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1999 Term, Number 5 / October 18, 1999

Today the Supreme Court granted certiorari in three cases, one of which is of potential interest to the business community. Amicus briefs in support of the petitioner are due on Thursday, December 2, 1999, and amicus briefs in support of the respondents are due on Monday, January 3, 2000. Any questions about this case should be directed to Donald Falk (202-263-3245) or Eileen Penner (202-263-3242) in our Washington office.

Federal Preemption Federal Railroad Safety Act. The express preemption clause in the Federal Railroad Safety Act ("FRSA") provides that the States may not regulate an aspect of railroad safety if "the Secretary of Transportation prescribes a regulation or issues an order covering the subject matter of the State requirement." 49 U.S.C. 20106. The Supreme Court granted certiorari in Norfolk & Southern Railway Company v. Shanklin, No. 99-312, to decide whether the FRSA preempts common-law negligence claims based on inadequate warning devices at railroad grade crossings, where the warning devices were installed using federal funds under a state-wide project approved by the federal government.

The Supreme Court last considered FRSA preemption in CSX Transportation, Inc. v. Easterwood, 507 U.S. 658 (1993). In that case, the Court held that, "for projects in which federal funds participate in the installation of warning devices, the Secretary has determined the devices to be installed and the means by which railroads are to participate in their selection." Id. at 671. Accordingly, in such circumstances, a state common-law tort claim based on inadequate warning devices at a particular crossing would be preempted. Ibid. Since federal funds were not involved in the installation of the devices at issue in Easterwood, however, the Court found no preemption. Id. at 672-673.

In 1987, the Tennessee Department of Transportation installed warning devices at a railroad crossing in Gibson County, as part of a federally funded "minimum protection program" to bring crossings throughout the State into compliance with federal regulations. On October 3, 1993, Eddie Shanklin was killed at the crossing when his car was struck by a train operated by Norfolk Southern. Shanklin's widow sued Norfolk Southern under a variety of state law tort theories, including a claim that the railroad was negligent in failing to provide additional warning devices. The district court rejected Norfolk Southern's preemption defense, and the jury found for the plaintiff.

The Sixth Circuit affirmed. 173 F.3d 386 (1999). The court of appeals noted that the Fifth, Eighth, and Tenth Circuits have held that federal funding is the touchstone of preemption in railroad crossing cases. Id. at 391. See Armijo v. Atchison, Topeka and Santa Fe Ry., 87 F.3d 1188, 1190 (10th Cir. 1996); Hester v. CSX Transportation, Inc., 61 F.3d 382, 386 (5th Cir. 1995); Elrod v. Burlington Northern R.R., 68 F.3d 241, 244 (8th Cir. 1995). The Sixth Circuit instead followed Judge Posner's opinion for the Seventh Circuit in Shots v. CSX Transportation, Inc., 38 F.3d 304 (7th Cir. 1994). In Shots, the Seventh Circuit announced a two-part test for preemption in grade-crossing cases: (1) whether federal funding participated in the installation of warning devices at the crossing in question; and (2) if so, whether the Secretary or one of his agents actually determined that the warning devices installed at that crossing were adequate. Id. at 309. Invoking the traditional presumption against preemption, the Sixth Circuit rejected preemption in this case because no agent of the Secretary had passed upon the safety of the Gibson County crossing at issue. 173 F.3d at 394-395.

This case will be of obvious interest to railroads. The decision is of broader interest, however, because the Court will be called upon to explore the level of generality at which a preemption analysis should be conducted. In particular, the Court will decide how specific and thorough the involvement of a federal regulatory agency must be in order to invoke a preemption clause that requires agency action with respect to regulated subject matter. The Court's decision thus may have significant ramifications for all businesses that face the prospect of costly and potentially inconsistent jury verdicts in areas in which the federal government has established uniform safety standards.

This Mayer, Brown, Rowe & Maw Supreme Court Docket Report provides information and comments on legal issues and developments of interest to our clients and friends. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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