Lundeen v. Canadian Pacific Railway Co.

532 F.3d 682, 2008 U.S. App. LEXIS 14210

• Court: Court of Appeals for the Eighth Circuit
• Decided: July 2, 2008
• Docket: Nos. 07-1656, 07-1670, 07-1672, 07-1676, 07-1679, 07-1680, 07-1684, 07-1693, 07-1694, 07-1698, 07-1699, 07-1707
• Status: Published

Opinions

BYE, Circuit Judge.

In Lundeen v. Canadian Pacific Railway Co., 447 F.3d 606, 615 (8th Cir.2006) (Lundeen I), we determined the above-captioned lawsuits, initially filed in state court, were preempted by 49 U.S.C. § 20106 of the Federal Railroad Safety Act (FRSA). On remand, the district court dismissed the lawsuits. The Lun-deens and other appellants (hereinafter the Lundeens) thereafter filed the instant appeals. While these appeals were pending, Congress amended § 20106. The amendment directly addresses the preemptive effect of § 20106, and if applicable here, would allow these cases to proceed in state court. Canadian Pacific Railway Company (CP) challenges the amendment on several constitutional grounds. We conclude the amendment is constitutional, and therefore vacate Lun-deen I and remand these cases to the district court with directions to further remand them to state court.

I

On January 18, 2002, a CP freight train derailed near Minot, North Dakota, and caused the release of more than 220,000 gallons of anhydrous ammonia into the air, exposing the area’s population to a cloud of toxic gas, causing many people to suffer from permanent respiratory disease and eye damage. Many of the injured people filed a class action suit in North Dakota federal district court. Some, however, retained individual counsel and filed suit in Minnesota state court. These consolidated appeals involve a group of the individual lawsuits filed in Minnesota state court.

The class action venued in North Dakota federal district court was ultimately dismissed on the pleadings upon the district court concluding the claims were preempted by § 20106. See Mehl v. Canadian Pac. Ry. Ltd., 417 F.Supp.2d 1104, 1116-18 (D.N.D.2006). The claims in Minnesota were resolved less consistently, with some being settled, some being resolved in favor of CP on the preemption issue, and still others being resolved against CP on the preemption issue and proceeding in state court.

CP removed a discrete group of the Minnesota cases — those brought by the Lundeens — to Minnesota federal district court. The district court determined the Lundeens’ original complaints alleged a federal cause of action by making a reference to “United States law,” creating federal question jurisdiction and making removal to federal court proper. See Lundeen v. Canadian Pac. Ry. Co., 342 F.Supp.2d 826, 829-31 (D.Minn.2004). Subsequent to such ruling, however, the district court allowed the Lundeens to amend their complaints to delete the reference to “United States law,” thereby dropping the federal claim and erasing the basis for federal question jurisdiction. After allowing the complaints to be amended, the district court concluded the cases should be remanded to Minnesota state court. Lundeen v. Canadian Pac. Ry. Co., 2005 WL 563111 at * 1 (D.Minn. March 9, 2005).

CP appealed the ruling to this appellate court. We decided federal question jurisdiction was present based upon another ground, that is, preemption under § 20106. Lundeen I, 447 F.3d at 615. The cases were thereafter remanded to district court in which the court held federal preemption doomed the Lundeen cases not only on the question of federal versus state jurisdiction, but also on the merits. The district court therefore entered dismissal orders. See Lundeen v. Canadian Pac. Ry. Co., 507 F.Supp.2d 1006, 1017 (D.Minn.2007). The Lundeens filed the present appeals challenging such decision.

In the meantime, the Minot derailment cases were causing a stir on the political front. While the present appeals were pending, Congress passed and President Bush signed into law an amendment to § 20106. The amendment provides in relevant part as follows:

(b) Clarification regarding State law causes of action. — (1) Nothing in this section shall be construed to preempt an action under State law seeking damages for personal injury, death, or property damage alleging that a party—

(A) has failed to comply with the Federal standard of care established by a regulation or order issued by the Secretary of Transportation (with respect to railroad safety matters), or the Secretary of Homeland Security (with respect to railroad security matters), covering the subject matter as provided in subsection (a) of this section;

(B) has failed to comply with its own plan, rule, or standard that it created pursuant to a regulation or order issued by either of the Secretaries; or

(C) has failed to comply with a State law, regulation, or order that is not incompatible with subsection (a)(2).

49 U.S.C. § 20106(b). This “clarifying” amendment reflected Congress’s disagreement with the manner in which the courts, including our own in Lundeen I, had interpreted § 20106 to preempt state law causes of action whenever a federal regulation covered the same subject matter as the allegations of negligence in a state court lawsuit. Congress made the amendment retroactive to January 18, 2002, the day of the Minot derailment. See id. at § 20106(b)(2) (“This subsection shall apply to all pending State law causes of action arising from events or activities occurring on or after January 18, 2002.”). In addition, Congress expressly stated § 20106 was not intended to confer federal question jurisdiction upon the federal courts when a party filed a state court lawsuit, as the Lundeens had done. See id. at § 20106(c) (“Nothing in this section creates a Federal cause of action on behalf of an injured party or confers Federal question jurisdiction for such State law causes of action.”). Therefore, if valid, subsection (c) of § 20106 effectively overrules our decision in Lundeen I.

After the Congressional amendment, we requested from the parties supplemental briefing addressing the impact of the amendment on these consolidated appeals. CP’s supplemental brief contends the amendment should be struck down as unconstitutional because it violates the separation of powers doctrine, CP’s due process rights, CP’s equal protection rights, and the Ex Post Facto clause.

The Lundeens contend Congress acted within its power in amending § 20106, and we must now enforce it by vacating Lun-deen I and sending these cases back to state court. The Lundeens further contend the amended statute does not violate any of CP’s constitutional rights. An ami-cus brief filed by the North Dakota attorney general on behalf of several states supports the amendment and its recognition of traditional state court jurisdiction. In addition, the United States intervened and filed a brief defending the constitutionality of the amendment.

II

We review constitutional claims de novo. Unites States v. Finck, 407 F.3d 908, 916 (8th Cir.2005).

CP first contends the amendment to § 20106 violates the separation of powers doctrine. We respectfully disagree.

Congress, of course, has the power to amend a statute that it believes [the courts] have misconstrued. It may even, within broad constitutional bounds, make such a change retroactive and thereby undo what it perceives to be the undesirable past consequences of a misinterpretation of its work product. No such change, however, has the force of law unless it is implemented through legislation. Even when Congress intends to supersede a rule of law embodied in one of our decisions with what it views as a better rule established in earlier decisions, its intent to reach conduct preceding the “corrective” amendment must clearly appear.

Rivers v. Roadway Exp., Inc., 511 U.S. 298, 313, 114 S.Ct. 1510, 128 L.Ed.2d 274 (1994).

In Plaut v. Spendthrift Farm, 514 U.S. 211, 115 S.Ct. 1447, 131 L.Ed.2d 328 (1995), the Supreme Court reiterated Congress possesses the power to amend existing law even if the amendment affects the outcome of pending cases. Id. at 218, 115 S.Ct. 1447. The Court explained the separation of powers doctrine is violated only when Congress tries to apply new law to cases which have already reached a final judgment. See id. at 226, 115 S.Ct. 1447 (“Congress can always revise the judgments of Article III courts in one sense: When a new law makes clear that it is retroactive, an appellate court must apply that law in reviewing judgments still on appeal that were rendered before the law was enacted, and must alter the outcome accordingly.”).

The amendment to § 20106 was a valid exercise of Congressional power, as it was implemented through the legislative process. In addition, Congress made clear its intent to reach conduct preceding the corrective amendment by expressly indicating it applied “to all pending State law causes of action arising from events or activities occurring on or after January 18, 2002.” 49 U.S.C. § 20106(b)(2). Furthermore, applying the amendment to the cases now before us does not violate the separation of powers doctrine because when the amendment became effective these cases were on appeal and had not reached final judgments. Finally, we reject CP’s argument about Congress’s reference to the amendment as a “[c]larification” of existing law rather than a substantive change to existing law somehow alters our analysis. We are obliged to apply the amendment to pending cases regardless of the label Congress attached to it. See Porter v. Comm’r of Internal Revenue, 856 F.2d 1205, 1209 (8th Cir.1988) (“Our objective in interpreting a federal statute is to achieve the intent of Congress.”). The statute’s clear language indicates state law causes of action are no longer preempted under § 20106.

CP next contends the amendment to § 20106 violates its due process rights because the amendment’s effective date (the day of the Minot derailment) indicates Congress specifically targeted CP and upset its settled expectations about the state of the law governing its business activities.

We review legislation regulating economic and business affairs under a “highly deferential rational basis” standard of review. Koster v. City of Davenport, Iowa, 183 F.3d 762, 768 (8th Cir.1999). “[Legislative Acts adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality, and ... the burden is on the one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way.” Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15, 96 S.Ct. 2882, 49 L.Ed.2d 752 (1976). Even retroactive legislation passes due process scrutiny so long as Congress had “a legitimate legislative purpose [that it] furthered by rational means.” Gen. Motors Corp. v. Romein, 503 U.S. 181, 191, 112 S.Ct. 1105, 117 L.Ed.2d 328 (1992); see also United States v. Ne. Pharm. & Chem. Co., Inc., 810 F.2d 726, 733-34 (8th Cir.1986) (“Due process is satisfied simply by showing that the retroactive application of the legislation is itself justified by a rational legislative purpose.”). To prevail on its due process claim, CP has the burden of showing there is no “reasonably conceivable state of facts that could provide a rational basis” for the law. FCC v. Beach Commc’ns, Inc., 508 U.S. 307, 313, 113 S.Ct. 2096, 124 L.Ed.2d 211 (1993).

CP has not satisfied its heavy burden of showing the amendment violates its due process rights. The purpose of the amendment is to give railroad accident victims the right to seek recovery in state courts when they allege railroads violate safety standards imposed by a railroad’s own rules, certain state laws, or federal regulations. This easily qualifies as a rational legislative purpose for the amendment. Contrary to CP’s claim that the amendment seeks “to impose unlimited liability [upon CP] for” the Minot derailment case, CP’s Brief at 49, the amendment merely gives injured parties the chance to seek recovery against railroads. Victims of railroad accidents must still prove their cases in court. Prior to the amendment, § 20106 had been interpreted in such a way that an injured person was denied the mere chance to hold a railroad accountable when its negligence not only violated state common law standards, but the very federal laws and regulations approved by Congress in an effort to further railroad safety. It was rational for Congress to “clarify” this result was not an intended purpose of § 20106 prior to the amendment. Indeed, the very act of enacting a retroactive statute “to correct the unexpected results of [a judicial] opinion” qualifies as a legitimate legislative purpose which survives scrutiny under the deferential rational basis standard of review. Romein, 503 U.S. at 191, 112 S.Ct. 1105 (upholding retroactive legislation against a due process challenge where the legislation was passed to overturn a particular Michigan Supreme Court opinion interpreting a workers’ compensation statute).

CP contends Congress acted arbitrarily and capriciously by making the amendment retroactive to January 18, 2002, the very date of the Minot derailment cases, because by doing so Congress singled out one accident and one railroad (CP). This argument misses the mark on both the facts and the law. Factually, the amendment does not single out one accident and one railroad: it applies to “all pending State law causes of action arising from events or activities occurring on or after January 18, 2002.” 49 U.S.C. § 20106(b)(2) (emphasis added). From a legal standpoint, however, even assuming Congress meant to target one particular event or specific pending litigation, it could do so without violating the constitution so long as it had a rational basis for doing so. See Plaut, 514 U.S. at 239 n. 9, 115 S.Ct. 1447 (“Congress may legislate ‘a legitimate class of one’ ” when it has a rational basis for doing so) (quoting Nixon v. Adm’r of Gen. Servs., 433 U.S. 425, 472, 97 S.Ct. 2777, 53 L.Ed.2d 867 (1977)); see also Robertson v. Seattle Audubon Soc’y, 503 U.S. 429, 433, 112 S.Ct. 1407, 118 L.Ed.2d 73 (1992) (rejecting a constitutional challenge to a statute known as the Northwestern Timber Compromise, which Congress passed to resolve two specific pending lawsuits between environmentalists and the logging industry). Congress can rationally decide to pick an effective date for legislation which will address the particular event which attracted its attention. See Williamson v. Lee Optical, 348 U.S. 483, 489, 75 S.Ct. 461, 99 L.Ed. 563 (1955) (recognizing legislative “reform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind”); see also Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 731, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984) (refusing to second-guess the balance of benefits and harms struck by Congress in selecting a statute’s effective date, noting “the enactment of retroactive statutes confined to short and limited periods required by the practicalities of producing national legislation ... is a customary congressional practice”).

CP also contends the amendment violates its equal protection rights because it imposes different standards of accountability on railroads depending on whether they caused harm before or after January 18, 2002, the amendment’s effective date. Unless a statute creates a suspect classification or impinges upon fundamental rights — and this one does neither — it must “be upheld against equal protection attack if it is rationally related to the achievement of legitimate governmental ends.” G.D. Searle & Co. v. Cohn, 455 U.S. 404, 408, 102 S.Ct. 1137, 71 L.Ed.2d 250 (1982).

In addressing CP’s due process claim, we already explained Congress had legitimate legislative purposes for adopting the amendment and acted rationally in doing so. As a consequence, CP’s equal protection argument fails. Moreover, we note CP’s equal protection claim is nothing more than an attack on the amendment’s effective date. Every retroactive statute, by necessity, imposes different standards on parties affected by the statute, and those differences are directly tied to the statute’s effective date. Thus, if we gave credence to CP’s equal protection claim we would in essence be holding Congress violates the equal protection clause every time it passes retroactive legislation.

Finally, CP argues the amendment violates the Ex Post Facto clause. The Ex Post Facto clause prohibits “enacting laws that increase punishment for criminal acts after they have been committed.” Doe v. Miller, 405 F.3d 700, 718 (8th Cir.2005). It applies only in the criminal context. See, e.g., E. Enters. v. Apfel, 524 U.S. 498, 538, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998) (“Since Calder v. Bull, 3 Dall. 386, 1 L.Ed. 648 (1798), this Court has considered the Ex Post Facto Clause to apply only in the criminal context.”) (Thomas, J., concurring). While a civil statute may be “so punitive either in purpose or effect [as to implicate the Ex Post Facto clause], only the clearest proof will suffice to override legislative intent and transform what has been denominated a civil remedy into a criminal penalty.” Smith v. Doe, 538 U.S. 84, 92, 123 S.Ct. 1140, 155 L.Ed.2d 164 (2003) (internal citations and quotations omitted).

There is no proof, let alone clear proof, Congress intended the amendment to § 20106 as a criminal penalty. The statute affects negligence actions brought by injured parties against railroads. Such actions are inherently civil in nature. The Ex Post Facto clause has no application here.

Ill

Congress did not violate the Constitution when it amended § 20106. As a consequence, we vacate our decision in Lundeen I and remand these cases to the district court with instructions in turn to further remand them to state court.