Dan's City Used Cars, Inc. v. Pelkey

Whether the Federal Aviation Administration Authorization Act preempts state law on the manner by which a towing company can collect debts secured by a lien.

Petitioner towed Respondent’s car and subsequently placed a lien on the car and sold it without notice to cover the towing and storage costs. Respondent filed suit under a state law requiring notice before a vehicle is sold to collect debts and under the New Hampshire Consumer Protection Act. The trial court granted summary judgment for Petitioner holding that the state laws were preempted by a provision of the Interstate Commerce Act, 49 U.S.C. § 1 et seq., as amended by the Federal Aviation Administration Authorization Act of 1994 (FAAAA) 49 U.S.C. §14501 et seq., which deregulated the trucking industry.

The Supreme Court of New Hampshire reversed and held that the FAAAA did not preempt state law, and the FAAAA was inapplicable because recovery of towing and storage costs are not incidental to the movement of property by a motor carrier. Similarly, the court held that the Consumer Protection Act is designed to protect a debtor from unfair or deceptive practices in debt collection, not to regulate transportation of property.

The Supreme Court granted certiorari to resolve a circuit split between the Supreme Court of New Hampshire and the Court of Appeals for the Sixth Circuit and the Supreme Court of Alabama.