United States District Court, N.D. Indiana, Hammond Division
OPINION AND ORDER
P. Rodovich United States Magistrate Judge.
matter is before the court on the Supplemental Brief on
O&M Expenses [DE 107] filed by the defendant, Norfolk
Southern Railway Company, on April 12, 2018, the Supplemental
Memorandum in Opposition to the Motion to Dismiss and/or
Strike CP's Request for O&M Expenses [DE 108] filed
by the plaintiff, Soo Line Railroad Company d/b/a Canadian
Pacific, on April 12, 2018, and the Supplemental Brief on
O&M Expenses [DE 109] filed by the defendant,
Consolidated Rail Corporation, on April 12, 2018. For the
following reasons, CP's request for O&M expenses is
DISMISSED and the Motion to Dismiss for
Failure to State a Claim and to Dismiss or Strike the Amended
Complaint's Requests for Relief [DE 77] is
August 3, 2017, the defendants Consolidated Rail Corporation
(Conrail), Norfolk Southern Railway Company (NSR), and CSX
Transportation, Inc. (CSXT) filed a Motion to Dismiss for
Failure to State a Claim and to Dismiss or Strike the Amended
Complaint's Requests for Relief [DE 77]. On March 29,
2018, the court granted in part and denied in part that
motion, finding that the state tort law claims brought by the
plaintiff, Soo Line Railroad Company, d/b/a Canadian Pacific
(CP), were preempted by the ICC Termination Act. The court
dismissed Count I of the Amended Complaint. Additionally, the
court found that without a viable underlying tort, Count II,
III, and IV were not recoverable.
as part of its breach of fiduciary duty claims, CP also
requested that the court award IHB operating and maintenance
expenses (O&M expenses). CP maintains Conrail was
obligated to pay O&M expenses pursuant to the 1906
Agreement. CP has alleged that in 1999 Conrail stopped paying
O&M expenses to IHB. [Amended Compl. ¶ 54].
Moreover, CP asserts that upon information and belief,
Conrail and IHB entered into a quid pro quo agreement in 1999
without the consent of the IHB Board to allow Conrail to
avoid its obligation under the 1906 Agreement to pay certain
O&M expenses, which totaled approximately $2.3 million in
1998, and for IHB to stop paying rent to Conrail. [Amended
Compl. ¶ 55].
court requested supplemental briefing from CP and Conrail on
this issue, noting that due to space constraints imposed by
N.D. Ind. L.R. 7-1(e), the parties had spent only 1-2 pages
at the conclusion of their briefs addressing it. On April 12,
2018, the parties filed their supplemental briefs. NSR has
indicated that it has paid O&M expenses to IHB that were
due and payable since 1998 and that CP has not asserted a
claim to the contrary. The Amended Complaint only seeks
relief for O&M expenses from Conrail.
Rule of Civil Procedure 12(b)(6) allows for a
complaint to be dismissed if it fails to “state a claim
upon which relief can be granted.” Allegations other
than those of fraud and mistake are governed by the pleading
standard outlined in Federal Rule of Civil Procedure 8(a)(2),
which requires a “short and plain statement” to
show that a pleader is entitled to relief. See Cincinnati
Life Ins. Co. v. Beyrer, 722 F.3d 939, 946 (7th Cir.
2013). The Supreme Court clarified its interpretation of the
Rule 8(a)(2) pleading standard in a decision issued in May
2009. While Rule 8(a)(2) does not require the pleading of
detailed allegations, it nevertheless demands something more
“than an un-adorned, the-defendant-unlawfully-harmed-me
accusation.” Ashcroft v. Iqbal, 556 U.S. 662,
678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). In order
to survive a Rule 12(b)(6) motion, a complaint “must
contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its
face.'” Iqbal, 556 U.S. at 678 (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570,
127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)); Cincinnati Life
Ins., 722 F.3d at 946 (“The primary purpose of
[Fed.R.Civ.P. 8 and 10(b)] is to give defendants fair notice
of the claims against them and the grounds supporting the
claims.”) (quoting Stanard v. Nygren, 658 F.3d
792, 797 (7th Cir. 2011)); Peele v. Clifford Burch,
722 F.3d 956, 959 (7th Cir. 2013) (explaining that one
sentence of facts combined with boilerplate language did not
satisfy the requirements of Rule 8); Joren v.
Napolitano, 633 F.3d. 1144, 1146 (7th Cir. 2011). This
pleading standard applies to all civil matters.
Iqbal, 556 U.S. at 684.
decision in Iqbal discussed two principles that
underscored the Rule 8(a)(2) pleading standard announced by
Twombly. See Twombly, 550 U.S. at 555
(discussing Rule 8(a)(2)'s requirement that factual
allegations in a complaint must “raise a right to
relief above the speculative level”). First, a court
must accept as true only factual allegations pled in
a complaint-“[t]hreadbare recitals of the elements of a
cause of action” that amount to “legal
conclusions” are insufficient. Iqbal, 556 U.S.
at 678. Next, only complaints that state
“plausible” claims for relief will survive a
motion to dismiss. Iqbal, 556 U.S. at 678. If the
pleaded facts do not permit the inference of more than a
“mere possibility of misconduct, ” then the
complaint has not met the pleading standard outlined in Rule
8(a)(2). Iqbal, 556 U.S. at 678-79. See Brown v.
JP Morgan Chase Bank, 2009 WL 1761101, at *1 (7th Cir.
June 23, 2009) (defining “facially plausible”
claim as a set of facts that allows for a reasonable
inference of liability).
the court agrees with CP that its claim for O&M expenses
is not subject to the ICC Termination Act (ICCTA) because it
neither seeks nor has the effect of managing rail
transportation. Courts have held that a rail carrier
asserting a state contract claim cannot use the preemptive
effect of the ICCTA to shield it from its own commitments.
Pejepscot Indus. Park, Inc. v. Maine Cent. R. Co.,
297 F.Supp.2d 326, 333 (D. Me. 2003). The ICCTA preempts
state or local regulations, not contracts or other
agreements, that have a significant impact on railroad
transportation. Union Pacific R. Co. v. Chicago Transit
Authority, 647 F.3d 675, 683 (7th Cir. 2011). Thus,
Conrail has acknowledged that ICCTA does not preempt CP's
claim that it breached the 1906 Agreement by failing to pay
their supplemental briefs, both parties have indicated that
pursuant to the 1906 Agreement, Conrail was obligated to pay
O&M expenses to IHB only if Conrail continued to operate
on or permitted other carriers to operate on the Rail
Properties. The court has considered the 1906 Agreement
because it forms the basis of CP's request for O&M
expenses and therefore is considered part of the pleadings.
See 188 LLC v. Trinity Industries, Inc., 300 F.3d
730, 735 (7th Cir. 2002) (“documents attached to a
motion to dismiss are considered part of the pleadings if
they are referred to in the plaintiff's complaint and are
central to his claim. Such documents may be considered by a
district court in ruling on the motion to dismiss.”).
has argued that CP has failed to state a valid claim with
respect to its request for O&M expenses because the
Amended Complaint alleges neither that Conrail operated on
the Rail Properties nor that Conrail allowed others to do so.
Moreover, Conrail contends that CP has not alleged a breach
of contract, rather the allegations relating to O&M
expenses are within its primary and secondary breach of
fiduciary claims that focused on the trackage rights rents.
CP asserts that the Amended Complaint has stated a claim for
O&M expenses for which relief can be granted. CP contends
that the Amended Complaint contains the following
allegations: the 1906 Agreement required Conrail to pay
O&M expenses to IHB; Conrail has not done so since 1999;
and the 1906 Agreement tied Conrail's obligation to pay
O&M expenses to IHB's obligation to pay rent to
Conrail. [Amended Compl. ¶ 51, 54, 55]. CP also
indicated that as a matter of public record, Conrail allowed
other companies to operate on the Rail Properties and
suggested that the court should take this into account when
determining whether CP has stated a valid claim with respect
to O&M expenses.
points out that the Amended Complaint alleges a pattern of
misconduct by Conrail and other defendants, such as
“demanding that IHB pay excessive amounts of back rent
that they claim IHB owes for operating over their property
since 1999, even though they are aware that they have no
basis in law or fact to demand payment of these
amounts.” [Amended Compl. ¶ 157]. CP contends that
this conduct constitutes a breach of fiduciary duty ...