Opinion
No. CV-19-00845-PHX-JJT
2020-03-26
Marie LYNN, Plaintiff, v. INVITAE CORPORATION, et al., Defendants.
Brandon David Millam, William H. Doyle, Doyle Firm PC, Phoenix, AZ, for Plaintiff. John W. Campbell, Pro Hac Vice, Federal Express Corporation, Memphis, TN, Rachel Anna DaPena, Sigurds Michael Krolls, Campbell Yost Clare & Norell PC, Phoenix, AZ, for Defendants.
Brandon David Millam, William H. Doyle, Doyle Firm PC, Phoenix, AZ, for Plaintiff.
John W. Campbell, Pro Hac Vice, Federal Express Corporation, Memphis, TN, Rachel Anna DaPena, Sigurds Michael Krolls, Campbell Yost Clare & Norell PC, Phoenix, AZ, for Defendants.
ORDER
John J. Tuchi, United States District Judge
At issue is Defendant's Motion for Summary Judgment Based on Federal Preemption (Doc. 36), to which Plaintiff filed a Response (Doc. 39, Resp.) and Defendant filed a Reply (Doc. 41, Reply). Defendant also filed an accompanying Memorandum in Support (Doc. 36-1, Mot.) and a Statement of Undisputed Material Facts (Doc. 37). Plaintiff filed a Controverting and Supporting Statement of Facts (Doc. 40), to which Defendant filed a Response (Doc 42). For the reasons that follow, the Court grants in part and denies in part Defendant's Motion.
I. BACKGROUND
Plaintiff, an individual, arranged with a Massachusetts genetic testing company, Invitae Corporation ("Invitae"), to have Plaintiff's embryonic cells tested for various genetic conditions as part of the in vitro fertilization process she had begun. Plaintiff was storing her embryos at a fertility center in Tempe. Invitae required Plaintiff to send cells from her embryos to its testing facility in Massachusetts and sent Plaintiff prepaid FedEx shipping labels. (Doc. 22, Second Am. Compl. ("SAC") ¶¶ 23–24.) The cells were packaged at the Tempe fertility center and picked up by Defendant Federal Express Corporation on September 14, 2018. (SAC ¶ 26.) The package was never delivered to Invitae. Instead, it was returned to the fertility center three days later, allegedly because Invitae had provided an outdated and improper shipping label that labeled the dry ice in terms of pounds instead of kilograms. (SAC ¶¶ 27, 30; Resp. at 2.) Plaintiff discovered that the cells inside had been tampered with and destroyed, and alleges that Defendant had opened the package and separated the cells from the dry ice, causing the cells to thaw and rendering them unusable to Plaintiff. (SAC ¶¶ 28–32.)
Plaintiff brings a single count of negligence against Defendant. In the Second Amended Complaint ("SAC"), she alleges Defendant negligently accepted shipment of the package despite having notice of the improper shipping label, and breached a duty of reasonable care by opening and tampering with the package, which was clearly marked with biohazard warnings. Plaintiff also submits with her Response the FedEx incident report, which states the package was rejected at the Phoenix FedEx ramp location. (Doc. 40 Ex. 2.) The report also indicates the package was not opened before it was rejected for shipment at the ramp, at the ramp, or at the Phoenix station after being rejected. Thus, Plaintiff suggests Defendant tampered with the package after it made the determination not to transport it by aircraft or deliver it to the intended recipient, Invitae.
Plaintiff also sued Invitae for negligence; that claim was dismissed pursuant to settlement between the parties. (Doc. 29.)
In its Answer, Defendant raises the affirmative defense of federal preemption under the Airline Deregulation Act ("ADA"). (Doc. 25.) The Court thereafter bifurcated discovery into two phases: the first to determine the issue of preemption, and if applicable, the second to address the merits. (Doc. 31.) Defendant's present Motion followed completion of the first phase and addresses only the issue of preemption.
II. LEGAL STANDARD
Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is appropriate when: (1) the movant shows that there is no genuine dispute as to any material fact; and (2) after viewing the evidence most favorably to the non-moving party, the movant is entitled to prevail as a matter of law. Fed. R. Civ. P. 56 ; Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Eisenberg v. Ins. Co. of N. Am. , 815 F.2d 1285, 1288–89 (9th Cir. 1987). Under this standard, "[o]nly disputes over facts that might affect the outcome of the suit under governing [substantive] law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A "genuine issue" of material fact arises only "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.
In considering a motion for summary judgment, the Court must regard as true the non-moving party's evidence, if it is supported by affidavits or other evidentiary material. Celotex , 477 U.S. at 324, 106 S.Ct. 2548 ; Eisenberg , 815 F.2d at 1289. However, the non-moving party may not merely rest on its pleadings; it must produce some significant probative evidence tending to contradict the moving party's allegations, thereby creating a material question of fact. Anderson , 477 U.S. at 256–57, 106 S.Ct. 2505 (holding that the plaintiff must present affirmative evidence in order to defeat a properly supported motion for summary judgment); First Nat'l Bank of Ariz. v. Cities Serv. Co. , 391 U.S. 253, 289, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968).
"A summary judgment motion cannot be defeated by relying solely on conclusory allegations unsupported by factual data." Taylor v. List , 880 F.2d 1040, 1045 (9th Cir. 1989). "Summary judgment must be entered ‘against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." United States v. Carter, 906 F.2d 1375, 1376 (9th Cir. 1990) (quoting Celotex , 477 U.S. at 322, 106 S.Ct. 2548 ).
III. ANALYSIS
The Court preliminarily addresses a few issues Defendant raises in its Reply before turning to the substantive analysis on preemption. Defendant makes several assertions pertaining to Plaintiff's ability to argue certain theories of liability or factual bases for those theories. First, Defendant contends that Plaintiff, for the first time in her Response, alleges an intentional tort claim. (Reply at 4.) Defendant refers to Plaintiff's characterization of Defendant's actions as "deliberate tampering," "deliberately and inexplicably open[ing] a marked biohazard," and other similar phrases. (Reply at 4 (citing Resp. at 3, 11–12).) This misconstrues Plaintiff's claim, which is that Defendant took a deliberate action—opening a biohazard package and separating the contents within—that itself constituted negligence. This characterization fits comfortably within the allegations of negligence made in the SAC. (See SAC ¶¶ 51–56.) The Court does not understand Plaintiff's Response as adding a claim for an intentional tort of "willfully and wantonly" destroying the cells, as Defendant appears to interpret it.
The Court notes, however, the SAC does allege "Defendants’ conduct exhibits an evil hand, driven by and evil mind sufficient to justify the award of potential damages." (SAC ¶ 58.) This is not the same as an intentional tort.
Second, Defendant takes issue with Plaintiff's argument that Defendant negligently violated its own internal policies and procedures, claiming Plaintiff never asserted that in the SAC. (Reply at 4–5.) It is true that a plaintiff's failure to plead a particular theory may preclude her from asserting that theory for the first time at summary judgment. See, e.g. , Coleman v. Quaker Oats Co. , 232 F.3d 1271, 1292 (9th Cir. 2000) (upholding dismissal of a disparate impact theory raised for the first time at summary judgment, where the complaint only alleged disparate treatment). A plaintiff may also be precluded from grounding her pleaded theory of liability in facts asserted for the first time at summary judgment. Pickern v. Pier 1 Imports (U.S.), Inc. , 457 F.3d 963, 969 (9th Cir. 2006) (upholding dismissal of a disability claim when the complaint identified only a general list of hypothetical physical barriers, and then raised specific accessibility violations for the first time at summary judgment).
However, the concern in those cases is about the prejudice to a defendant who has no notice of the claimed theories or underlying facts until after discovery closes and therefore cannot defend itself. See Coleman , 232 F.3d at 1292. Here, it is clear Defendant had notice of Plaintiff's argument about a failure to follow internal procedures, as Defendant mentioned it in its Motion—before Plaintiff even submitted her brief. (See Mot. at 6–7.) Further, while discovery is closed as to the issue of preemption, it is not closed as to the merits of Plaintiff's negligence claim. Defendant is therefore not prejudiced by Plaintiff's failure to include in the SAC the allegations that Defendant failed to follow its own internal policies.
In either event, the allegations that Defendant violated its own internal policies do not constitute acts of negligence separate and apart from the two "chronologically distinct actions" already alleged against Defendant: (1) Defendant's opening and tampering with the package after it had been rejected for air transportation, and (2) Defendant's acceptance of Plaintiff's package despite notice of its improper weight labeling. See Rombom v. United Air Lines, Inc. , 867 F. Supp. 214, 223 (S.D.N.Y. 1994) (conducting an ADA preemption analysis for each "chronologically distinct action" alleged against the defendant); see also N. Cypress Med. Ctr. Operating Co. Ltd. v. Fedex Corp. , 892 F. Supp. 2d 861, 868 (S.D. Tex. 2012). That Defendant may have violated its internal policies in committing either of these actions may be evidence of negligence, but they do not constitute distinct actions for which a separate preemption analysis is appropriate.
A. ADA Preemption
Prior to 1978, interstate air transportation was governed by the Federal Aviation Act ("FAA"). The FAA had no express preemption clause. Rather, it had a savings clause which provided "[n]othing ... in this chapter shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this chapter are in addition to such remedies." 49 U.S.C. § 1506 (1976) (recodified at 49 U.S.C. § 40120(c) ). In 1978, Congress enacted the ADA as an amendment to the FAA after concluding "pervasive federal regulation" was negatively impacting airlines’ "efficiency, prices, variety, and quality." See Nat'l Fed'n of the Blind v. United Airlines Inc. , 813 F.3d 718, 725 (9th Cir. 2016). Congress determined that economic deregulation would prompt competitive market forces to improve these aspects of air transportation. Id.
To prevent the states from undoing federal deregulation with their own patchwork regulations and laws, Congress included an express preemption provision. Id. at 726. It provides that a state "may not enact or enforce a law ... related to a price, route, or service of an air carrier that may provide air transportation." 49 U.S.C. § 41713(b)(1). This includes state common-law causes of action. Nw. Inc. v. Ginsberg , 572 U.S. 273, 284, 134 S.Ct. 1422, 188 L.Ed.2d 538 (2014). Congress also retained the FAA's savings clause, although the Supreme Court has stated that its "general remedies" provision "cannot be allowed to supersede the specific substantive preemption provision." Morales v. Trans World Airlines, Inc. , 504 U.S. 374, 385, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992).
The ADA's use of the phrase "relates to" demonstrates Congress's broad preemptive intent. A claim relates to prices, routes, or services if it has "a connection with, or reference to," the same. Morales , 504 U.S. at 384, 112 S.Ct. 2031. At the same time, however, the ADA does not preempt state laws that affect a carrier's prices, routes, or services in only a "tenuous, remote, or peripheral ... manner" with no significant impact on Congress's deregulatory objectives. See id. at 390, 112 S.Ct. 2031.
At issue in this case is the interpretation of the term "services" as used in the ADA. Courts have diverged on this point, with the Ninth Circuit taking the narrowest approach, as initially outlined in Charas v. Trans World Airlines, Inc. , 160 F.3d 1259 (9th Cir. 1998), and later affirmed in National Federation of the Blind . Charas involved multiple plaintiffs who brought state-law tort claims after sustaining personal injuries during or shortly after flight. Relying on the savings clause and another portion of the Act requiring airlines to carry liability insurance, the Court held that state tort claims that do not "significantly impact federal deregulation" are not preempted by the ADA. Charas , 160 F.3d at 1265.
In defining a "price, route, or service" under § 41713(b)(1), the Ninth Circuit held:
Airlines’ "rates" and "routes" generally refer to the point-to-point transport of passengers. "Rates" indicates price; "routes" refers to courses of travel. It therefore follows that "service," when juxtaposed to "rates" and "routes," refers to such things as the frequency and scheduling of transportation, and to the selection of markets to or from which transportation is provided (as in, "This airline provides service from Tucson to New York twice a day.") To interpret "service" more broadly is to ignore the context of its use; and, it effectively would result in the preemption of virtually everything an airline does. It seems clear to us that that is not what Congress intended.
Id. at 1265–66 (internal citations omitted). The court concluded that, in the context of economic deregulation, Congress used "service" "in the public utility sense—i.e. , the provision of air transportation to and from various markets at various times." Id. at 1266. This did not include dispensing of food and drink, storage of overhead baggage, flight attendant assistance, or the like. The Ninth Circuit characterizes these as "amenities," not services. Id.
After Charas , the Supreme Court decided Rowe v. New Hampshire Motor Transportation Association , 552 U.S. 364, 128 S.Ct. 989, 169 L.Ed.2d 933 (2008). Rowe dealt with the Federal Aviation Administration Authorization Act ("FAAAA"), the trucking deregulation statute whose preemption provision was modeled after the ADA. The Maine statute at issue forbade licensed tobacco retailers to employ a "delivery service" unless that service followed particular delivery procedures and a recipient-verification regime. The Court determined the statute's focus on delivery services created a direct connection with—and was thus "related to"—motor-carriers. Id. at 371, 128 S.Ct. 989 (citing Morales , 504 U.S. at 384, 112 S.Ct. 2031 ). And it was related to their "services" because it directly regulated significant aspects of package pickup and delivery service. Id. From a macro perspective, the statute itself also significantly impeded the federal goals of economic deregulation by effectively requiring carriers to either offer specific delivery systems not present in the market or freeze current systems that carriers might prefer to discontinue in the future. For these reasons, the Court held the state statute was preempted.
The preemption clause provides that a state "may not enact or enforce a law ... related to a price, route, or service of any motor carrier ... with respect to the transportation of property." 49 U.S.C. § 14501(c)(1). Because the text between the two is nearly identical, FAAAA preemption interpretation is instructive in the ADA context, as well. Dilts v. Penske Logistics, LLC , 769 F.3d 637, 644 (9th Cir. 2014).
After Rowe , some district courts in the Ninth Circuit questioned the vitality of Charas . When the Ninth Circuit weighed in, however, it found the two cases consistent and reaffirmed Charas's narrow interpretation of "services" under the ADA. See Nat'l Fed'n of the Blind , 813 F.3d at 727–29. The court determined that both Charas and Rowe "viewed the term ‘service’ as focused on ‘essential details of the carriage itself." Id. at 727 (citing Rowe , 552 U.S. at 373, 128 S.Ct. 989 ). The Maine statute directly regulated the carriage of goods by imposing delivery procedures that affected how and to whom carriers could deliver tobacco. In doing so, it regulated "such things as ... the selection of markets to or from which transportation is provided." Id. (quoting Charas , 160 F.3d at 1265 ). Turning to the case at hand (a discrimination suit brought by visually-impaired passengers), the Ninth Circuit determined that an airline's check-in kiosks at the airport were not services "in the public utility sense." They did not relate to the "schedules, origins [or] destinations of the point-to-point transportation of passengers, cargo, or mail" or "the provision of air transportation." Id. at 726 (quoting Charas 160 F.3d at 1261 ). Rather, they constituted the type of amenity, in the form of assistance to passengers in need, that Congress did not intend to regulate.
With that background in mind, the Court must determine whether Plaintiff's negligence claims have a connection with or reference to the services of an air carrier, as interpreted by the Supreme Court and the Ninth Circuit.
B. Plaintiff's Claims of Negligence
As determined above, the Court need only conduct a preemption analysis for Defendant's chronologically distinct acts: (1) its opening of and tampering with the package after it had been rejected for air transportation, and (2) its initial acceptance of Plaintiff's package despite notice of the improper weight labeling. The Court finds that the first action is not preempted but that the second is preempted.
For the most part, the Ninth Circuit ADA cases deal with commercial airlines. "A commercial airline's purpose under the ADA is provision of air transportation to and from various markets at various times. By extension, [Defendant's] purpose ... is the provision of package shipment to and from various markets at various times." Centuori v. United Parcel Serv., Inc., 2017 WL 1194497, at *6 (W.D. Wash. Mar. 30, 2017) (citing Charas , 160 F.3d at 1266 ). Plaintiff argues the first action, opening and tampering with the package after it had already been rejected for shipment, does not relate to services because it no longer involved "the provision of air transportation to and from various markets at various times." (Resp. at 11 (citing Charas , 160 F.3d at 1265 ).)
Defendant, on the other hand, argues it was providing a core service in the same way that "transporting intact humans is the core of a passenger airline's business." (Mot. at 6.) Not allowing its passengers "to be killed or maimed in flights ... cannot plausibly be considered a mere amenity." (Mot. at 6.) Defendant's analogy missed the mark. The package was not accidentally damaged during air transit. It was intentionally opened after being rejected for the same. A proper analogy already exists in case law. In Charas , one of the plaintiffs informed the airline of a health condition and requested assistance in disembarking from the plane after the flight. The airline crew provided no help, and the plaintiff fell down on the stairway while exiting the plane. Another Charas plaintiff was denied passage when a crewmember believed she might have a medical condition that precluded her from flying. The airline required her to stay overnight at a hotel pending doctor's approval for flight. The plaintiff fell on the shuttle on the way to her hotel. The Ninth Circuit determined the airlines’ actions, characterized generally as "flight attendant assistance," were amenities not related to the core service of provision of air transportation—even though they took place during or directly after the flight.
The Court finds that Defendant's post-rejection opening of Plaintiff's package fits within the same amenity framework. Plaintiff utilized Defendant's transportation services to transport the package from Tempe to Massachusetts. Rather than perform that core service, Plaintiff submits evidence unrefuted by Defendant that Defendant rejected the package for shipment and, afterward , opened it and separated its contents. If Defendant's intention was to somehow fix the labeling error to enable shipment to Invitae (for example, by weighing the dry ice to determine its weight in kilograms), the Court finds such "assistance" comparable to that in Charas . See also Centuori , 2017 WL 1194497, at *6 (finding UPS's internal address correction policy and the particular placement of delivered packages on a plaintiff's property akin to amenities rather than the "provision of package shipment"). Any other purpose the Court can envision for separating the contents post-rejection—for example, to ascertain the biohazard contents for law enforcement purposes, for internal data gathering, or to satisfy personal curiosity—appears similarly beyond the scope of the core service of package delivery as narrowly defined in the Ninth Circuit.
Defendant cites extensively to Tobin v. Federal Express Corp. , 775 F.3d 448 (1st Cir. 2014) and other First Circuit cases. (See Reply at 6, 8–10.) The Court agrees that under the First Circuit's broad interpretation of "service," Plaintiff's claim may be preempted. However, the Ninth Circuit recently expressly acknowledged it has a narrower construction of "service" than most circuits, including the First Circuit. Nat'l Fed'n of the Blind , 813 F.3d at 727–28. Defendant's reliance on A.C.L. Computers & Software, Inc. v. Federal Express Corp. , 2016 WL 946127 (N.D. Cal. March 14, 2016), which itself relies on Tobin , is similarly misplaced.
Defendant contends that its "services" do not end when it deems a package undeliverable. (Reply at 6.) Rather, the parties’ agreement provides that Defendant may contact the shipper for instructions on returning or disposing of the shipment; if the shipper chooses to have the package returned, Defendant will return it at the shipper's cost. (Reply Ex. A) Defendant provides no legal support that these terms and conditions supersede the Ninth Circuit's definition of "service" for the purposes of ADA preemption. But even if the Court accepted this premise, nowhere in those terms does it state that in fulfilling this return service, Defendant may open, separate, and rearrange the contents of the package containing biohazard materials.
Finally, the Court finds that imposing a common law duty of care when opening a biohazard package and separating its contents from the dry ice within would not have a significant impact on Congress's deregulatory objectives or "frustrate the purpose of deregulation by acutely interfering with the forces of competition." Californians For Safe & Competitive Dump Truck Transp. v. Mendonca , 152 F.3d 1184, 1189 (9th Cir. 1998) ; see also Centuori , 2017 WL 1194497, at *6 ("[T]he requirement that UPS and its agents comport themselves reasonably is ‘generally applicable’ and does not ‘otherwise regulate prices, routes, or services.’ ") (quoting Dilts , 769 F.3d at 644 ). Defendant's argument that determining reasonableness would impermissibly result in questions for the jury and patchwork standards is unavailing. Application of a state's common law standard of reasonableness was precisely what the Ninth Circuit anticipated in Charas when it held the ADA does not automatically immunize airlines from liability for their tortious conduct. Charas , 160 F.3d at 1266.
Defendant's act of opening and separating the contents of a package after it was rejected for shipment is an amenity under the ADA rather than a core service. Accordingly, Plaintiff's negligence claim related to that action is not preempted.
On the other hand, Plaintiff's claim that Defendant was negligent in accepting the package despite having notice of the improper labeling is preempted. Functionally, Plaintiff's argument is that Defendant should not accept packages in the first instance if they contain labeling errors. Acceptance is likely one of the first steps in most, if not all, package delivery services provided by Defendant. Plaintiff's claim thus relates directly to Defendant's "services" by attempting to regulate its practices, or impose different ones, at the "origins" of the "point-to-point transportation of ... mail." See Charas , 160 F.3d at 1261. This is akin to the type of widespread regulation "on essential details of the carriage itself" that the Supreme Court held preempted in Rowe. 552 U.S. at 373, 128 S.Ct. 989. Accordingly, Plaintiff's claim related to acceptance of the package is preempted under the ADA.
IT IS THEREFORE ORDERED granting in part and denying in part Defendant's Motion (Doc. 36) as consistent with this Order. Plaintiff's negligence claim as it relates to Defendant's acceptance of a package containing a labeling error is preempted and, accordingly, dismissed.
IT IS FURTHER ORDERED that pursuant to the Court's Order (Doc. 47), the parties shall file a new scheduling order within 30 days of the filing of this Order.