NE Southern Railroad v. B&M, et al.

2008 DNH 179

• Court: District Court, D. New Hampshire
• Decided: September 30, 2008
• Docket: CV-07-403-JL
• Status: Published

Opinion

NE Southern Railroad v. B&M, et a l . CV-07-403-JL 09/30/08

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

New England Southern Railroad Co.

v. Civil No. 07-403-JL Opinion No. 2008 DNH 179 Boston and Maine Co., Springfield Terminal Railway Co., and Pan Am Railways, Inc.

MEMORANDUM AND ORDER

The plaintiff. New England Southern Railroad Co., brought

this action against the defendants for allegedly failing to make

over $430,000 in payments due under a lease agreement. The

plaintiff invoked the court's jurisdiction under 28 U.S.C. §§

1331 (federal question) and 1367 (supplemental jurisdiction), and

various sections of the Interstate Commerce Commission

Termination Act of 1995 (ICCTA) .1 Prior to answering the

complaint, the defendants filed a joint motion to dismiss for

lack of subject matter jurisdiction. See Fed. R. Civ. P.

12(b)(1). For the following reasons, the defendants' motion is

granted.

1 Pub. L. No. 104-88, 109 Stat. 803 (codified as scattered sections of U.S.C., including 49 U.S.C. §§ 10101-16106).

1 I. BACKGROUND

This case involves the defendants' alleged non-payment of

rail-service fees generated by the movement of freight traffic

over a stretch of railway track owned by one of the defendants,

the Boston and Maine Corporation (Boston and Maine), but leased

to and serviced by the plaintiff. Beginning in 1985, the

plaintiff, a rail carrier, leased certain lines of railroad and

appurtenant facilities from Boston and Maine. The parties' lease

agreement (1) authorized the plaintiff to use and operate rail

cars on these lines, and (2) obligated the plaintiff to provide

rail-service to, or interchange, freight traffic that moves over

these lines. For its part, the lease agreement required that

Boston and Maine (1) compensate the plaintiff for any rail-

service it provided to cars on these lines, and (2) assign the

plaintiff Boston and Maine's rights under "all sidetrack

agreements and private vehicular crossing agreements."

Since the lease went into effect, the defendants--Boston and

Maine and the Springfield Terminal Railways, subsidiary

corporations of Pan Am Railways--moved freight traffic over the

leased lines, thereby obligating the plaintiff to provide rail-

service to these cars. Each month, the defendants provided the

plaintiff with an accounting of rail-service compensation owed.

2 which, under the terms of their contract, the defendants were

obligated to pay each month.

The plaintiff brought a four-count complaint against the

defendants, alleging: (1) breach of contract, (2) quantum

meruit, (3) unjust enrichment, and (4) deceptive and unfair trade

practices in violation of N.H. Rev. Stat. Ann. § 358-A. The

plaintiff alleges that, in the five months preceding the lawsuit,

the defendants failed to make over $430,000 in rail-service

payments, and erroneously calculated the rail-service

compensation owed by the plaintiff. The plaintiff also alleges

that, in further contravention of the lease, the defendants

failed either to assign their rights under the relevant sidetrack

agreements, or to "pay [the plaintiff] any revenue derived from"

these agreements. The defendants have since moved to dismiss the

complaint on the grounds that the court lacks subject matter

jurisdiction.2

II. APPLICABLE LEGAL STANDARD

"Federal courts are courts of limited jurisdiction. They

possess only that power authorized by Constitution and statute

2 There is no diversity jurisdiction here because both the plaintiff and Boston and Maine are Delaware citizens.

3 . . . United States v. Coloian, 480 F.3d 47, 50 (1st Cir.

2007) (quoting Kokkonen v. Guardian Life Ins. Co. of Tim., 511

U.S. 375, 377 (1994)). "It is to be presumed that a cause [of

action] lies outside this limited jurisdiction" and the burden

lies with the plaintiff, as the party invoking the court's

jurisdiction, to establish the contrary. Kokkonen, 511 U.S. at

377 (internal citations omitted); see also Peiepscot Indus. Park

v . M e . Cent. R .R ., 215 F.3d 195, 200 (1st Cir. 2000). "Without

jurisdiction the court cannot proceed at all in any cause.

Jurisdiction is power to declare the law, and when it ceases to

exist, the only function remaining to the court is that of

announcing the fact and dismissing the cause." Steel Co. v.

Citizens for a Better Env't, 523 U.S. 83, 94 (1998).

In reviewing a motion to dismiss on jurisdictional grounds,

"[t]he court must construe the complaint liberally, treating all

well-pleaded facts as true and indulging all reasonable

inferences in favor of the plaintiff." Skrizowski v. United

States, 292 F. Supp. 2d 277, 280 (D.N.H. 2003). Still, the

complaint must allege a substantial claim arising under federal

law, see Mich. S. R.R. Co. v. Branch & St. Joseph Counties Rail

Users Ass'n, 287 F.3d 568, 573 (6th Cir. 2002), and the court may

not base jurisdiction on unsupported conclusions or

interpretations of law. See Skrizowski, 292 F. Supp. 2d at 279.

4 III. ANALYSIS

Under 28 U.S.C. § 1331, "the district courts shall have

original jurisdiction over all civil actions arising under the

Constitution laws, or treaties of the United States." See

Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987) . In

determining whether an action arises under federal law, the court

follows the well-pleaded complaint rule, which "provides that

federal jurisdiction exists only when a federal question is

presented on the face of the plaintiff's properly pleaded

complaint." I d . at 392.

In an effort to meet its jurisdictional burden, the

plaintiff alleged in its complaint that because a federal statute

grants the Surface Transportation Board "jurisdiction over rates

and practices relating to the use of freight cars by railroads,"

49 U.S.C. § 10501(b), the plaintiff's claims necessarily arise

under federal law. The plaintiff has since revised its

jurisdictional argument to state that its claims arise under 49

U.S.C. §§ 11121 (establishing safe and adequate car service

criteria) and 11122 (authorizing the Board to set car hire

compensation rates) of the ICCTA. The plaintiff argues that,

because the rail industry is federally regulated, and because

federal law authorizes the Board to establish rail carrier car

5 compensation rates,3 as the arguments go, jurisdiction lies in

federal court. These arguments ignore the jurisdiction-stripping

provision of the ICCTA. See 49 U.S.C. § 10501(b).

In 1995, Congress enacted the ICCTA, significantly reducing

state and local regulation of the railroad industry. See Maynard

v. CSX Transp., Inc., 360 F. Supp. 2d 836, 839 (E.D. Ky. 2004).

As the First Circuit noted in analyzing the ICCTA, Congress

abolished the Interstate Commerce Commission, significantly

deregulated the railroad industry, and established the Surface

Transportation Board to carry out its directives. See Pei epscot,

215 F.3d at 197. As part of this scheme, the ICCTA vests the

Board with exclusive jurisdiction over transportation by rail

carriers.

The jurisdiction of the Board over -

(1) transportation by rail carriers, and the remedies provided in this part with respect to rates, classifications, rules (including car service, interchange, and other operating rules), practices, routes, services, and facilities of such carriers;

is exclusive.

3 See 49 U.S.C. § 11122 (statute authorizing the Board to establish "the compensation to be paid for the use of" railway cars); and 49 C.F.R. § 1033.1 (regulations setting forth the Board's car-hire rates).

6 49 U.S.C. § 10501(b)(emphasis added). The plaintiffs do not

dispute--indeed, they affirmatively argue--that their claims

involve "transportation by rail carriers" within the meaning of

§ 10501 (b) (1) .

Instead, relying on Pei epscot, the plaintiff argues that

this court has concurrent jurisdiction over their claims.

Pei epscot recognized that despite the "exclusive" jurisdiction

given to the Board by § 10501(b), other provisions of the ICCTA

"strongly suggest that certain actions may be filed in federal

district court--and that in some areas the [Board's] jurisdiction

is concurrent, not exclusive." Pei epscot, 215 F.3d at 201; see,

e.g., 49 U.S.C. § 11704(a) (claim to enforce prior order of the

Board); § 11704(c) (damages resulting from act or omission by

rail carrier); § 11706 (losses under receipt or bill of lading).

In Pei epscot, the court was asked to decide whether

§ 10501(b) divested the district court of jurisdiction over

claims brought under a provision of the ICCTA that expressly

provides for federal causes of action. See 215 F.3d at 197.

Section 11704(c), the specific provision of the ICCTA invoked by

the plaintiff in Pei epscot, plainly states that a person injured

by an act or omission of a rail-carrier "may file a complaint

with the Board . . . or bring a civil action . . . to enforce

liability against a rail carrier." 49 U.S.C. § 11704(c)

7 (emphasis added). Resolving the tension between this provision

and the ICCTA's grant of "exclusive" jurisdiction to the Board,

the Court of Appeals concluded that " [v]iewing the language of

the ICCTA in light of its legislative history and the evidence of

practice under its predecessor, the ICA," the provision under

which that plaintiff brought its claims (i.e., § 11704) provides

for concurrent jurisdiction between the Board and the district

courts. Pej epscot, 215 F.3d at 205.

The holding in Pei epscot, however, merely recognized federal

court jurisdiction under § 11704, a provision of the ICCTA which

expressly provides for it. Here, the plaintiff fails to identify

any provision of the ICCTA--including §§ 10501, 11121, and 11122-

-which expressly confers jurisdiction like § 11704 does. Indeed,

the only provision cited by the plaintiff that even addresses

jurisdiction, § 10501, exclusively confers it on the Board. See

49 U.S.C. § 10501(b). There is nothing, therefore, in the

specific provisions invoked by the plaintiff to divest the Board

of its exclusive jurisdiction, or to create concurrent

jurisdiction in both the Board and this court, over the

plaintiff's claims. See Carroll v. United States, 354 U.S. 394,

399 (1957) (jurisdictional statutes must be read in light of "the axiom that clear statutory mandate must exist to found

jurisdiction").4

IV. CONCLUSION

Because this court lacks subject matter jurisdiction over

the plaintiff's complaint, the defendants' motion to dismiss

(document no. 8) is granted, and those claim are dismissed.

Insofar as the plaintiff argues that Count IV of its complaint

does not fall within § 10501's grant of exclusive jurisdiction to

the Board, the court declines to exercise supplemental

jurisdiction. See 28 U.S.C. § 1367(c); Picciotto v. Cont'l C a s .

C o ., 512 F.3d 9, 22 (1st Cir. 2 0 0 8 ) ("the supplemental

jurisdiction statute does not apply [where] there is no civil

action to which any additional claims may attach"). The clerk

shall enter judgment accordingly and close the case.

4 The court notes that the plaintiff's state-law claims may be subject to federal preemption. See San Luis Central R.R. Co. v. Springfield Terminal Rv. Co., 369 F. Supp. 2d 172 (D. Mass. 2 0 05); Engelhard Corp. v. Springfield Terminal Rv. Co., 193 F. Supp. 2d 385 (D. Mass. 2002); see also Pei epscot, 215 F.3d at 202 (noting, without deciding, that "[t]he last sentence of § 10501(b) plainly preempts state law"). But because there is no federal subject matter jurisdiction over these claims, the court does not reach that issue.

9 SO ORDERED.

U m t e d States District Judge

Date September 30, 2008

cc: Martin P. Honigberg, Esq. Kevin M. O'Shea, Esq. Michael J. Connolly, Esq.