Opposition Brief — Troy Cab, Inc. v. Michigan Public Service Commission
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Supreme Court. US.
FILED
2 MAY 3 - 2004
OFFICE OF THE CLERK
No. 03-1250
Jn the Supreme Court of the United States
TROY CAB, INC, ET AL
Petitioners,
Vv.
MICHIGAN PUBLIC SERVICE
COMM&SSION, ET AL
Respondents.
On Petition For Writ of Certiorari
To The Michigan Court of Appeals
BRIEF IN OPPOSITION TO
PETITION FOR A WRIT OF CERTIORARI
Michael A. Cox
Attorney General
Thomas L. Casey
Solicitor General
P. O. Box 30212
Lansing, Michigan 48909
(517) 373-1124
Counsel of Record
Henry J. Boynton
Assistant Solicitor General
David A. Voges
Emmanuel B. Odunlami
QUESTIONS PRESENTED
Under MCL 478.1 and MCL 478.2(1), motor carrier vehicles
that engage in intrastate commerce pay an annual fee of $100 for
the administration of the Michigan Motor Carrier Act and other
Acts related to the safety of Michigan’s highways. Petitioners
assert that the $100 fee is preempted by the Federal Aviation
Administration Authorization Act of 1994. The Michigan Court
of Appeals neither addressed nor considered this claim since the
Petitioners did not contest the trial court’s ruling that federal law
did not preempt the challenged fees. The Michigan Court of
Appeals, however, did address Petitioners’ claim that they were
not permitted to discovery facts related to their preemption claim.
The Michigan Court of Appeals found the Petitioners never
sought evidence relating to the preemption issue despite an ample
opportunity to do so.
The questions presented are:
Even if the fact that Petitioners submitted no evidence is
ignored and even if their claim of preemption is properly
preserved, have Petitioners established that the challenged
Motor Carrier Act’s fee provisions are preempted by federal
law?
Whether this Court should review an issue that was not
considered by the ap: !late court below?
Where the Petitioners failed to present evidence to support
their claims, did the Michigan Courts properly grant summary
disposition against them?
of
PARTIES TO THE PROCEEDING
The parties to the proceeding in the Michigan Court of
Appeals were Westlake Transportation, Inc., Vanderkooi
Carriers, Inc., El Toro Motor Freight, Inc., Myriah, Inc., Prism,
Inc., Gerrigs Trucking & Leasing, Inc., Best Way Express, Inc.,
Troy Cab, Inc., Deco Services, Inc., d/b/a Deeco Transportation,
Tiberio Frank, d/b/a Fairfield Towing, Elex, Inc., d/b/a Lafond
Express, Dale Constine & Sons, Inc., Calcut Sales & Services,
Inc., d/b/a Calcut Trucking Company, Ambassador
Transportation, Inc., Hawkins Steel Cartage, Inc., Midcon Freight
Systems, Inc., JLH Transfer, Inc., H & H Enterprises, Inc., d/b/a
S & M Cartage, Inc., Central Transport, Inc., Bancroft Trucking
Company, US Truck Company, Inc., West End Cartage, Inc.,
Central Cartage Company, CTX, Inc., Mohawk Motor Michigan,
Inc., Economy Transport, Inc., McKinlay Transport Limited,
Mason & Dixon Lines, Inc., Universal Amcan Limited, Romeo
Expediters, Inc., Tom Thumb Services, Inc., d/b/a REI, OJ
Transport Company, JLAW Enterprises, Inc., OJ Transport, Inc.,
Michigan Public Service Commission, Michigan Department of
Treasury, Michigan Department of Commerce, the State of
Michigan, American Trucking Associations, Inc., and TNT
Holland Motor Express, Inc. Petitioner TNT Holland Motor
Express, Inc. has since become USF Holland, Inc.
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TABLE OF CONTENTS
AFFEi PI IN TD oo cociichcsssccesassccessesescccsnsosecscvescsesessses i
PARTIES TO THE PROCEEDING. ............c.cecescsscscessssosesooosees ii
Te I a sesaccecescsacossttrsssisivoseseccossssacesnnces Vv
SN ih ccaetsensntnicsicpuidtovechscatabicsaventsrenescnenes l
Css dlamsewsine 2
CONST!TUTIONAL AND STATUTORY PROVISIONS
PT Ns patie saicacinsuihenstesctssdbsuvbioasicisacsecsnnivesorsere 3
PR Se Nida telah actcsdesscusbsdicscbisscasncosecacksssassdsonescacseces 5
ae a esse cannsnsceesiossaasvieciots 5
2. Proceedings in the instant case ...............ccececesees 7
a. Michigan Court of Claims.........0........ccc00. 7
b. Michigan Court of Appeals. ..............c.c.cec000: 8
c. Michigan Supreme Court ...0..0.0..0...c.c00. 12
REASONS FOR DENYING THE PETITION...........ececcs0e00-. 13
A. Under Michigan Court Rule (MCR)
2.116(c)(10), summary disposition is properly
granted where a party opposing such a motion
failed to present evidence to support its claim.......... 13
B. Because the Michigan Court of Appeals did not
review Petitioners preemption issue, this Court
should deny review of that issue. ...............csccccsseceses. 15
C. Even if the fact that Petitioners submitted no
evidence is ignored, and even if their claim of
preemption is properly preserved, they still have
not established that the Michigan Motor Carrier
Act’s fee provisions are preempted by federal
law. 16
irs III iors cccnamesacsbaccvadescnceepsicccecssessecscecs 16
-ivV-
2. Federal Preemption Is Determined By
Congressional Intent, And Is Limited And
Strictly Construed With Respect To
Statutes Enacted Under The State's Police
PRIN sasasnccivsvashenomadhicaabiaiadicnmoa iiabidsicacicsous: 17
3. The Express Language Of FAAAA Section
601 And Its Legislative History Establish
That Congress Did Not Intend To Preempt
Non-Economic State Regulation Of
Intrastate Transportation Of Property By
Motor Carriers, Including Safety and
Fitness Regulation, And The Issuance Of
Certificates And Collection Of Fees Related
—— Exclusively To Such Non-Preempted
4. The Michigan Court of Appeals correctly
held in Jn Re Federal Preemption, supra,
that FAAAA Section 601 does not preempt
the MCA fee provisions................cccscecececsecesecess 24
5. A Major Purpose Of The MCA Extends To
Safety Regulation, Which Has Been
Preserved By FAAAA Section 601. ................. 26
6. Petitioners’ arguments concerning the
distinction between “motor vehicle” and
“motor carriers” is without merit....................... 29
CEA iasiisiscink es elbiiliulbies cecil bea Eas 32
TABLE OF AUTHORITIES |
Page
Cases
Anderson v Kemper Insurance Co..,
128 Mich App 249; 340 NW2d 87 (1983) .......ecccecsccsesseees 15
Central Transport, Inc v Michigan Public Service Comm,
SO We EE iicidd ce ES 7
City of Columbus v Ours Garage and Wrecker Serv,
Pe CI wirstasserchivicisitsiaicinunsiccue cc 30
Cloverleaf Butter Co v Patterson,
PEt A CD witiitisinridtbioteinekecedn 18
Durant v Stahlin,
375 Mich 628; 135 NW2d 392 (1965)..........ccccccccecesessseees 15
Florida Lime & Avocado Growers v Paul,
cee ge PRS, + SROs eRe ca RED PS Meco 18
Halifax Packing Co v Coyne,
A OC iiakithe cesta ta eat) Se 18
Hillsborough County v Automated Medical Laboratories,
Inc,
— FEA FOUND ceriictieel tthe secon 18
In Re Federal Armored,
MPSC File No. 23409, Case No. 5 ...cccccccccececcoceccececececeeees 22
In Re Federal Preemption of Provisions of the Motor
Carrier Act,
223 Mich App 288; 566 NW2d 299 (1997)......6, 13, 16, 24
Louisiana Public Service Comm v F. ederal
Communications Comm,
Slt et Saree ee ere 17
Loving v United States,
Fle TO I isovccninsnsncitssexansesosncioscanearencasmnmnsinsaie 30
-Vi-
Mabee v White Plains Publishing Co,
SAT UID FFG CED wv iicinnsiccibashenisniiariaadibeanivtiabiascibicpanens 18
Maiden v Rozwood,
461 Mich 109; 597 NW2d 817 (1999) ...........cceceesseeeneeeee is
Moore v United States,
41 F Supp 786 (DC Minn, 1941), aff'd 316 US 642
CREED ..ciccasestntenisennannbisnitiiniasniantabicidataaghintatinbeniasibamunilies 30
Morales v TransWorld Airlines,
504 ATE SID saiciiiincathciscartiresitivaiinpelasbauniienmtants 21
Remes v Dobys,
87 Mich App 534; 274 NW2d 64 (1978) ..........s:ssssesseseeees 15
Rice v Santa Fe Elevator Corp,
ST US 2a a iicvindictntinttinimnmimigennens 30
Smith v Globe Life Ins Co.,
460 Mich 446; 597 NW2d 28 (1999) ..........scssccssscessseeeees 15
Spiek v Dept of Transportation,
456 Mich 331; 572 NW2d 201 (1998)............sssccsccssseseeees 14
Westlake Transportation, Inc v Michigan Public Service
Comm,
255 Mich App 589; 662 NW2d 784 (2003)..........sssssessees |
Zobrest v Catalina Foothills School Dist,
SI Fg 6 at eoscsriunssdintciinventoniosuaaltiedinadeddaiaiiaiatias 16
Statutes
MO UI, TAG? iviscivvicctsiccitieinisihinigclebipmatatianalaiptaeaiaa ian 2
GD Ue BO TUE sissicecsnrinscosiininnisnctiinailiimaityiseasstaiatlaiieaiiabasecniaiiaadiiieids 31
TD AS BFAD nccenincicsintagenccieimintnanreesennetncnntesiatiinncmiiiiinlion 30
BD TIS PASO) iss icsavinsinncsscinavsscrcildidincisttesiascasionnialias 19, 30
MT PI oes viccnsseeienecicheissntescinshciehestinstannticiemesibancainaa 3
PS DEIR crciivcssstcivctsncnnniivniciencinieriaaenas 30
OEE 098. 1 OU in cctecn cision omcanaane 5
- Vii -
NS ITA dni bsiiehahinsaldbiapstniceieiibeiinianadbddaandainidebdaissaies 17, 27
UAE TN TI AID stscibiinsinisitveatincshisnniichenddliaeedionanineeiteandainntiaptsailsconisiiaies 28
rInDC TTI sriiiidtarntaminiisssisssihsileetiasicieatessnaabuiaginaiipuceissiens sokeaavaeh 27
IIR I ibiniicchitiicibsablishnilisiditihadghtscnesuibdtcicinihinkglinedpadceladesisicas 28
pc ec ge AE TLE LDN LOOT SOAR EEE 27
ak Oe OA thie eeeiisinidestcdviniosntahisiahanidialdin schilhadbsabibiesitals 1:3,143,25
IRIS slilirossecetenieteprasikchiaaccecatcaaiiadaleshabthciiatasniisaelie 13, 25
Pe rN cisssiutcnarabiasbetsiisen sa ictlciaicadasboaseicbas uaiiigie shies i, 13
Be Aer TUITT ici sbuihisdhsanihciahesinhiihcsdhanpihhpiiaeicnipiiacincsbciechasiohe 28
Pe a ON i lis sclisa asidcscenicdguiascindasaaeadeenasevaed 27, 28
Other Authorities
House Conference Report No. 103-677, p. 84, reprinted in
ates BT ie siencitisndsicnisectnnsecetbanbinnianasielcoiestins 20
House Conference Report No. 103-677, reprinted in 1994
RAGIN as. A FP aiclaliasiiencinbbpaecnieiniacschaahiacaesdniedieibacinicdbicshe 20
House Conference Report, 103-677, p. 85, reprinted in
Re a ie TUT sissies achecnscsteendioedennideniesnionnanins 21
House Conference Report, 103-677, pp. 85-87, reprinted in
Re AEG, BIS THE FID vnctccscconiaschescnssssesinssonenennnees 23
Constitutional Provisions
Se RE A Ei iecisickcsntinishincchitioshicunigiccdonedesiaininimondonionlbiaiens 3
ce een ee ee ee eS ee
OPINIONS BELOW
The opinion of the Michigan Court of Appeals (Pet. App. 1-35) is
published and reported as Westlake Transportation, Inc v
Michigan Public Service Comm, 255 Mich App 589; 662 NW2d
784 (2003). The order of the Michigan Supreme Court denying
Petitioner’s application for leave to appeal (Pet. App. 73-75) is
published and reported at 469 Mich 969; 673 NW 2d 752 (2003).
The trial court rulings are unpublished.
JURISDICTION
Tne Michigan Court of Appeals decision was entered on March
11,2003. The judgment of the Michigan Supreme Court denying
Petitioners’ Application for Leave to Appeal was entered
December 3, 2003. The jurisdiction of this Court is invoked
under 28 USC 1257.
| i a
§.
CONSTITUTIONAL AND STATUTORY PROVISIONS
INVOLVED
The Supremacy Clause of the United States Constitution, art
VI, cl 2, provides in relevant part:
This Constitution, and the Laws of the United States
which shall be made in pursuance thereof. . . shall be the
supreme Law of the Land. . . and the judges in every State
shall be bound thereby, anything in the Constitution or the
Law of any State to the Contrary notwithstanding.
Michigan Compiled Laws (MCL) 478.1 provides:
Each application filed with the commission for a
certificate of authority or for a permit, as required by this
act, shall be accompanied by a fee of $100.00. Each
application filed with the commission for the renewal ofa
certificate or permit shall be accompanied by a fee of
$50.00 for the administration of this act, which fee shall
be in addition to all other fees, and shall be retained by
the commission and deposited with the state treasurer,
whether or not the certificate or permit or the renewal of
the certificate or permit is granted.
MCL 478.2(2) provides:
(2) A motor carrier licensed in this state shall pay an
annual fee of $100.00 for each vehicle operated by the
motor carrier which is registered in this state and
} operating entirely in interstate commerce. A motor carrier
shall pay a fee of only $50.00 for each self-propelled
motor vehicle operated by or on behalf of the motor
carrier if the motor carrier begins operation of the vehicle
after June 30 and has not previously paid a fee under this
subsection for that vehicle.
49 USC 14501. Federal authority over intrastate
transportation.
* * *
_______ (ce) Motor carriers of property. —
(1) General rule. — Except as provided in paragraphs
(2) and (3), a State, political subdivision of a State, or
political authority of 2 or more States may not enact or
enforce a law, regulation, or other provision having the
force and effect of law related to a price, route, or service
of any motor carrier (other than a carrier affiliated with a
direct air carrier covered by section 41713(b)(4)) or any
motor private carrier, broker, or freight forwarder with
respect to the transportation of property.
(2) Matters not covered. — Paragraph (1) —
(A) shall not restrict the safety regulatory authority
of a State with respect to motor vehicles, the authority of
a State to impose highway route controls or limitations
based on the size or weight of the motor vehicle or the
hazardous nature of the cargo, or the authority of a State
to regulate motor carriers with regard to minimum
amounts of financial responsibility relating to insurance
requirements and self-insurance authorization;
* * *
ee
STATEMENT
1. Prior Proceedings
On August 23, 1994, the Federal Aviation Administration
Authorization Act of 1994 (FAAAA) was signed into law.
Section 601 of the FAAAA preempted state economic regulation
of motor carriers related to price, route or services. Section 601
effected a partial preemption of state law, which is evidenced by
Section 601’s (49 USC 14501(c)(2)) description of matters not
covered, wherein Congress stated that the preemption:
(A) shall not restrict the safety regulatory authority of
a State with respect to motor vehicles, the authority of a
State to impose highway route controls or limitations
based on the size or weight of the motor vehicle or the
hazardous nature of the cargo, or the authority of a State
to regulate motor carriers with regard to minimum
amounts of financial responsibility relating to insurance
requirements and self-insurance authorization; and
On September 8, 1994, the Michigan Public Service
Commission (MPSC) issued an order, with notice to all interested
_ parties including Petitioners, initiating a contested case
proceeding (MPSC Case No. T-1273) to examine the effect of
Section 601 of the FAAAA on the Michigan Motor Carrier Act
(MCA), MCL 475. 1 et seg, and associated rules. In that
September 8, 1998 order, the MPSC indicated that following the
submission of evidence and testimony, it would issue a decision
determining which sections of the MCA and its rules had been
preempted and which had not.
On January 11, 1995, following contested case hearings and
the submission of briefs by interested parties, the MPSC issued its
opinion and order in MPSC Case No. T-1273, identifying those
provisions of the MCA and rules promulgated thereunder, that
were preempted by Section 601 of the FAAAA as well as those
:
sections that were not preempted by Section 601 and which
remained binding on motor carriers.
With regards to the assessment of annual registration fees, the
MPSC found in its January 11, 1995 Opinion and Order that they
were not preempted by Section 601 of the FAAAA, stating:
[T]]he preemptive effect of Section 601 extends only to
issues of price, route, and service. Neither the language
of Section 601 nor the Conference Report imply that fees
imposed by a state’s existing regulatory structure might
fall within that relatively narrow range of issues. Thus,
application of the annual registration fee required by
MCL 478.2 is not preempted.
Importantly, the MPSC’s opinion also notes that the MCA does
not require that revenue received (i.e. from fees) under that law
be used exclusively for economic reason. Jd. Thus, the fees
received can be used only to fund non-preempted motor carrier
regulatory activities performed by the MPSC.
On appeal, the Michigan Court of Appeals in In Re Federal
Preemption of Provisions of the Motor Carrier Act, 223 Mich
App 288; 566 NW2d 299 (1997), upheld the MPSC’s opinion and
order with respect to fees, finding that it was not only in keeping
with Section 601’s partial preemption but also supported by the
record, as follows:
The PSC still has significant regulatory obligations.
For example, the PSC must supervise and regulate the
safety of motor carrier operations. MCL 479.41; MSA
22.587(1). There is still a certification process. It follows
that the fees for obtaining a certificate of authority, MCL
478.1; MSA 22.560, for protesting an application for a
certificate, MCL 478.1a; MSA 22.560(1), and for
administering the act, MCL 478.2(1); MSA 22.561(1), are
unaffected by the preemptive effect of § 601. In fact,
yo
because the PSC is not using its resources to enforce
preempted portions of the Motor Carrier Act, the fees
collected by the PSC are not related to the preempted
provisions and rules. Indeed, appellants Central
Transport and Universal Am-Can have not shown that the
cost of the PSC’s operations has ever been totally funded
by the fees it collects, and they have not provided any
reason to believe that the fees collected were or can be
used only for what is now preempted economic
regulation.
The Michigan Supreme Court unanimously denied the application
for leave to appeal. 458 Mich 852. One of the parties, Central
Transport, Inc., then filed a Petition for Writ of Certiorari. The
question presented in the Petition was:
Whether Section 601 of the Federal Aviation
Administration Authorization Act of 1994 (“Section
601”), which prohibits virtually all state regulation of
intrastate motor carriers, except for certain specified
safety powers, preempts the annual per-vehicle fee
provision for intrastate motor carriers contained in the
State of Michigan’s former economic regulatory statute?
This Court denied the Petition. Centra! Transport, Inc v
Michigan Public Service Comm, 525 US 1018 (1998).
2. Proceedings in the instant case
a. Michigan Court of Claims
In Westlake, et al, Docket No. 95-15628-CM and Troy Cab, et
al, Docket No. 95-15631-CM, Westlake and Troy Cab both
challenged the lawfulness of the collection of fees pursuant to the
MCA. These cases were certified as a class action on June 9,
1995.
+e
Petitioners filed a motion for partial summary disposition
asserting that the fee provisions of the MCA were preempted by §
601 of the FAAA On October 13, 1998, the Court of Claims
issued its Opinion, finding that Petitioners’ motion was without
merit and denied the motion (Pet. App. 36-50). On December 30,
1998, the Court granted the State Defendants’ Motion for
Summary Disposition (Pet. App. 54-56). On March 7, 2000 the
Court denied Plaintiffs’ Motion for Reconsideration (Pet. App.
57-72). Petitioners filed a claim of appeal with the Michigan
Court of Appeals on March 24, 2000.
b. Michigan Court of Appeals.
On March 11, 2003, the Court of Appeals, issued its opinion
in the consolidated appeals and affirmed the Court of Claims
summary disposition ruling in favor of the State Defendants. The
court stated:
In their complaints, plaintiffs and intervening
plaintiffs allege that the intrastate fees in MCL 478.1 and
MCL 478.2(1) were preempted by § 601 of the FAAAA.
Subsection 601(h), which became effective on January 1,
1995, prohibited state regulation of prices, routes, or
services of motor carriers, save for a few delineated
exceptions. (Currently codified as 49 USC § 14501[c].)
Plaintiffs argue that the court erred in granting
defendants summary disposition on this issue before
discovery was complete.” Plaintiffs assert that they
should have been allowed an opportunity to conduct
additional discovery in order to show that, as utilized, the
intrastate fees are prohibited by federal law.
In re Fed Preemption of Provisions of the Motor
Carrier Act, 223 Mich. App. 288, 302; 566 N.W.2d 299
(1997), held that § 601 did not preempt the entire MCA
and did not indicate an intent to preempt fee provisions
such as MCL 478.1 and MCL 478.2. The Court noted
that in response to the enactment of the FAAAA, the PSC
"issued considered decisions that indicated how its
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regulation of the trucking industry in Michigan was
affected by federal legislation preempting at least some
aspects of state regulation." Jn re Motor Carrier Act,
supra at 300. In regard to the fee provisions at issue, the
Court stated:
The PSC still has significant regulatory
obligations. -For example, the PSC must supervise
and regulate the safety of motor carrier operations.
MCL § 479.41; MSA 22.587(1). There is still a
certification process. It follows that the fees for
obtaining a certificate of authority, MCL § 478.1;
MSA 22.560, for protesting an application for a
certificate, MCL § 478.1a; MSA 22.560(1), and for
administering the act, MCL § 478.2(1); MSA
22.561(1), are unaffected by the preemptive effect of
§ 601. In fact, because the PSC is not using its
resources to enforce preempted portions of the Motor
Carrier Act, the fees collected by the PSC are not
related to the preempted provisions and rules. Indeed,
appellants Central Transport and Universal Am-Can
have not shown that the cost of the PSC's operations
has ever been totally funded by the fees it collects,
and they have not provided any reas > to believe that
the fees collected were or can be used only for “hat is
now preempted economic regulation. [/d. at? ‘’-303;
emphasis added. ]
Plaintiffs contend that the PSC intrastate fees were
being used to fund preempted portions of the MCA, and,
thus, the fees were related to a preempted provision.
Therefore, the fees were also preempted. Plaintiffs did not
submit any documentary evidence below in support of
this contention. Plaintiffs argue that they had intended to
do so, but their opportunity was foreclosed when the court
denied their motion for partial stay and bifurcation of
issues. Plaintiffs requested a 90- to 120-day stay in the
proceedings to conduct discovery in order to present a
factual record to the court in a supplemental brief in
-10-
response to the decision in Jn re Motor Carrier Act,
supra; however, the court denied the motion without
prejudice because it believed its summary-disposition
ruling would cover the issue.
A court's decision regarding matters of discovery is
reviewed on appeal for an abuse of discretion. Jn re Pott,
234 Mich. App. 369, 373; 593 N.W.2d 685 (1999).
Plaintiffs could not address this Court's decision in Jn re
Motor Carrier Act, supra, in their original motions for
partial summary disposition because they were filed and
argued in 1995, and the case was not decided until April
25, 1997. However, plaintiffs did not file their motion for
partial stay and bifurcation of issues until March 1998,
nearly one year later. The record indicates that plaintiffs
were conducting discovery during this entire time, yet
never sought evidence relating to this issue.
We find that plaintiffs had ample opportunity to
conduct discovery following the decision in Jn re Motor
Carrier Act, supra, and file a supplemental brief
containing their findings. Given that one year had passed,
we also find that there is no reason to believe that had
plaintiffs been given another three or four months in
which to conduct discovery, plaintiffs would have
uncovered a factual basis for their claim. Furthermore,
we note that by stipulation, discovery was to be
completed 180 days after the court issued its ruling on the
parties’ motions for summary disposition.
Plaintiffs assert in their reply brief that they are not
arguing that they were prevented from conducting
discovery, but that they were denied an opportunity to
supplement their motion papers. However, the court did
not foreclose plaintiffs' opportunity to present their
argument. They could have filed additional briefs at any
time before the court issued its ruling. In fact, on January
28, 1998, plaintiffs filed a supplemental brief in support
of their motions for summary disposition and in
opposition to defendants’ motion, in which they
~~ =
specifically mentioned In re Motor Carrier Act, supra.
This indicates plaintiffs were well aware of the import of
the case, and could have conducted discovery and
presented their argument accordingly. Plaintiffs mention
that defendants did not submit the opinion as authority
until January 1998. However, Jn re Motor Carrier Act
was decided in April 1997, and nothing prevented
plaintiffs from proactively distinguishing their case from
it.
Moreover, the court specifically invited plaintiffs to
present their argument again if they thought its ruling did
not adequately cover the issue. Plaintiffs did file a motion
for reconsideration after the court issued its orders on the
parties' motions for summary disposition, yet did not
reraise this issue. We recognize that plaintiffs renewed
their motion to stay on October 8, 1998; however, this
was before the court issued its ruling. Because the court
had not yet issued its ruling, plaintiffs could have
attempted to conduct discovery after its first motion was
denied.
Therefore, we conclude that the court did not abuse its
discretion in denying plaintiffs’ request to stay the
proceedings in order to conduct additional discovery. A
decision of a court that obtained the correct result, albeit
for a different reason, will be affirmed on appeal. Lavey v
Mills, 248 Mich. App. 244, 250; 639 N.W.2d 261 (2001).
° We note that plaintiffs do not contest the court's
summary-disposition ruling, that § 601 did not preer pt
the intrastate fees.
Petitioners filed an Application for Leave to Appeal with the
Michigan Supreme Court on April 1, 2003.
e}2-
c. Michigan Supreme Court
On December 3, 2003, the Michigan Supreme Court denied
the application for leave (Pet. App. 73-75).
o43-
REASONS FOR DENYING THE PETITION
A. Under Michigan Court Rule (MCR) 2.116(c)(10),
summary disposition is properly granted where a party
opposing such a motion failed to present evidence to
support its claim.
In presenting its case at the state level, the Petitioners failed to
present evidence in support of its claim that the intrastate fees in
MCL 478.2 and MCL 478.2(1) were preempted by § 601 of the
FAAAA. On January 3, 1995, Petitioners filed a class action in
the Michigan Court of Claims challenging the $100 fee imposed
by MCL 478.1 and MCL 478.2(1). They filed and argued a
motion for summary disposition in 1995. The Michigan Court of
Appeals issued its decision in In Re Fed Preemption, supra, on
April 25, 1997. The Court of Claims issued its written opinion
denying Petitioners’ motion on October 13, 1998 (Pet. App. 36-
50) and entered its order denying the motion on November 12,
1998 (Pet. App. 51-53). The Court of Claims specifically invited
Petitioners to present their argument again if they thought the
Court’s ruling did not cover the issue. Pet. App. 23. The
Petitioners filed a motion for reconsideration and the Court
denied the motion on March 7, 2000 (Pet. App. 57-72). While
Petitioners were conducting discovery during this entire time,
they never sought discovery relating to the issue in this case. As
a result the trial court properly granted summary disposition to
the Respondents pursuant to Michigan Court Rule (MCR)
2.116(C)(10).'
In the Michigan trial courts, a motion for summary
disposition under MCR 2.116(C)(10) tests whether there is
factual support for a claim and is reviewed de novo by Michigan
' MCR 2.116(C)(10) provides:
Except as to the amount of damages, there is no genuine issue as to any
material fact, and the moving party is entitled to judgment or partial
judgment as a matter of law.
a -14-
courts on appeal. Spiek v Dept of Transportation, 456 Mich 331,
337; 572 NW2d 201 (1998). In Maiden v Rozwood, 461 Mich
109, 120-121; 597 NW2d 817 (1999), the Michigan Supreme
Court addressed the legal standard under which motions brought
pursuant to MCR 2.116(C)(10) are to be decided:
A motion under MCR 2.116(C)(10) tests the factual
sufficiency of the complaint. In evaluating a motion for
summary disposition brought under this subsection, a trial
court considers. affidavits, pleadings, depositions,
admissions, and other evidence submitted by the parties,
MCR 2.116(G)5), in the light most favorable to the party
opposing the motion. Where the proffered evidence fails
to establish a genuine issue regarding any material fact,
the moving party is entitled to judgment as a matter of
law. MCR 2.116(C)(10), (G)(4). . . .
** *
A litigant’s mere pledge to establish an issue of fact at
trial cannot survive summary disposition under MCR
2.116(C)(10). The court rule plainly requires the adverse
party to set forth specific facts at the time of the motion
showing a genuine issue for trial.
Today we clarify the correct legal standard under
MCR 2.116(C)(10) because our Court has inconsistently
applied the standard since the 1985 amendment of the
court rule. ... The reviewing court should evaluate a |
motion for summary disposition under MCR 2.116(C)(10) |
by considering the substantively admissible evidence
actually proffered in opposition to the motion. A
reviewing court may not employ a standard citing the |
mere possibility that the claim might be supported by |
evidence produced at trial. A mere promise is insufficient
under our court rules. [Citations omitted.]
Thus even if the Petitioners had stated a prima facie case
when before the trial court it was also required to show there is a
ie
genuine issue of material fact, that is based on something more
than mere conjecture. This the Petitioners failed to do. Durant v
Stahlin, 375 Mich 628, 638; 135 NW2d 392 (1965); Anderson v
Kemper Insurance Co., 128 Mich App 249, 252-253; 340 NW2d
87 (1983). Therefore, under the Michigan Court Rules, a party,
when challenged, must show that it has a case on the law and that
there is some evidentiary proof of specific facts to support its
allegations. Durant at 638; Remes v Dobys, 87 Mich App 534,
537-538; 274 NW2d 64 (1978). Ifa party opposing a MCR
2.116(C)(10) motion fails to present such evidentiary proofs,
summary disposition is properly granted. Smith v Globe Life Ins
Co., 460 Mich 446, 455-456 n2; 597 NW2d 28 (1999). Having
waived the opportunity to present evidence to support its claim,
Petitioners should neither be allowed to avoid MCR 2.116(C)(10)
nor be heard to complain.
After the Petitioners failed to present any evidence in support
of its claims, the Michigan Court of Appeals correctly affirmed
the Michigan Court of Claims.
B. Because the Michigan Court of Appeals did not review
Petitioners’ preemption issue, this Court should deny
review of that issue.
In discussing the Petitioners’ preemption claims that the fees
in MCL 478.1 and 478.2(1) are preempted, the Michigan Court of
Appeals noted at footnote 9 (Pet. App. 20) of its Opinion:
We note that plaintiffs do not contest the court’s
summary disposition ruling, that § 601 did not preempt
the intrastate fees.
The Michigan Court of Appeals then addressed the Petitioners’
other claim regarding the challenged fee sections, i.e. — whether
the Petitioners were wrongly denied discovery or the opportunity
to present supplemental pleadings. The Michigan Court of
Appeals examined those contentions and found that they lacked
merit. (Pet. App. 22-23). The Michigan Court of Appeals,
-16-
however, did not address the Petitioners’ claim that MCL 478.1
and 478.2(1) were preempted, While the Petitioners’ brief (Res.
App. 8b-12b) to the Michigan Court of Appeals did contain
argument regarding § 601, it is nonetheless clear that the Court of
Appeals did not believe the Petitioners had properly contested the
trial court’s ruling that § 601 did not preempt the intrastate fees.
Because the Michigan Court of Appeals heid that the issue had
not been presented, it did not consider the issue. In the past, this
Court has generally declined invitations to review issues not
addressed by the appellate courts below. Zobrest v Catalina :
Foothills School Dist, 509 US 1, 8 (1993) (where issues are
neither raised before nor considered by the Court of Appeals, this
Court will not ordinarily consider them.”) The Petitioners have
failed to present any compelling reasons why this Court should
depart from that practice.
C. Even if the fact that Petitioners submitted no evidence is
ignored, and even if their claim of preemption is properly
preserved, they still have not established that the
Michigan Motor Carrier Act’s fee provisions are
preempted by federal law.
1. Introduction.
Basically, Petitioners contend that the Michigan Court of
Appeals erred when it did not rule contrary to Jn Re Federal
Preemption, supra? even though they acknowledge they
submitted no evidence to support their claim and did not prove
their case (Res. App. 7b, 13b-14b). Further, their strictly legal
argument that Section 601 of the FAAAA results in the
preemption of virtually all state motor carrier laws is without
merit. The FAAAA, by its own terms, does not support the broad
sweep of federal motor carrier preemption, urged by the
Petitioners. Section 601 expressly excepts from its preemptive
2 As previously noted herein, the Michigan Court of Appeals decision in Jn Re
Federal Preemption, supra, was ultimately appealed to this Court, which
denied certiorari in Central Transport, Inc, supra, to an issue very similar to
the one Petitioners present here.
«37.
effect significant aspects of regulation, including safety
regulation, regulation of size and weight of vehicles, regulation of
insurance requirements, and regulation of the transportation of
household goods.
The Petitioners erroneously contend that the sole focus of the
MCA is the economic regulation of competition. This is not true
since the MCA, from its very inception, has had as a dual purpose
to “protect and conserve the highways and protect the safety and
welfare of the traveling and shipping public in their use of the
highways.” MCL 475.2.
2. Federal Preemption Is Determined By Congressional
Intent, And Is Limited And Strictly Construed With
Respect To Statutes Enacted Under The State's Police
Powers.
Congressional intent determines whether federal law preempts
state law. "[T]he critical question in any preemption analysis is
always whether Congress intended that federal regulation
supersede state law." Louisiana Public Service Comm v Federal
Communications Comm, 476 US 355, 369 (1986) ("Louisiana
PSC"). This Court in Louisiana PSC identified when Congress
can be understood to have preempted state law:
Pre-emption occurs when Congress, in enacting a federal
statute, expresses a clear intent to pre-empt state law...,
when there is outright or actual conflict between federal
and state law..., where compliance with both federal and
state is in effect physically impossible..., where there is
implicit in federal law a barrier to state regulation...,
where Congress has legislated comprehensively, thus
occupying an entire field of regulation and leaving no
room for the States to supplement federal law..., or where
the state law stands as an obstacle to the accomplishment
and execution of the full objectives of Congress. . . .
(Citations omitted). 476 US at 368-369.
o
Petitioners erroneously argue that Congress has occupied
virtually the entire field of regulation. However, federal
occupation of a field will not be lightly inferred:
The principle to be derived from [Supreme Court]
decisions is that federal regulation of a field of commerce
should not be deemed preemptive of state regulatory
power in the absence of persuasive reasons - either that
the nature of the regulated subject matter permits no other
conclusion or that the Congress has unmistakably so
ordained. Florida Lime & Avocado Growers v Paul, 373
US 132, 147 (1963).
Moreover, preemption of matters "within the traditional
police power of the State should not be lightly inferred." Fort
Halifax Packing Co v Coyne, 482 US 1, 21 (1987). A federal
statute will be read to supersede a State's historic powers only if
this is "the clear and manifest purpose of Congress."
Hillsborough County v Automated Medical Laboratories, Inc,
471 US 707, 715 (1985).
This Court has also recognized that, in exercising its power
under the Commerce Clause, “Congress may weigh relative needs
and restrict the application of a legislative policy to less than the
entire field." Mabee v White Plains Publishing Co, 327 US 178,
184 (1946). In Cloverleaf Butter Co v Patterson, 315 US 148,
155 (1942), this Court added that, where there has only been a
partial exercise of the federal government's power over interstate
commerce, "the state may legislate freely upon those phases of
the commerce which are left unregulated by the nation."
As is evident from its plain language, Congress in Section 601
effected only a partial preemption, while expressly preserving
other state regulation (safety, fitness, etc), which necessarily
includes the attendant fees used for such continued regulation.
Congress neither sought nor intended to occupy virtually all
motor carrier regulation (or to bar continued state regulation in
i.
the areas not preempted). Section 601 did not preempt areas
relating to safety, fitness, certificates, fees, among others.
3. The Express Language Of FAAAA Section 601 And
Its Legislative History Establish That Congress Did
Not Intend To Preempt Non-Economic State
Regulation Of Intrastate Transportation Of Property
By Motor Carriers, Including Safety and Fitness
Regulation, And The Issuance Of Certificates And
Collection Of Fees Related Exclusively To Such Non-
Preempted Regulation.
Section 601 provides for only partial preemption of traditional
state authority to regulate intrastate motor carrier matters, and did
not preempt all state regulation of for-hire carriers as Petitioners’
claim. By its own terms, Section 601 provides for only partial
preemption of state regulation, namely, economic regulation
"related to a price, route, or service of any motor carrier".
Section 601(h) [49 USC 14501(c)], in pertinent part, states:
(1) GENERAL RULE. -- Except as provided in
paragraphs (2) and (3), a State, political subdivision of a
State, or political authority of 2 or more States may not
enact or enforce a law, regulation, or other provision
having the force and effect of law related to a price, route,
or service of any motor carrier (other than a carrier
affiliated with a direct air carrier covered by section
41713(b)(4) of this title) or any motor private carrier with
respect to the transportation of property.
(2) MATTERS NOT COVERED. -- Paragraph (1) --
(A) shall not restrict the safety regulatory
authority of a State with respect to motor vehicles, the
authority of a State to impose highway route controls
or limitations based on the size or weight of the motor
vehicle or the hazardous nature of the cargo, or the
authority of a State to regulate motor carriers with
regard to minimum amounts of financial
-20-
responsibility relating to insurance requirements and
self-insurance authorization; and
(B) does not apply to the transportation of
households goods. (Emphasis added).
Besides the plain language of Section 601's statutory
provisions, the legislative history also establishes that only a
partial preemption was intended by Congress, and not the
sweeping preemption that Petitioners suggest. The preemption as
stated pertains only to that which is "related to a price route, or
service of any motor carrier." The legislative history further
indicates that the specific exemptions from preemption listed in
Section 601(h)(2)(A) (e.g., safety, financial fitness, fees, size,
weight, etc.) were not intended as a specific or exhaustive list, but
were meant as examples of the kind of state regulation that
remains. In other words, Congress preempted only those matters
which are expressly preempted in the FAAAA, and nothing else.
In this regard, the House Conference Report No. 103-677, p. 84,
reprinted in 1994 U.S.C.C.A.N. 1756 states:
Paragraph (4)(B) emphasizes that State authority to
regulate safety, financial responsibility relating to
insurance, transportation of household goods, vehicle size
and weight and hazardous materials routing of air carriers
and carriers affiliated with a direct air carrier through
common controlling ownership is unchanged, since State
regulation in those areas is not a price, route or service
and thus is unaffected. (This provision is identical to the
new subsection 11501(h)(2)(A) discussed below.) This
list is not intended to be all inclusive, but merely to
specify some of the matters which are not "prices, rate or
services" and which are therefore not preempted.
(Emphasis added).
The House Conference Report No. 103-677, reprinted in 1994
U.S.C.C.A.N. 1757 further indicates that those matters which are
not a price, rate or service are not preempted, stating as follows:
ee ee ee ee ee
q
. eo
New subsection (h)(2) emphasizes that State authority
to regulate safety, financial fitness and insurance,
transportation of household goods, vehicle size and
weight and hazardous materials routing of motor carriers
is unchanged since State regulation in those areas is not a
price, route or service and thus is unaffected. This
subsection is identical to section 41713(b)(4)(B),
described above.
The same House Conference Report also. provides compelling
evidence that congressional intent is not to preempt the ability of
the states to issue statewide certificates of authority applicable to
motor carriers to demonstrate their compliance with state and
federal laws, or to interfere with tax (or fee) laws, as follows:
Furthermore, neither preemption provision would
preempt the ability of a State to issue a certificate or other
documentation (in written or electronic form)
demonstrating that the carrier complies with State
requirements which are not preempted by these sections
and nothing in this amendment is intended to change the
application of State tax laws to motor carriers. {House
Conference Report, 103-677, p. 85, reprinted in 1994
U.S.C.C.A.N. 1757.]
Petitioners, however, claim that a broad preemptive purpose
can be ascertained by looking at the language Congress has used
to deregulate the airline industry (citing Airline Deregulation Act
of 1978 (ADA), 49 USC 41713). Petitioners indicate that the
ADA prohibited the states from enacting or enforcing Laws
"relating to rates, routes, or services." Citing the House
Conference Report on Section 601, Petitioners claim that this
Court’s decision in Morales v TransWorld Airlines, 504 US 374
(1992) should be the starting point for any determination of the
preemptive effect of the FAAAA.
oo.
The Morales case, however, involved a different issue, under
a different Act, relating to solely to airlines. Furthermore, the
FAAAA, adopted in August 1994, and effective January 1, 1995,
was simply not before this Court in Morales in 1992. As with
any other statutory construction issue, any analysis of Section 601
of the FAAAA should start with the plain language of the
FAAAA itself.
It should also be noted that Section 601 was expressly given
prospective, not retroactive, effect. By its terms, Section 601 is
effective January 1, 1995. The FAAAA did not transform this
Court's ruling in Morales, applicable to an airline, as a retroactive
preemption of state law relative to motor carrier regulation.
Moreover, the MPSC prior to the adoption of Section 601 had
already ruled that economic regulations related to rates, routes, Or
services do not apply to air carriers, or to motor carrier operations
integrated with air carriers, but would apply only to ground-only
_ motor carrier functions, not having a connection with air carriers.”
Thus, the MPSC has always regulated in a manner consistent with
the 1992 Morales decision.
Also, in Morales, the airlines sued to enjoin various State
attorneys general from enforcing state guidelines requiring that
airline advertisements contain certain disclosures as to fare terms,
restrictions and availability. The Court concluded that the
airlines’ advertisements “relat[ed] to rates" and were therefore
preempted by the ADA. This Court, however, in Morales
emphasized the limited reach of its holding:
Nor need we address whether state regulation of the non-
price aspects of fare advertising (for example, state laws
preventing obscene depictions) would similarly ‘relat[e]
3 The MPSC in its August 25, 1992 Order in In Re Federal Armored, MPSC
File No. 23409, Case No. 5, determined that the economic regulation of motor
carrier air-ground services were subject to preemption under Section 1305 of
the Airline Deregulation Act, but the carrier's strictly ground-based services
os.
to' rates; the connection would obvivusly be far moze
tenuous. .. .'/s/ome [S]tate actions may affect [airline
fares] in too tenuous, remote, or peripheral a manner' to
have pre-emptive effect. (Emphasis added). 504 US at
390.
Both Section 601 itself and House Conference Report 103-
677 thus indicate that with the preemption of state regulation
"related to a price, route, or service of a motor carrier" that
Congress listed, by example and not specific list, several major
areas of state regulation which were not preempted. Such
examples included, inter alia, the major area of safety related
regulation and the ability of states to review and issue (or deny)
statewide certificates of authority to ensure compliance with state
and federal law. Similarly, Section 601 contains no language
suggesting that the collection of fees is in any way altered. In
fact, the presumption is that the fee collection power was
continued in order to provide revenues to ensure proper safety
related regulation, and to ensure that the motor carrier industry
pays its fair share of services rendered by the states, which benefit
motor carriers. Ps
The legislative history indicates that a primary intent behind
Section 601's preemption was to provide a level playing field
relative to economic regulation of motor carriers and air carriers,
and not to impact safety or other non-economic motor carrier
regulation. House Conference Report, 103-677, pp. 85-87,
reprinted in 1994 U.S.C.C.A.N. 1757-1759. Thus, the overriding
goal of Section 601 was to put all motor carriers on an equal
competitive footing regardless of whether their services did or did
not include an air carrier component. Therefore it may be seen
that the FAAAA’s preemption relates to the economic regulation
relating to a "price, route, or service" and not to other regulatory
areas, and not to areas of state regulation that Section 601
expressly exempted from preemption (safety, fitness, etc).
-24-
4. The Michigan Court of Appeals correctly held in in Re
Federal Preemption, supra, that FAAAA Section 601
does not preempt the MCA fee provisions.
The Michigan Court of Appeals in Jn Re F. ederal Preemption,
223 Mich App at 301, correctly found that the clear and
unambiguous language of Section 601 expressed Congressional
intent not to preempt all state regulation of the trucking industry.
The Court of Appeals characterized Section 601 ’s preemptive
effect as follows:
Con ional intent is the cornerstone of preemption
analysis. Ryan v Brunswick Corp, 454 Mich 20, 27; 557
NW2d 541 (1997). Regardless of the similarities between
the Airline Deregulation Act of 1978 and § 601 of the
FAAAA, it is clear and unambiguous from the language
of § 601 that the congressional intent was not to preempt
all state regulation of the trucking industry. Section 601
expressly excepts from its preemptive effect significant
aspects of regulation, including safety regulation,
regulation of size and weight of vehicles, regulation of
insurance requirements, and regulation of the
transportation of household goods. If the language of a
statute is clear and unambiguous, the plain meaning of the
statute reflects the legislative intent... . [T]he House
Conference Report indicates that “economic regulation”
is intended to be preempted and that states retain their
authority to regulate various aspects of the transportation
industry. See H R Conf Rep No 677, 103rd Cong, 2nd
Sess, pp 84-85. The title given to § 601(h) is “Preemption
of State Economic Regulation of Motor Carriers.”
(Emphasis added.) The argument that Congress intended
to preempt the entire field of regulation of motor carriers
fails in the face of the language of the legislation and its
history. The PSC’s determination that § 601 was
intended to preempt only economic regulation is
consistent with the language and history of the legislation.
~ 25.
The Court of Appeals then concluded, 223 Mich App at 302-
303:
The PSC still has significant regulatory obligations.
For example, the PSC must supervise and regulate the
safety of motor carrier operations. MCL 479.41; MSA
22.587(1). There is still a certification process. It follows
that the fees for obtaining a certificate of authority, MCL
478.1; MSA 22.560, for protesting an application for a
certificate, MCL 478.la; MSA 22.560(1), and for
administering the act, MCL 478.2(1); MSA 22.561(1), are
unaffected by the preemptive effect of § 601. In fact,
because the PSC is not using its resources to enforce
preempted portions of the Motor Carrier Act, the fees
collected by the PSC are not related to the preempted
provisions and rules. Indeed, appellants Central
Transport and Universal Am-Can have not shown that the
cost of the PSC’s operations has ever been totally funded
by the fees it collects, and they have not provided any
reason to believe that the fees collected wee or can be
used only for what is now preempted economic
regulation.
Despite having submitted no additional evidence in the instant
case, Petitioners continue to argue that MCL 478.1 and MCL
478.2 which provide for the collection of fees, were preempted by
Section 601. The Petitioners’ entire theory, however, is based
upon the erroneous premise that the fees are to be impliedly
swept into preemption as relating to "a price, route, or service of
any motor carrier." As noted, however, neither the issuance and
renewal of statewide certificate authority, nor the state fees at
issue, were intended to be preempted by Congress, as they are not
related to "a price, route, or service" of a motor carrier.
The Petitioners fail to acknowledge that Congress, by
expressly preserving significant aspects of state motor carrier
regulation such as safety, fitness, etc., adopted only a partial
preemption of state law. Moreover, the part of regulation
- 26-
preempted by Section 601 does not affect the regulatory fees in
this case as the MPSC has not engaged in any economic or other
regulation preempted by Section 601. Since January 1, 1995, the
MPSC has only engaged in regulatory activity, such as safety,
which is expressly not preempted by Section 601, and has used all
collected regulatory fees only for said activity or to reimburse the
state for motor carrier related costs.
Although the Petitioners’ claim that preemptive effect of the
FAAAA was more extensive than what the Michigan Court of
Appeals found, they have failed to address or rebut major
underpinnings of the Michigan Court of Appeals’ decision. For
example, the Court of Appeals found that the FAAAA, by its own
terms, does not support the “broad sweep of the federal motor
carrier preemption”, urged by the Petitioners.
The Petitioners fail to come to grips with the fact that the
Michigan Court of Appeals finding with respect to the extent of
the FAAAA’s preemption comes from a plain reading of that Act.
In essence, what the Michigan Court of Appeals found is that
because the statute is clear and unambiguous, no statutory
interpretation is necessary. Thus, the language of the statute
controls.
In summary, Section 601 contains no language that preempts
the continued authority of the states to grant statewide certificates
to ensure continued compliance with state and federal laws
applicable to motor carriers, and to collect applicable fees to fund
non-preempted regulation such as safety and fitness. Moreover,
Congressional intent, discussed infra, indicates that no
preemption of statewide certificates or fees was intended.
5. A Major Purpose Of The MCA Extends To Safety
Regulation, Which Has Been Preserved By FAAAA
Section 601.
Petitioners erroneously contend that the sole focus of the
MCA is state economic regulation of motor carriers. Petitioners
are incorrect because the MCA, since its enactment in 1933, has
2
had the dual purpose of not only economic regulation, but also,
importantly, safety regulation.
The very first titled purpose of the Motor Carrier Act is "to
promote safety upon and conserve the use of public highways of
the state..." This is restated in the purpose and policy section of
the Act, MCL 475.2, which states in part as follows:
It is hereby declared to be the purpose and policy of the
Legislature in enacting this law to confer upon the
Commission the power and the authority and to make it
its duty to supervise and regulate the transportation of
property by motor vehicle for hire upon and over the
public highways of this state in all matters whether
specifically mentioned herein or not, so as to:... (b)
protect and conserve the highways and protect the safety
and welfare of the traveling and shipping public in their
use of the highways;... (emphasis added).
The current title to the MCA also provides for the collection of
fees and taxes from motor carriers to promote highway safety and
conservation as follows:
[T]o provide for the levy and collection of certain
privilege fees and taxes for such carriers for such
Purposes and the disposition of such fees and taxes; ...
(emphasis added).
The MCA extensively addresses safety, fitness, and insurance
issues. MCL 475.5 tailors the duration of evidentiary
proceedings to accommodate fitness issues, and MCL 476.3
requires MPSC review of applications for certificates of authority
to verify the physical condition of the equipment and property of
the applicant as well as to ascertain that the vehicles of the
applicant have passed an inspection within the proceeding 12
months pursuant to the requirements of the Motor Carrier Safety
Aci, 1963 PA 181, MCL 480.11, et seq.
- 28.
Sections 476.5, 476.10, 478.7, 479.9, 479.10, 479.11, 479.12
and 479.13 all underscore and amplify the Commission's
regulatory duties relating to public safety as they apply to motor
Carriers. These sections spell out the Commission's
responsibilities ranging from insurance monitoring and other
record checking to leasing, contested case evidentiary
presentations, rulemaking responsibilities, and collection of
assessments. The MPSC is also granted "authority to prevent
evasion of this act through any device or arrangement" [Title and
MCL 475.2(1)} and to do "all things necessary to carry out and
enforce this act." (MCL 476.10).
Both the MPSC and the State Police also act in concert, in
many instances, to enforce both the MCA and the Michigan
Motor Carrier Safety Act, 1963 PA 181, MCL 480.11, et seq. In
addition, 1993 PA 352, effective January 13, 1994, now Article
VI of the MCA, MCL 479.41 ("Art VI"), which expands the
MPSC jurisdiction and authority relative to motor carrier safety,
in conjunction with the State Police, states:
Sec. 1. The commission shall supervise and regulate the
safety of operations of each motor carrier. The
commission may promulgate rules for the purpose of
promoting safety upon the highways and the conservation
of their use. [MCL 479.41].
** €
Sec. 2. Upon request of the commission, the department
of state police shall review the operation of an intrastate
motor carrier to determine whether the carrier is in
compliance with applicable safety related laws and rules
and issue a report within 60 days after completion of its
review to the commission. [MCL 479.42].
* * &
Sec. 3. The public service commission, in cooperation
with the department of state police, will develop and
- 29.
implement by rule or order a motor carrier safety rating
system within 12 months after the effective date of this
article. In the rating system, an unsatisfactory rating shall
not be imposed without an on-site safety review being
conducted by the department of state police. [MCL
479.43].
MCA Art VI thus explicitly authorizes cooperative functions
between the MPSC and State Police in furthering motor carrier
related public safety. Pursuant to Art. VI, the MPSC may request
State Police review of the operations of particular motor carriers
for compliance with safety related laws and rules. Moreover, the
two agencies are directed to cooperate in developing a motor
carrier safety rating system which is now in place and is being
administered by the MPSC.
In light of the foregoing, the Petitioners contention that the
MCA’s sole focus was the economic regulation of motor carriers
lacks merit. Instead, the MCA contains numerous provisions
related to safety and other matters not preempted by Section 601
of the FAAAA. The MPSC has made a good faith effort to
comply with federal law and has done so by identifying those
provisions of the MCA that were preempted by the FAAAA and
which would no longer be enforced by the MPSC pending
anticipated action by the Michigan Legislature to conform the
MCA with the FAAAA. The determinations made by the MPSC
are consistent not only with the plain language of Section 601 of
the FAAAA but also with the legislative history underlying that
enactment.
6. Petitioners’ arguments concerning the distinction
between “motor vehicle” and “motor carriers” is
without merit.
Petitioners have misconstrued the interchangeability of the
word motor vehicles and motor carrier as being an exclusion of a
motor carrier of property from the state regulatory authority.
eT em
- 30-
Their premise is based upon 49 USC 14501(c)(2)(A), which
provides:
Matters not covered. Paragraph (1) -- shall not restrict the
safety regulatory authority of a State with respect to
motor vehicles, the authority of a State to impose
highway route controls or limitations based on the size or
weight of the motor vehicle or the hazardous nature of the
cargo, or the authority of a State to regulate motor carriers
with regard to minimum amounts of financial
responsibility relating to insurance requirements and self-
insurance authorization.
Petitioners’ construction of the statutory term is too narrow and
no evidence on record supports this assertion. To be a motor
carrier one must have the direction and control of a motor vehicle,
which does the carrying for him. Moore v United States, 41 F
Supp 786, 792 (DC Minn 1941), aff'd 316 US 642 (1942). See
also Loving v United States, 32 F Supp 464 (1940) using the word
a common carrier by motor vehicle.
In addition, pursuant to 49 USC 13102(12): “The term
‘motor carrier’ means a person providing motor vehicle
transportation for compensation.”
Further, Petitioners’ additional assertion is that the only
regulatory authority conferred by Congress on the state is with
respect to motor vehicles is contradictory to a reasonable
interpretation of § 14501(c)(2)A). | When considering
preemption, the Court starts with the assumption that the historic
police powers of the States re not to be superseded by the Federal
Act unless there is a clear and manifest purpose of Congress to do
so. City of Columbus v Ours Garage and Wrecker Serv, 536 US
424, 432-433 (2002) (quoting Rice v Santa Fe Elevator Corp, 331
US 218, 230(1947)). Also, “Federal preemption prescriptions
relating to motor carriers, contained in 49 USC 14501(c),
specifically save to States “safety regulatory authority. . . with
respect to motor vehicles. § 14501(c\(2)(A). Id. at 427-428. The
«3i.
Court referred to federal preemption relating to motor carriers and
not motor vehicles.
This Court and Congress interchangeably used the phrase
motor carriers and motor vehicles. Furthermore, the definition
under 49 USC 13102, which defines a motor carrier as a provider
of a motor vehicle for compensation confirms Petitioners’
misconception. Neither the statute nor case law supports
Petitioners’ distinction between motor carriers and motor
vehicles. :
Dated: May, 2004
CONCLUSION
The Petition for a Writ of Certiorari should be denied.
i:
Respectfully submitted
Michael A. Cox
Attorney General
Thomas L. Casey
Solicitor General
Counsel of Record
P. O. Box 30212
Lansing, Michigan 48909
Telephone: (517) 373-1124
Henry J. Boynton
Assistant Solicitor General
David A. Voges
Emmanuel B. Odunlami
Assistant Attorney General
Attorneys for Petitioners
TABLE OF CONTENTS
Page
Portions of Plaintiffs-Appellants’ Brief on Appeal
In Michigan Court of Appeals Docket
Nos. 226052, 226122, 226053 and
DR £5.68 o5055 501A RS ee lb
-lb-
STATE OF MICHIGAN
COURT OF APPEALS
WESTLAKE TRANSPORTATION, INC.,
VANDERKOOI CARRIERS, INC., EL
TORO MOTOR FREIGHT, INC., MYRIAH
INC., PRISM, INC., GERRIG’S TRUCKING &
LEASING, INC., and BEST WAY, EXPRESS, INC.
Plaintiffs/Appellants,
and COA 226052
COA 226122
AMERICAN TRUCKING ASSOCIATIONS,
INC., and TNT HOLLAND MOTOR Court of Claims
EXPRESS, INC., No. 95-15628 CM
Intervening Plaintiffs/Appellants,
PLAINTIFFS-APPELLANTS’
BRIEF ON APPEAL
ORAL ARGUMENT REQUESTED
MICHIGAN PUBLIC SERVICE
COMMISSION, its COMMISSIONERS, JOHN
G. STRAND, RONALD E. RUSSELL, and JOHN
L. O’7?DONNELL, MICHIGAN DEPARTMENT OF
TREASURY and its STATE TREASURER and the
STATE OF MICHIGAN,
Defendants/Appellees,
Consolidated With,
TROY CAB, INC., DEECO SERVICES, INC.,
d/b/a DEECO TRANSPORTATION, FRANK
TIBERIO, d/b/a FAIRFIELD TOWING, ELEX, INC.,
d/b/a LAFOND EXPRESS, DALE CONSTINE &
SONS, INC., CALCUT SALES & SERVICES, INC.,
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d/b/a CALCUT TRUCKING COMPANY,
~ AMBASSADOR TRANSPORTATION, INC.,
HAWKINS STEEL CARTAGE, INC., MID-CON
FREIGHT SYSTEMS, INC., JLH TRANSFER,
INC., H&H ENTERPRISES, INC., D/B/A S&M
CARTAGE, INC., CENTRAL TRANSPORT, INC.,
BANCROFT TRUCKING CO., U.S. TRUCK CO.,
INC., WEST END CARTAGE, INC., CENTRAL
CARTAGE CO., CTX, INC., MOHAWK MOTOR
OF MICHIGAN, INC., ECONOMY TRANS-
PORT, L.T.D., MASON & DIXON LINES, INC.,
UNIVERSAL AM-CAN, L.T.D., ROMEO
EXPEDITERS, INC., TOM THUMB SERVICES,
INC., d/b/a REI, O-J TRANSPORT COMPANY,
J-LAW ENTERPRISES, INC., ALLIANCE OF
O-J TRANSPORT, INC., Individually on behalf
of all others similarly situated,
Plaintiffs/Appellants,
Vv
STATE OF MICHIGAN, MICHIGAN
DEPARTMENT OF TREASURY,
TREASURER OF THE STATE OF MICHIGAN,
MICHIGAN DEPARTMENT OF COMMERCE,
DIRECTOR OF THE MICHIGAN DEPARTMENT
OF COMMERCE, MICHIGAN PUBLIC
SERVICE COMMISSION, CHAIRMAN OF THE
MICHIGAN PUBLIC SERVICE COMMISSION,
JOHN G. STRAND, COMMISSIONER OF THE
MICHIGAN PUBLIC SERVICE COMMISSION,
RONALD E. RUSSELL, and COMMISSIONER OF
THE MICHIGAN PUBLIC SERVICE COMMISSION,
JOHN L. Q’DONNELL,
Defendants/Appellees.
FOSTER, SWIFT, COLLINS
& SMITH, P.C.
ROBERT E. MCFARLAND
(P17394)
Attorneys for
Plaintiffs/Appellants
32300 Northwestern Hwy,
Ste. 230
Farmington Hills, MI 48334
(248) 539-9900
SCOPELITIS, GARVIN,
LIGHT & HANSON, P.C.
ANDREW K. LIGHT
LYNNE D. LIDKE
Attorneys for
Plaintiffs/Appellants
1500 Market Tower
10 West Market Street
Indianapolis, Indiana 46204
(317) 637-1777
FRASER, TREBILCOCK,
DAVIS & FOSTER, P.C.
MICHAEL S. ASHTON
(P40474)
Attorneys for Intervening
Plaintiffs-Appellants
American Trucking
Associations, Inc.
1000 Michigan National
Tower
Lansing, MI 48933
(517) 482-5800
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JENNIFER M. GRANHOLM
(P40992)
Michigan Attorney General
David M. Gadaleto (P30163)
William W. Derengoski
(P34242)
Judith I. Blinn (P26678)
Assistant Attorney Generals
Attomeys for
Defendants/Appellees
6545 Mercantile, Ste. 15
Lansing, MI 48911
(517) 241-6680
LOOMIS, EWERT,
EDERER, PARSLEY,
DAVIS & GOTTING, PC
KARL L. GOTTING
(P14220) -
CATHERINE A. JACOBS
(P32996)
Attorneys for
Plaintiffs/Appellants
232 South Capitol Avenue
Suite 1000
Lansing, MI 48933-1525
(517) 482-2400
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PLAINTIFFS-APPELLANTS’ BRIEF ON APPEAL
ORAL ARGUMENT REQUESTED
TABLE OF CONTENTS
INDEX OF AUTHORITIES, ooo cs ions ccerevsncenes ii
JURISDICTIONAL STATEMENT. ............-0005: viii
STATEMENT OF QUESTIONS INVOLVED.......... viii
STATEMENT OF BACTR. ccc sind avin een ses viii
Fe RT Cee re tr ener eT 5
A. The Court of Claims Erred in Ruling That Michigan’s
Interstate Decal Fee Is Not Preempted By Controlling
Federal Motor Carrier Registration Standards......... 5
1. The Interstate Decal Fee Was Preempted Prior To The
January 1, 1994 Implementation of the SSRS...... 8
2. The Michigan Interstate Decal Fee Is Also Preempted
After The January 1, 1994 Implementation Of The
B. The Court of Claims Erred in Failing To Afford Appellants
The Opportunity To Show That Michigan’s Intrastate
Decal Fee Is Preempted By Section 601 Of The
1. Section 601 Broadly Preempts All Laws Related To
Motor Carrier Prices, Routes, and Services. ....... 20
2. Under In re Federal Preemption, Appellants Should
Have Been Afforded The Opportunity To Prove Their
SN hie. a bs Sk ds Bre BEE eR RESO 24
C. The Court of Claims Further Erred In Ruling, Without
Affording Plaintiffs The Opportunity To Present Evidence,
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That The Feed[sic] Were Not In Reality An
ey re ee ea ere 29
2
As the Amount of the Revenues Raised from the
Intrastate Decal Fee Bear No Relation to the Necessary
Expenses of Regulation of the Mpsc[sic] under the
Mmca[sic], it must Be Regarded as a Tax Law,
Unconstitutional under the Single Object Clause, the
Michigan Constitution, as Well as the Distinct
Statement of the Tax Clause. ............ece000: 31
The Court of Claims Also Committed Error in
Concluding That The Imposition Of Decal Fees Upon
Plaintiffs Did Not Constitute A Violation Of Both The
Equal Protection Clause Of The United States And
Michigan Constitutions And The Uniformity Of
Taxation Clause Of The Michigan Constitution. . . . . 47
[pages 19-29]
B.
The Court of Claims Erred in Failing to Afford Appellants
bee Posouenn to oral mm Michigan’s Intrastate
Separate from their challenge to the Interstate Decal Fee
imposed upon interstate motor carriers, Appellants also sought
to demonstrate to the Court of Claims that the $100 Intrastate
Decal Fee assessed against intrastate carriers under MCL §
478.2(1); MSA 22.561(1) is preempted effective January 1,
1995 pursuant to Section 601 of the FAAAA. As shown
below, the broad preemptive scope of Section 601, when read
in light of In re Federal Preemption, supra, compels reversal
and remand to the Court of Claims for further fact-finding
relevant to Appellants’ claim. Appellants remain convinced
that, had they not been denied a full and fair opportunity to
prove their case, judgment in their favor on their Section 601
claims would have been ordained. '®
'8 By its terms, Section 601 does not apply to state laws or
regulations relating to the price, route, or service of a motor
vebicle engaged in the transportation of household goods. 49
USCA § 14501(c)(2)(B). Thus, insofar as MCL § 478.2(1);
MSA 22.561(1) imposes a $50 decal fee on vehicles used
exclusively for the intrastate transportation of houschold goods,
it is not the subject of either the Westlake Complaint or the
Troy Cab Complaint and should not be the subject of any court
order in this case.
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1.
Section 601 Broadly Preempts All Laws Related
To Motor Carrier Prices, Routes, And Services
Section 601, entitled Preemption of Intrastate
Transportation of Property, was enacted by the 103™ Congress,
signed into law by President Clinton on August 23, 1994, and
upheld as a valid exercise of preemptive powers in Kelley v.
US., 69 F.3d 1503 (10" Cir. 1995), cert. denied, 517 U.S.
1166, 116 S.Ct. 1566, 134 L.Ed.2d 665 (1996). In enacting
Section 601, Congress expressly found that state regulation of
intrastate transportation has unreasonably burdened interstate
commerce, impeded the free flow of trade, and proved
unreasonably costly. Section 601(a){1), 108 Stat. 1605, 1605.'°
Thus, effective January 1, 1995, Section 601(c) broadly
preempted the MPSC’s economic regulation of intrastate motor
carrier operations by directing that no state or political
subdivision may
49 USCA § 14501(c)(1) (emphasis supplied).
The limited exceptions to Section 601, none of which apply
in this case, are extremely narrow. Specifically, states may still
regulate activity related to cargo liability, bills of lading, cargo
credit rules, or antitrust immunity, but only if a motor carrier
voluntarily subjects itself to such state regulation. 49 USCA §
14501(c)(3). In addition, the states are still afforded authority
in three other safety-related arenas:
'9 A complete copy of Section 601 is reproduced in the
Appendix at 17. As applied to motor carriers, Section 601 was
originally codified at 49 USCA § 11501 (1994 Supp.)
(superseded) but later recodified in substantially-similar form
at 49 USCA § 14501 (1997).
(1) Motor vehicle safety;
(2) Highway routing or limitations based upon the size or
weight of the motor vehicle or the hazardous nature of
the cargo; and
(3) Minimum amounts of financial responsibility relating to
insurance requirements and self-insurance
authorization.
49 USCA § 14501(c)(2)(A). Notably, these three non-
preempted areas embrace common “police powers” that are in
virtually all circumstances reserved to and exercised by state
authorities over every kind of motor vehicle, not just motor
vehicles operated by for-hire motor carriers.
That Section 601 is intended to have broad preemptive
effect is shown by legislative history evidencing Congress’s
intent to deregulate the motor carrier industry in the same
broad way it previously deregulated the airline industry. As
that legislative history shows, the House conferees expressly
adopted “the broad preemptive interpretation” set forth in
Morales v. Trans World Airlines, Inc., 504 U.S. 374, 112 S.Ct.
2031, 119 L.Ed.2d 157 (1992), a decision that interpreted the
preemptive language of the Airline Deregulation Act (“ADA”).
House Conf. Rep. No. 103-677, 103™ Cong., 2d Sess. (1994),
reprinted in 1994 U.S. Code Cong. & Ad. News 1715, 1755
(hereinafter cited as “Report”). In Morales, the U.S. Supreme
Court held that airline advertising was related to rates, routes,
or services and thus state law could in no way regulate such
advertising. The Court then went on to hold that any state law
or regulation having any “connection with, or reference to,” a
rate, route, or service of airline transportation was preempted.
504 US at 384; 112 SCt at 2037; 119 L Ed2d at__.
The U.S. Supreme Court’s words illustrate that, in making
express reference to Morales, the House conferees sought to
remove all doubt as to whether Congress intended sweeping
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preemptive changes to motor carrier regulation when it enacted
Section 601. Using the plain-spoken phrasing of Morales,
preemption of laws “related to a price, route, or service of any
motor carrier” means expansive and conspicuous preemption
of all laws “having a connection with o or reference to” a price,
route, or service of any motor carrier.”” Also relevant is the U.
S. Supreme Court’s more recent interpretation of the ADA in
American Airlines v Wolens, 513 US 219, 115 SCt 817, 130 L
Ed 2d 715 (1995), in which the Court found that a claim based
on state-imposed obligations — which the MSPAC’s claim to
the Intrastate Decal Fee clearly is — is a preempted activity."
20s indicated in the Report, the wording interpreted in
Morales, supra, is slightly different from that employed in
Section 601. Under the original airline deregulation statuie, the
words employed were “relating to rates, routes, or services,”
while under the recodified version of that statute and under
Section 601, the words employed are “related to a price, route,
or service.” However, the conferees stated that they did not
intend to “alter the broad | preemption interpretation” of Morales
by “substituting the word ‘related’ for the prior word ‘relating’
and the word ‘price’ for the word ‘rates’... .” Report, reprinted
in 1994 U.S. Code Cong. & Ad. News 1715, 1755.
21More recently, this Court has itself had occasion to
address the preemptive scope of both the ADA and Section 601
in cases that are not analogous to this case. Compare Thomas
v. United Parcel Service, 241 Mich. App. 171, 614 N.W.2d 707
(2000) (race and gender discrimination claim not preempted)
with Gilman v. Northwest Airlines, Inc., 230 Mich. App. 293,
583 N.W.2d 536 (1998) (age and sex discrimination claim not
preempted) and Fitzpatrick v. Simmons Airlines, Inc., 218
Mich. App. 689, 555 N.W.2d 479 (1996), lv den, 456 Mich.
891, 570 N.W.2d 785 (1997) (airline height and weight
standards preempted). More relevant decisions by this Court i in
In Re Federal Preemption, supra, and
vy. Michigan Public Service Commission, 225 Mich. App. 424,
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571 N.W.2d 734 (1997), lv den, 459 Mich. 859, 583 N.W.2d
900 (1998) are discussed above.
Significantly, the federal preemption brought about by the
ADA was so broad that it also had an effect on motor carriers.
Therefore, > in Federal Express Corp v iliti
Commission, 936 F2d 1075 (9™ Cir 1991), cert den, 504 US
979, 112 S Ct 2956, 119 L Ed 2d 578 (1992), on remand, 1993
WL 399380 (ND Cal 1993) (unpublished), the appellate court
ruled that the ADA preempted state regulatory control over
motor vehicle operations that were an integral part of an air
carrier’s integrated business. Among the regulatory provisions
nullified by the court was a quarterly fee assessed by the state
public utilities commission that, like the Intrastate Decal Fee,
was primarily used to defray the cost of economic regulation.
See 1993 W.L. 399380 at *6 (citing Cal Pub Util Code §§
5003.1). In the Court’s view, “[t]he PUC’s... imposition of
fees enter[ed] the zone that Congress has forbidden the states to
enter,” and, as a result, the California regulatory fee was
preempted. 936 F 2d at 1078.
Further, on remand in Federal Express, the district court
reviewed the ADA’s impact on a regulatory fee imposed upon
so-called exempt carriers, those whose rates were not
regulated. The court held that the exempt carrier fee was
preempted, rejecting the California commission’s argument
that the fee revenue was necessary for non-economic (non-
preempted) regulation. Because the fee revenue was “applied
indiscriminately to the full range of CPUC regulatory activity,”
1993 WL 399380 at *7, the court persuasively held that the fee
could not be harmonized with the ADA as supporting only an
isolated class of acceptable regulation.
Like the California fee provisions, the Intrastate Decal fee
has been used to support and provide for the economic
regulation of motor carrier rates, routes, and services as
dictated by the language in the MMCA, and, as will be
22The unpublished decision on remand is reproduced in the
Appendix at 18.
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discussed further below, there was no evidence presented to the
Court of Claims that the fee is now used exclusively for non-
preempted activities related only to Appellants’ operations.
Further, a $100 fee imposed annually on each vehicle used by a
motor carrier engaged in the intrastate transportation of
property cannot help but be “related to a price, route, or
service” of the motor carrier. As such , the Intrastate Decal Fee
should have been captured by the preemptive net of Section
601. As shown below, however, the Court of Claims placed
undue reliance on In Re Federal Preemption, supra, and
erroneously ruled to the contrary. |
2.
Under In Re Federal Preemption, Appellants Should
Have Been Afforded The Opportunity To Prove Their Case
On April 25, 1997, after the parties’ cross-motions for
disposition had been fully briefed and argued, this Court
handed down its opinion in In Re Federal Preemption, supra.
The case arose from administrative proceedings in which the
MPSC determined for itself which provisions of the MMCA it
deemed preempted by Section 601. On appeal, this Court ruled
— based upon the limited record before it — that all fees imposed
by the MMCA survived preemption because the MPSC “still
has significant regulatory obligations” after enactment of
Section 601. 223 Mich. App. at 302, 566 N.W.2d at 305. Asa
result, the Court of Claims decided that In re Federal
Preemption was outcome-determinative of Appellants’ claim
and entered summary disposition in favor of Appellees. The
Court of Claims erred, however, because its undue reliance
upon In re Federal Preemption was misplaced.
In In re Federal Preemption, this Court simply accepted the
MPSC’s representation, without benefit of any factual record,
that it would not use the Intrastate Decal Fee to support
preempted portions of the MMCA. Further, the Court noted
that the parties opposing the MPSC’s action had not proven
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anything to the contrary. Specifically, the Court observed as
follows:
The PSC still has significant regulatory
obligations. For example, the PSC must
supervise and regulate the safety of motor
carrier operations. There is still a certification
process. It follows that the fees ... for
administering the act ... are unaffected by the
preemptive effect of § 601. In fact, because the
PSC is not using its resources to enforce
preempted portions of the Motor Carrier Act,
the fees collected by the PSC are not related to
- pt ovine and _ Indeed,
Id. at 302-03, 566 NW2d at 305 (citations omitted; emphasis
supplied). Importantly, Appellants sought to submit the proof
lacking in In Re Federal Preemption, but they were denied that
opportunity by the Court of Claims.
On March 23, 1998, Appellants filed with the Court of
Claims a Motion for Partial Stay and Bifurcation of Issues in
response to the In Re Federal Preemption decision. Appellants
asked the court to bifurcate their Section 601 claim from the
pending cross-motions for summary disposition and to stay its
hand for a period of 90 to 120 days while Appellants conducted
discovery and made a factual record for the court. It was
Appellants’ express intent to directly address In re Federal
Preemption by supplementing their motion for summary
disposition with evidence demonstrating the MPSC’s continued
use of the Intrastate Decal Fee for economic regulatory
purposes contrary to the terms and intent of Section 601 and
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further showing why the MPSC’s continued collection of the
same fees for substantially-reduced regulatory activity should
be deemed preempted. See Plaintiffs’ Motion for Partial Stay
and Bifurcation of Issues. The Court of Claims, however,
denied Appellants’ motion and then ruled against Appellants
on their Section 601 claim almost six months later.
In Re Federal Preemption is not dispositive of Appellants’
challenge to the Intrastate Decal Fee. Rather, what was are
dispositive of Appellants’ claim was the Court of Claims’
erroneous ruling denying Appellants the opportunity to present
the type of factual record that this Court did not have when it
issued the In Re Federal Preemption decision. Notably,
Appellants requested, at most, four months to make their
record, which, given the Court of Claims’ six-month delay in
ruling following its denial of Appellants’ motion, would have
been more than sufficient time to make a difference in the
outcome of this case. The Court of Claims ruling must be
reversed, and this case should be remanded for further
discovery and the submission of proof necessary to rebut the
MPSC’s unsubstantiated contention that it uses the Intrastate
Decal Fee for only non-preempted purposes. There are at least
four reasons why such a result is warranted.
First, as noted above, a $100 per-vehicle fee cannot help
but affect the rates, routes, and service of a motor carrier.
Indeed, the Intrastate Decal Fee stands as a direct roadblock to
a motor carrier’s very livelihood — the operation of its vehicles
upon the highways of the state — and its continued assessment
thus prompts the following question: If Congress intended to
make entry into intrastate transportation markets easier by
enacting Section 601, how can it be said that such a goal has
been accomplished if motor carriers must still pay the exact
same per-vehicle fee they paid before Section 601 went into
effect? The answer to that question is apparent: It cannot be
said that Congress’s intent has been carried out because the
MPSC has not dismantled the onerous financial barricade
erected long before enactment of Section 601, and thus the
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exact same roadblock “having a connection with or reference
to” motor carrier prices, routes, and services continues to block
Appellants’ movement in the intrastate transportation market.
The Intrastate Decal Fee, therefore, should not be permitted to
stand untested as to its use and purpose.
Second, justification of the Intrastate Decal Fee based upon
the unsubstantiated claim that it is used only for non-preempted
purposes runs afoul of Congressional intent. Lest there be any
question in this regard, the House Conference Report
contemplated the exact type of argument advanced by the
MPSC in this case with the following pointed comment:
routes or services. There hi has been concern
raised that States, which by this provision are
prohibited from regulating intrastate prices,
routes and services, may instead attempt to
regulate intrastate trucking markets through its
unaffected authority to regulate matters such as
safety, vehicle size and weight, insurance and
self-insurance requirements, or hazardous
materials NPA pee ammo
Report, reprinted in 1994 U.S. Code Cong. & Ad. News 1715,
1756 (emphasis supplied). In light of such express
congressional intent, Appellants should be afforded the right to
show that the Intrastate Decal Fee is a de facto regulation of
their rates, routes, and services that cannot now be justified by
the non-preempted powers the MPSC still retains.
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Third, the broad claim of “safety” cannot in and of itself
shield the Intrastate Decal Fee from Congressional attack under
Section 601. As the district court explained in Federal Express,
“(t]he field of safety, while susceptible to regulation, is not
talismanic.” 1993 WL 399380 at *4. Therefore, state safety
regulation after federal preemption of economic entry and rate _
regulation may not be accomplished
by means of blunt regulations which ...
transgress into federally protected territory. The
[state’s] role in the protection of safety —
however indispensable — must be fulfilled by
well-tailored rules that do not relate to [a
carrier’s] rates, routes or services.
Id. at *6. Using the Federal Express court’s words, the
Intrastate Decal Fee is unlawfully “blunt,” and it is certainly
not “well-tailored.” By law, it is expressly “assessed against
and collected from each motor carrier for the administration of
[the MMCA]” — the compilation of Michigan statutes that
authorizes economic regulation of motor carrier prices, routes,
and services. See MCL § 478.2(1); MSA 22.561(1) (emphasis
supplied). At the same time, however, administration of
Michigan’s Motor Carrier Safety Act, MCL §§ 480.11, et seq;
MSA 9.1666(1), et seq, is the job of the Department of State
Police, not the MPSC, and Appellants are therefore rightly
skeptical of the MPSC’s sweeping proclamation that the
Intrastate Decal Fee must be saved in the name of “safety.”
“This is not to say that Michigan Trucking Ass’n, supra,
was wrong in its conclusion that Section 601 did not preempt
the MPSC’s statutory authority to work with the Department of
State Police in adopting a motor carrier safety rating system.
225 Mich App at 429, 571 NW2d at 736-37. However, nothing
in that case supports the proposition that the same $100 per-
vehicle fee collected for purposes of all regulation before
Section 601 was enacted is somehow still justified after Section
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601 disabled the MMCA and left the MPSC with far less
authority than it possessed before.
Finally, even if the MPSC’s safety regulatory authority
were not so narrow, other factors also suggest that the MPSC
cannot help but use the Intrastate Decal Fee for purposes
wholly unrelated to its non-preempted regulation of
Appellants’ activities. Notably, the transportation of household
goods remains subject to full economic regulation under the
terms of Section 601, 49 USCA § 14501(c)(2)(B), yet MCL §
478.2(1); MSA 22.561(1) imposes only a $50 decal fee on
vehicles used exclusively for the intrastate transportation of
household goods. Therefore, the MPSC’s continued economic
regulatory authority over household goods transportation raises
the obvious question of whether the $100 Intrastate Decal Fee
imposed upon Appellants is being used by the MPSC to
subsidize economic regulation of household goods carriers. In
other words, Appellants should have been afforded the
opportunity to conduct discovery to determine whether the
Intrastate Decal Fee, just like the exempt carrier fee reviewed
by the district court in Federal Express, supra, is “applied
indiscriminately to the full range of ... regulatory activity,”
both preempted and non-preempted, after enactment of Section
601. 1993 WL 399380 at *7.
It is well established that, in addressing a motion for
summary disposition, a trial court must give the benefit of the
doubt to the non-movant and determine whether a record might
be developed that would leave open an issue upon which
reasonable minds might differ. Mahaffey v Attorney General,
222 Mich App 325, 340, 564 NW2d 104, 111 (1997).
Moreover, summary disposition is premature if granted before
discovery on a disputed issue is complete and if further
discovery would stand a fair chance of uncovering factual
support for the non-moving party’s position. Great Lakes Gas
Transmission Co. v MacDonald, 193 Mich App 571, 574-75,
485 NW2d 129, 131 (1992). The Court of Claims violated
those principles in entering summary disposition in favor of
Appellees because, as shown above, further discovery did stand
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a fair chance of uncovering the type of factual record lacking in
the In Re Federal Preemption case. In the absence of affording
Appellants the opportunity to conduct that discovery, the Court
of Claims wrongly concluded that In Re Federal Preemption is
dispositive of Appellants’ claim.
In short, Appellants could not have anticipated this Court’s
ruling in In re Federal Preemption when they first filed their
motion for summary disposition in the Court of Claims, but
they did preserve their right to respond to that ruling and
demonstrate that the Intrastate Decal Fee cannot survive
preemption scrutiny. Effective January 1, 1995, Congress’s
enactment of Section 601 made continued assessment of the
Intrastate Decal Fee unlawful, and Appellants should be
permitted on remand to prove just that. Summary disposition
in favor of Appellees was improper and should be reversed.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.