May 13, 2013

Supreme Court Decides Dan's City Used Cars, Inc. v. Pelkey

On May 13, 2013, the U.S. Supreme Court decided Dan's City Used Cars, Inc. v. Pelkey (No. 12-52), holding that Section 14501(c)(1) of the Federal Aviation Administration Authorization Act's preemption of state laws relating to price, route or service of any motor carrier with respect to the transportation of property does not preempt state law claims relating to the storage and disposal of a towed vehicle.

The plaintiff asserted state law claims and alleged that, unbeknownst to him, his car had been towed while he was hospitalized and he was not properly notified of the defendant's plan to auction the car. The plaintiff alleged that he communicated his intent to retrieve his car once he learned of the towing, but the defendant nevertheless traded the car without compensating him.

The New Hampshire Superior Court granted summary judgment to the defendant, finding that the Federal Aviation Administration Authorization Act ("the Act") preempted the plaintiff's claims of violations of state law. The New Hampshire Supreme Court reversed and held that the preemption clause was inapplicable because the plaintiff's claims did not involve "the transportation of property." The U.S. Supreme Court granted certiorari to resolve a split of authority in the state supreme courts.

The Act prohibits enforcement of state law "related to a price, route or service of any motor carrier…with respect to the transportation of property." New Hampshire law regulates the removal, storage and disposal of abandoned motor vehicles. The U.S. Supreme Court looked to the language of the Act conclude that the plaintiff's claims did not fall within the Act's preemptive scope. Section 14501(c)(1) of the Act encompasses state laws relating to "the transportation of property," and "transportation" is defined in relevant part as services related to the "movement" of property. The plaintiff's claims relating to storage and disposal of his vehicle did not relate to the "movement" of his property.

The Court concluded that the purpose of the Act—to ensure that state regulation did not undercut federal deregulation of certain aspects of the transportation industry—was not subverted by this interpretation because the plaintiff's claims were "far removed" from Congress' concern. Thus, the Court concluded that state laws concerning the storage and disposition of towed vehicles are not preempted by the Act.

Justice Ginsburg delivered the Court's unanimous opinion.

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