governed by the act. They also

moved, in case the federal court retained jurisdiction, for a

preliminary injunction. The court denied both motions, deeming the

"rail carrier" argument untimely and the nuisance claim unlikely to

succeed on the merits.

Plaintiffs now seek review of both rulings. Ordinarily,

the denial of a motion for remand is not subject to immediate

review, but the district court certified the question to this court

giving us jurisdiction. 28 U.S.C. § 1292(b). In any event, we

have jurisdiction to review the denial of the preliminary

injunction, id. § 1292(a)(1), and can review the denial of remand

as an ancillary matter. James v. Bellotti, 733 F.2d 989, 992 (1st

Cir.), cert. denied, 467 U.S. 1209 (1984).

Review of the district court's refusal to remand--turning

as it did on a question of subject matter jurisdiction--is plenary.

BIW Deceived v. Local S6, 132 F.3d 824, 830 (1st Cir. 1997). The

denial of the preliminary injunction is reviewed for abuse of

discretion. Jean v. Mass. State Police, 492 F.3d 24, 26 (1st Cir.

2007). As usual, underlying factual determinations are reviewed

for clear error; legal questions de novo. Id.

The district court's subject matter jurisdiction here

turns on whether defendants properly removed the suit. The removal

statute, 28 U.S.C. § 1441, permits removal only where the district

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court could have exercised original jurisdiction over an action.

The parties here are not of diverse citizenship, and the Fayards'

complaint--at least on its face--raised only state law claims. So

the only colorable basis for removal, which the defendants invoked

and the district court upheld, is jurisdiction based on the

doctrine of "complete preemption."

Complete preemption is a short-hand for the doctrine that

in certain matters Congress so strongly intended an exclusive

federal cause of action that what a plaintiff calls a state law

claim is to be recharacterized as a federal claim. A federal

claim, of course, falls within the district court's federal

question jurisdiction, 28 U.S.C. § 1331; Am. Well Works Co. v.

Layne & Bowler Co., 241 U.S. 257, 260 (1916), so permitting

removal. By contrast, ordinary preemption--i.e., that a state

claim conflicts with a federal statute--is merely a defense and is

not a basis for removal. Gully v. First Nat'l Bank, 299 U.S. 109,

115-16 (1936).

Complete preemption originated with the Supreme Court's

decision in Textile Workers Union of America v. Lincoln Mills of

Alabama, 353 U.S. 448 (1957), and the Court has applied the

doctrine in only a few contexts: labor contracts, Avco Corp. v.

Aero Lodge No. 735, 390 U.S. 557 (1968); claims for benefits from

plans regulated by ERISA, Metro. Life Ins. Co. v. Taylor, 481 U.S.

58 (1987); and usury claims against federally chartered banks,

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Beneficial Nat'l Bank v. Anderson, 539 U.S. 1 (2003). Despite

academic concerns,2 the doctrine is well established, although

perhaps poorly named, since ordinary "defensive" preemption may

also be "complete," as where Congress "occupies the field," thereby

blocking state regulation. E.g., Sullivan v. American Airlines,

Inc., 424 F.3d 267, 273 n.7 (2d Cir. 2005).

The Supreme Court decisions finding complete preemption

share a common denominator: exclusive federal regulation of the

subject matter of the asserted state claim, e.g., Avco, 390 U.S. at

560, coupled with a federal cause of action for wrongs of the same

type, e.g., Beneficial, 539 U.S. at 10. Exclusive federal

regulation alone might preempt state claims; but it is the further

presence of a counterpart federal cause of action that allows the

state claim to be transformed into a federal one.

For complete preemption to operate, the federal claim

need not be co-extensive with the ousted state claim. On the

contrary, the superseding federal scheme may be more limited or

different in its scope and still completely preempt. Cf.

Caterpillar, Inc. v. Williams, 482 U.S. 386, 391 n.4 (1987). This

means--an example would be some state-law claims relating to

pension plans--that the coverage that would have been supplied by

2
See generally Seinfeld, The Puzzle of Complete Preemption,
155 U. Pa. L. Rev. 537, 553-54 (2007); Young, Stalking the Yeti:
Protective Jurisdiction, Foreign Affairs Removal, and Complete
Preemption, 95 Cal. L. Rev. 1775, 1812-19 (2007).

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the state claim is not available under the federal ERISA scheme and

so simply disappears. E.g., Felix v. Lucent Techs., Inc., 387 F.3d

1146, 1162 (10th Cir. 2004), cert. denied, 545 U.S. 1149 (2005).

This brings us to the application of the complete

preemption doctrine in this case. Although the lower courts are

divided over specific applications,3 one circuit has already held

that the ICCTA can sometimes support complete preemption. PCI

Transp., Inc. v. Fort Worth & W. R.R. Co., 418 F.3d 535 (5th Cir.

2005). Historically, federal regulation of railroads has been

extensive; and the ICCTA uses language that could support complete

preemption in an appropriate case. In discussing the scope of

regulatory authority granted to the agency that administers the

ICCTA (the Surface Transportation Board) the act broadly provides:

The jurisdiction of the Board over
transportation by rail carriers, and the
remedies provided in this part with respect to
rates, classifications, rules . . . practices,
routes, services, and facilities of such
carriers . . . is exclusive. Except as
otherwise provided in this part, the remedies
provided under this part with respect to
regulation of rail transportation are

3
Compare, e.g., Roddy v. Grand Trunk W. R.R. Inc., 395 F.3d
318 (6th Cir.) (no complete preemption under Railway Labor Act),
cert. denied, 546 U.S. 928 (2005), with Graf v. Elgin, Joliet & E.
Ry. Co., 790 F.2d 1341, 1344-46 (7th Cir. 1986) (finding complete
preemption under Railway Labor Act); and compare Bastien v. AT&T
Wireless Servs., Inc., 205 F.3d 983, 986 (7th Cir. 2000) (finding
complete preemption under the Federal Communications Act), with
Marcus v. AT&T Corp., 138 F.3d 46, 53 (2d Cir. 1998) (no complete
preemption under the Federal Communications Act). See generally
14B Wright, Miller & Cooper, Federal Practice and Procedure:
Jurisdiction 3d § 3722.1 & nn.27-28 (1998 & Supp. 2008).

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 exclusive and preempt the remedies provided
under Federal or State laws.

49 U.S.C. § 10501(b).

Belatedly, the Fayards argue that the ICCTA has no

bearing on this case because the EB&SR is not a rail carrier within

the meaning of the act. But it appears that EB&SR contracts with

CSX--a large interstate railroad and admittedly a common carrier--

to undertake the last leg of transportation, and EB&SR apparently

provides its services indiscriminately to any car shipper who wants

them, meeting the conventional definition of common carrier. N.Y.

Susquehanna & W. Ry. Corp. v. Jackson, 500 F.3d 238, 250-51 (3d

Cir. 2007).4

But even where a federal statute can completely preempt

some state law claims, the question remains which claims are so

preempted. No one supposes that a railroad sued under state law

for unpaid bills by a supplier of diesel fuel or ticket forms can

remove the case based on complete preemption simply because the

railroad is subject to the ICCTA. For complete preemption, the

critical question is whether federal law provides an exclusive

substitute federal cause of action that a federal court (or

possibly a federal agency) can employ for the kind of claim or

4
That EB&SR is a common carrier under the ICCTA appears to be
the view both of the Board, East Brookfield & Spencer R.R., LLC--
Lease & Operation Exemption--CSX Transp., Inc., 2005 WL 2237178
(Surface Transp. Bd. Sept. 15, 2005), and a sister agency, Employer
Status Determination, East Brookfield & Spencer Railroad, LLC
(EBSR), Railroad Retirement Board B.C.D. 04-63 (Dec. 3, 2004).

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wrong at issue.5 Accordingly, we narrow our focus to the nuisance

claims brought by the Fayards.

At first blush, the ICCTA appears to provide the

possibility of such a claim: railroads must "establish reasonable

rates" and reasonable "rules and practices on matters related to .

. . transportation or service." 49 U.S.C. § 10702. The Board may

determine which railroad practices violate that section, id. §

10704, and a federal cause of action is conferred upon those

injured by practices that directly violate the act, id. § 11704;

Rymes Heating Oils, Inc. v. Springfield Terminal R.R. Co., 358 F.3d

82, 89 (1st Cir. 2004). Such claims may be pursued either in

federal court or before the agency. Pejepscot Indus. Park., Inc.

v. Me. Cent. R.R. Co., 215 F.3d 195, 205 (1st Cir. 2000).

Yet despite the apparent breadth of the Board's mandate,

it is far from clear that the ICCTA provides private redress for

the kind of nuisance claims that the Fayards are advancing. True,

federal remedies extend to controversies between railroads and

shippers and to certain other traditional matters,6 but the

5
There is disagreement whether non-judicial claims alone can
trigger complete preemption; this turns in part on the weight given
to conceptual as opposed to prudential underpinnings of the
doctrine. Compare Lontz v. Tharp, 413 F.3d 435, 442 (4th Cir.
2005) (Wilkinson, J.) (administrative cause of action
insufficient), with Graf v. Elgin, Joliet and Eastern Ry. Co., 790
F.2d 1341, 1344-46 (7th Cir. 1986) (Posner, J.) (arbitrable claim
sufficient).
6
See, e.g., 49 U.S.C. § 11705(a),(b); GS Roofing Prods. Co. v.
Surface Transp. Bd., 262 F.3d 767, 777 (8th Cir. 2001); CSX

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reference to "practices" may be limited by context, and we could

find no Board or court precedents entertaining ICCTA claims seeking

redress for railroad conduct akin to nuisance. Indeed, as the

Board has explained:

[T]he courts and the Board have found that any
form of state or local permitting or
preclearance that, by its nature, could be
used to deny a railroad its ability to conduct
its operations or to proceed with activities
that the Board has authorized, is preempted. .
. . At the same time, state and local
regulation is applicable where it does not
have the effect of preventing or unreasonably
interfering with interstate commerce. . . .
Finally whether a particular state or local
regulation is being applied so as to not
restrict unduly the railroad from conducting
its operations, or unreasonably burden
interstate commerce, is a fact-specific
determination.

James Riffin--Petition for Declaratory Order, 2008 WL 1924680

(Surface Transp. Bd. May 1, 2008).

Consonantly, precedent confirms that state nuisance law

continues to apply to railroads, e.g., Rushing v. Kansas City S.

Ry., 194 F. Supp. 2d 493, 501 (S.D. Miss. 2001); Cannon v. CSX

Transp. Inc, No. 1:01CV2296, (N.D. Ohio, filed Dec. 27, 2001),

although specific applications may be preempted--for example,

because the specific state claim is expressly preempted by federal

law, e.g., Noise Control Act of 1972, 42 U.S.C. § 4916 et seq.

(2000); Balt. & Ohio R.R. v. Oberly, 837 F.2d 108 (3d Cir. 1988),

Transp., Inc.--Petition for Declaratory Order, 2005 WL 1024490, at
*2-*4 (Surface Transp. Bd. May 3, 2005).

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or implicitly preempted because it interferes with interstate

commerce or federal regulation.7

Thus, if this were a suit 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. But while some state law claims may

be completely preempted under the ICCTA, the question before us is

whether the ICCTA automatically immunizes railroads from state

nuisance claims. It does not, nor does it clearly provide a

federal cause of action amounting to nuisance. Certainly nothing

in the ICCTA provides for nuisance the clear-cut federal cause of

action available to ERISA benefit claimants or those who seek to

enforce labor contracts.

At the very least defendants, who bear the burden of

showing that removal was proper, Danca v. Private Health Care Sys.,

Inc., 185 F.3d 1, 4 (1st Cir. 1999); Columbia Gas Transmission

Corp. v. Tarbuck, 62 F.3d 538, 541 (3d Cir. 1995), have not

demonstrated that the ICCTA provides such a cause of action for

nuisance. And, in the absence of such a clear cut federal cause of

action, there are good reasons, certainly for a lower federal

7
E.g., A & W Props., Inc. v. Kansas City S. Ry. Co., 200
S.W.3d 342, 351 (Tex. App. 2006); Vill. of Ridgefield Park v. N.Y.
Susquehanna & W. Ry. Corp., 163 N.J. 446 (N.J. 2000); Cannon v. CSX
Transp., Inc., No. 84373, 2005 WL 77088 (Ohio Ct. App. Jan. 13,
2005). Compare Emerson v. Kansas City S. Ry. Co., 503 F.3d 1126
(10th Cir. 2007) (nuisance claim based on improper trash disposal
by railroad not preempted by ICCTA).

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court, to refuse to extend complete preemption beyond its current

boundaries as reflected in the Supreme Court decisions.

To begin, the Supreme Court has described complete

preemption as a "narrow exception," Beneficial, 539 U.S. at 5, to

the usual rule against federal jurisdiction or removal premised

merely upon a prospective federal defense. Both jurisdiction and

removal are primarily creatures of Congress; and the balance

Congress has struck should not lightly be disregarded. Grable &

Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 314

(2005). Congress has only rarely chosen to make a federal defense

the basis for federal jurisdiction or removal--the federal officer

removal statute, 28 U.S.C. § 1442(a), being one example.

Further, numerous federal statutes regulate a great

variety of entities, products, services and other activities

affecting commerce (e.g., the food and drug laws, see Buckman Co.

v. Plaintiffs' Legal Comm., 531 U.S. 341 (2001)); and if each of

these regulatory schemes allowed for related state law claims to be

removed to federal court merely because of a potential preemption

defense, but without a federal cause of action, this would license

wholesale transfer of state law claims into federal court. Cf.

Campbell v. SmithKline Beecham, 919 F. Supp. 173, 176-77 (E.D.Pa.

1996).

Finally, where a clear cut federal cause of action exists

focusing on the same wrong or harm, then some redress is

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potentially available to an injured party--even if it is less

complete than the supplanted state claim; but absent a clear cut

federal cause of action, a danger exists of creating gaps in

protection by categorically supplanting state claims with non-

existent federal remedies. By contrast, where the state claim is

left intact, federal interests are still largely protected:

nothing prevents a preemption defense from being asserted, albeit

in state courts.

Here, for example, the lack of complete preemption does

not suggest that a state court could, on a nuisance claim, grant

the relief sought by the Fayards. Defendants' affidavits say

compliance with the conditions sought to be imposed by the Fayards

as to hours, noise, lighting and the like would make its operation

impossible. If so, the grant of relief arguably would interfere

directly with operations that have been authorized by the Board

under the ICCTA. 49 U.S.C. § 10704(a)(1).

If this is so, the ICCTA, backed by the Supremacy Clause,

would likely preclude any such action by a state court. CSX

Transp., Inc. v. City of Plymouth, 92 F. Supp. 2d 643, 647 (E.D.

Mich. 2000). Damages claims based on the alleged nuisance could

meet the same fate. Pejepscot Indus. Park, Inc. v. Me. Cent. R.R.

Co., 297 F. Supp. 2d 326, 332 (D. Me. 2003). The absence of

complete preemption does not even prevent a federal injunction suit

to forestall a state claim; but this ordinarily will not work

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where, as here, the state law suit has already begun. See Younger

v. Harris, 401 U.S. 37 (1971).

Admittedly, defensive preemption would not necessarily

follow for claims based on alleged voluntary commitments by the

railroad--which may underlie the Fayards' misrepresentation claim.

The ICCTA and the Board apparently are more tolerant of self-

assumed restrictions.8 But the defendants have not urged complete

preemption based on anything save the nuisance claims so questions

of preemption, complete or defensive, with regard to Fayards' other

claims need not be decided.

In sum, preemption may well be a defense to the Fayards'

nuisance claims, but the conditions have not been met to authorize

removal through the extreme and unusual outcome of complete

preemption. The preliminary injunction was properly denied because

inter alia of the prospects of a preemption defense; but the

motion to remand should have been granted in the absence of any

federal cause of action and therefore the absence of subject matter

jurisdiction.

Accordingly, we vacate the district court's judgment and

remand the case so that it may be remanded to the state court. The

8
See 49 U.S.C. § 10709(c)(1); Allied Erecting & Dismantling
Co., Inc. v. Ohio Cent. R.R., Inc., No. 4:06CV509, 2006 WL 2933950
at *4 (N.D. Ohio Oct. 12, 2006); Joint Petition for Declaratory
Order--Boston & Maine Corp. and Town of Ayer, STB Finance Dkt. No.
33971, 2001 WL 458685 at *5 (Apr. 30, 2001) (ICCTA does not preempt
state law claim seeking to enforce railroad's voluntary
commitments).

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Fayards have requested attorneys' fees for an improvident removal;

given the complexity of the complete preemption question, their

motion is denied. The motion to substitute Dorothy Pugliese,

executrix, for Steven Pugliese, now deceased, is granted. Each

side shall bear its own costs.

It is so ordered.

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