The Arizona Supreme Court’s recently reviewed a case centered around the issue of preemption. Generally, under the doctrine of preemption, federal law preempts lawsuits based on state law claims, whether express or implied preemptions.  In the case discussed below, the court evaluated whether an express preemption existed related to AEB technology or whether implied obstacle preemption would apply. Obstacle preemption occurs when the application of state law creates an obstacle to accomplishing the  objectives of federal law.

Varela v. FC US LLC, et. al.

On March 1, 2022, the Arizona Supreme Court rejected an argument made by Fiat Chrysler America (“FCA”) that a claim was preempted pursuant to implied obstacle preemption permitting a wrongful death suit brought by Melissa Varela (“Varela”) to move forward.[i]

Varela involved a wrongful death case where Varela came to a stop on the freeway because her exit was blocked by an emergency vehicle and was rear-ended by a 2014 Jeep Grand Cherokee, killing her four-year-old daughter.  The 2014 Jeep Grand Cherokee involved in the collision was a lower-level model and was not equipped with automatic emergency braking (“AEB”).[ii]  AEB was an optional feature on lower end models of the Jeep Grand Cherokee, such as the Limited Edition and Overland model, and was only a standard feature on the Summit and SRT models, which were more expensive.

In her lawsuit against FCA, Varela argued that if the 2014 Jeep Grand Cherokee had been equipped with AEB, the collision would not have occurred, or the damage would have been less.  Accordingly, Varela sued FCA for negligence, defective product design, defective product warning, and wrongful death – all for failing to include AEB as a standard feature in the 2014 Jeep Grand Cherokee.

FCA moved to dismiss the claim on the basis it was preempted pursuant to implied obstacle preemption.  The trial court agreed with FCA, however, the Arizona Court of Appeals reversed the trial court, finding the National Highway Transportation Safety Administration (“Agency”) did not express an intent to preempt the field.  FCA then appealed to the Arizona Supreme Court.

Issue and Holding

The issue before the Arizona Supreme Court was whether state law tort claims were preempted by federal rules of the Agency regarding the failure to install AEB technology.  The Arizona Supreme Court affirmed the appellate court’s decision and found Varela’s claims were not preempted by the doctrine of implied obstacle preemption and allowed Varela’s claims to move forward against FCA.  In reaching its decision, the Arizona Supreme Court overruled Dashi v. Nissan North America, Inc.[iii]  Dashi held a tort claim related to AEB technology was preempted by the doctrine of implied obstacle preemption because it adopted the incorrect framework for analyzing preemption.

Analysis

The Arizona Supreme Court was clear – implied obstacle preemption must be strictly construed and narrowly implied to protect state rights.  In order to protect state rights, the Court reviewed the complete record of the agency.  FCA relied on the record to support its position.  After reviewing, the Court “determined … AEB is best left unregulated, and that any AEB regulation is an exclusive federal; responsibility.”[iv]

1. Review of the Administrative Record

The first record reviewed by the Arizona Supreme Court was the New Car Assessment Program, which was published by the Agency and the Department of Transportation (“DOT”) and used as guidance from 2016 to 2020.  The court found the purpose of the program was to develop a five-star rating system to be shared with consumers, which would then incentivize manufacturers of vehicles to install AEB to make their products as safe as possible for consumers.  The court found it was not the intent of the Agency to communicate any preemptive intent regarding AEB.

The court then analyzed a series of publications by the Agency from 2016 to 2020, which provided guidance related to automated vehicles and automated driving systems.  The court found that as a whole, the published guidance failed to demonstrate any intent by the Agency to occupy the field in the area of automated vehicles and automated driving system testing, development, or deployment.

In 2017, the Agency denied a petition to initiate rulemaking which would have mandated manufacturers install AEB in all lightweight vehicles, such as the 2014 Jeep Grand Cherokee.  The court pointed out the Agency denied the petition because it did not see a need for an AEB rule since nonregulatory efforts were successful, and the rulemaking process is lengthy and pointless due to the progressive nature of innovation of AEB technology.  Based on the court’s analysis, it did not find the Agency’s denial of the 2017 petition was evidence of an authoritative preemptive intent.

Lastly, in March 2020, the Agency published a proposal for rulemaking related to automated driving systems.  The court quoted the proposal, which explicitly stated the Agency “does not intend that this proposal preempt state tort law that would effectively impose a higher standard on motor vehicle manufacturers than that to be established by this proposal.”[v]  The court found the Agency did not indicate an intent to regulate AEB technology exclusively.

Similarly, in December 2020, the Agency published an advance notice of proposed rulemaking related to safety which would accommodate design flexibility for manufacturers to promote safety innovations and designs in AEB technology.  The December 2020 advance notice did not include statements regarding exclusive regulation of AEB technology by the Agency.

2. Review of Conflict Between State Tort Law and Federal Regulatory Objectives.

FCA contended a jury verdict on Varela’s claims would frustrate the Agency’s federal regulatory objectives.  The court disagreed.  The court found the Agency’s intention is the speedy and widespread deployment of AEB technology, and a jury verdict could speed up the process.  Thus, the Agency’s objective would, in fact, be enhanced by such an outcome.

3. Review of Precedent

The Arizona Supreme Court reviewed four appellate court decisions which conflicted with one another and caused confusion.  The Court analyzed (1) Geier v. American Honda Motor Co., (2) Dashi v. Nissan North America, Inc., (3) Sprietsma v. Mercury Marine, and (4) Williamson v. Mazda Motor of America, Inc.  The court found Grier was inapplicable because it involved a safety standard which was not at issue in the matter.  The court explicitly overruled Dashi because it applied the incorrect framework for analyzing the claim.  The court agreed with Varela that Sprietsma was similar to this case because it involved a death allegedly caused by the absence of a propeller blade guard on outboard motors where there was limited regulatory guidance.  Finally, the court found Williamson informative because it provides guidance on how much weight should be given to the Agency’s judgment to determine the preemptive effect of the denial to engage in AEB rulemaking in 2017.

Conclusion 

The Arizona Supreme Court concluded the Agency did not convey an authoritative statement establishing manufacturer choice as a significant federal policy objective.[vi]  The court also declined to explicitly decide that AEB should not be regulated.[vii] Further, the court found the states have regulated, and continue to regulate, the development and deployment of AEB technology.  The court also concluded the Agency’s administrative record shows a commitment to working with the states to facilitate the development and deployment of AEB, as well as other automated driving systems.  Thus, the court held Varela’s claims were not preempted by the doctrine of implied obstacle preemption and affirmed the appellate court’s decision, reversing the trial court’s order and remanding for further proceedings.

Takeaway

FCA may choose to take this issue to the United States Supreme Court because preemption is a federal issue.  Regardless, this decision is important for products liability law in Arizona.  This matter raises the question of whether manufacturers are required to equip products with the latest safety technology.  If manufacturers are required to do so, how will reasonableness and the cost-effectiveness of the safety technology play a role?  The answer to these questions is yet to be determined.

[i] Varela v. FCA US LLC, et al., 249 Ariz. 89 (2020).

[ii] i.e. forward collision warning (“FCW”).

[iii] Dashi v. Nissan North America, Inc., 247 Ariz. 56 (App. 2019).

[iv] Varela, 249 Ariz. at ¶18.

[v] Id. at ¶36.

[vi] Id. at ¶59.

[vii] Id.

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