Federal Law Does not Preempt New Hampshire Statute regarding Storage and Handling of Towed Vehicle

This U.S. Supreme Court opinion arose out of an incident occurring in New Hampshire involving the handling of towed vehicles.  New Hampshire state and local law enforcement officers are called upon regularly to have vehicles towed, both by governing bodies and by private parties requesting assistance with the removal of vehicles from private parties.  RSA 262:31; RSA 259:4-a; RSA 262:40-a.  This opinion clarifies that federal law does not preempt the provisions of RSA Chapter 262 regarding storage and handling of towed vehicles.
 
“Preemption” occurs when one level of government claims regulation of a given field as its own and prohibits lower levels of government from regulating that field.  Article VI of the U.S. Constitution says the federal constitution, laws and treaties are the “supreme law of the land” and are superior to conflicting provisions of state constitutions or laws.  This is commonly known as the “Supremacy Clause” and it means that, if state law conflicts with federal law, the federal law wins.  This case involved potential preemption of a New Hampshire statute by a federal law.
 
The facts of the case are quite compelling.  The landlord of the apartment complex where Mr. Pelkey lived required tenants to remove their cars from the parking lot when it snowed so that a plow could clear it.  In February, 2007, there was a snowstorm at a time when Mr. Pelkey was confined to bed with a serious medical condition and he was unable to move his car.  The landlord had Mr. Pelkey’s car towed by Dan’s City Used Cars.  Soon after, Mr. Pelkey was admitted to the hospital for a procedure to amputate his left foot, during which he suffered a heart attack.  He remained under hospital care until his discharge on April 9, 2007.
 
Dan’s City wrote to Mr. Pelkey that it had towed and was storing his car.  However, the post office returned the letter, checking the box “moved, left no address.”  Dan’s City scheduled an auction of the car for April 19.  Meanwhile, in the days following his discharge from the hospital, Mr. Pelkey’s attorney learned from counsel for the apartment complex that the car had been towed and was scheduled for auction.  On April 17, two days before the scheduled auction, Mr. Pelkey’s attorney informed Dan’s City that Mr. Pelkey wanted to pay any charges owed and reclaim his vehicle.  Dan’s City proceeded with the auction anyway.  Attracting no bidders, Dan’s City later disposed of the car by trading it to a third party without any notice to Mr. Pelkey.
 
Mr. Pelkey brought suit against Dan’s City in the superior court alleging that Dan’s City violated the New Hampshire Consumer Protection Act (RSA 358-A:2) by failing to comply with the requirements of RSA Chapter 262 regarding the disposal of stored vehicles and proceeding with an auction despite notice that Mr. Pelkey wanted to reclaim the car.  Dan’s City argued that RSA Chapter 262 was preempted by federal law, and therefore it could not be the basis of a Consumer Protection Act claim.
 
Under the Federal Aviation Administration Authorization Act of 1994 (FAAAA), “A State…may not enact or enforce a law, regulation, or other provision having the force and effect of a law related to a price, route, or service of any motor carrier…with respect to the transportation of property.”  49 U.S.C. §14501(c)(1).  At issue in this case was whether Dan’s City’s actions regarding the storage and disposal of Mr. Pelkey’s car was related to “the transportation of property.”  If it was, then the FAAAA would preempt RSA 262, and Dan’s City’s actions could not be the basis of a Consumer Protection Act claim under New Hampshire law.
 
The FAAAA defines “transportation,” in relevant part, as “services related to the movement” of property, “including arranging for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, packing, unpacking, and interchange of passengers and property.”  49 U.S.C. §13102(23)(B).  The U.S. Supreme Court agreed with the New Hampshire Supreme Court’s interpretation of this language, finding that that Dan’s City’s actions regarding the auction of the car were not related to the movement of the car.  Although the definition of “transportation” includes the words “storage” and “handling,” the Court held that these words apply only to temporary storage and handling before the vehicle reaches its destination.  In this case, the actions that were the basis of the lawsuit all occurred after the towing (“movement”) operation had ended.
 
Dan’s City also argued that, whether or not the car was still being moved, the storage and disposal of the car were still “services related to movement” under the FAAAA and were still exempt from RSA Chapter 262.  The Court disagreed, finding that the transportation “service” in this case was the removal of the car from the parking lot.  That service, which did involve the movement of property, ended months before the conduct on which the lawsuit was based.  The FAAAA was intended only to create a uniform system of regulating transportation and interstate commerce across the country.  The state laws in question don’t affect participation in interstate commerce by requiring a motor carrier to abide by a different set of laws than other states’ laws.  Therefore, the Court held, the FAAAA does not preempt state law claims stemming from the storage and disposal of a towed vehicle.