Federal Preemption Doesn't Bar Railroad's Suit Against Locomotive Seat Manufacturer

ABSTRACT: The Eighth Circuit Court of Appeals recently held that a railroad's products liability and breach of contract claims that were based on federally-imposed standards of care are not preempted. BNSF Railway Co. v. Seats, Inc., (No. 17-1399, 8th Cir. 2018).

In BNSF Railway Co. v. Seats, Inc., a Burlington Northern Santa Fe locomotive engineer was injured when the backrest of his locomotive seat broke.  The engineer sued BNSF under the Federal Employers Liability Act alleging the seat did not comply with standards articulated in the Locomotive Inspection Act (“LIA”) The LIA requires all locomotives and their components to be “in proper condition and safe to operate without unnecessary danger of personal injury”. 

BNSF settled the engineer’s lawsuit.  Thereafter, BNSF sued Seats, Inc. to recover its settlement costs.  Seats designed, manufactured and marketed the locomotive seat that injured the engineer.  BNSF sought relief under products liability and breach of contract theories.  The district court decided BNSF’s claims were preempted by the LIA, and granted Seats’ motion to dismiss BNSF’s claims.

On appeal, the Eighth Circuit noted that the LIA does not confer a private right of action on injured railroad workers.  Rather, the LIA establishes standards of care that are enforced by a private right of action for railroad employees under the FELA.  These standards of care, in the interest of national uniformity, are intended to occupy the field of locomotive design, materials and construction.  Thus, quoting the U.S. Supreme Court decision in Kurns v. Railroad Friction Products Corp., 565 U.S. 625 (2012), the Eighth Circuit stated that “state common law duties and standards of care directed to the subject of locomotive equipment are pre-empted by the LIA”. 

The Court framed the primary issue in the case as whether the LIA preempts state claims based on federal standards of care.   Seats argued that state claims based on federal standards compromise national uniformity.   The Court disagreed, and held that “…the enforcement under state law of a federal standard of care does not undermine national uniformity because it does not impose conflicting regulations that a railroad must heed during interstate travel.”  

In determining that the District Court erred in ruling that the LIA preempts BNSF’s products liability claim, the Court added that if it were to hold that state law claims asserting LIA violations are preempted, the nation’s railroads would be left without a remedy, no matter how glaring the liability of an equipment supplier. 

BNSF’s breach of contract claim was based on Seats’ contract with the locomotive manufacturer, General Electric.   Seats and GE executed a contract that required Seats to manufacture locomotive seats “in compliance with the LIA” for installation in the locomotive.  BNSF alleged Seats breached this contract by providing a defective seat.  

Seats successfully argued to the District Court that BNSF’s breach of contract claim was a repackaged version of its products liability claim that was also preempted by the LIA.  Again, the Eighth Circuit disagreed.   The Court’s reasoning on the breach of contract claim was two-pronged.

First, the Court noted that “[j]ust as there is room for state tort remedies, there is room for state contract remedies associated with the federal standards embodied in the LIA”.  Second, the Court found that the breach of contract claim did not require compliance with a state duty or standard of care.  Instead, the claim was based on a duty that was voluntarily assumed and not imposed by state law.   Therefore, these “self-imposed undertakings” are not preempted by federal law.                            

Commentary: The Seats decision provides great clarity to the commercial relationships between railroads and vendors whose products are covered by federal standards of care.  The case is certainly not the first among such entities, and the Eighth Circuit has provided a definitive guide for current and future litigation.