Welcome to summer. Hope you are all enjoying some summer action. We have had an interesting month as we moved to larger quarters. We are at the same address but in a different building with a nicer view and more room for our growing operation. More importantly Shuie now has even more room for his candy horde.
This month we report:
HOURS OF SERVICE – The fight for changes to HOS continues. This month the arena was the U.S. Senate. An amendment was presented and added to The Transportation, Housing and Urban Development Appropriations bill. Pending a study, the amendment sought to suspend the newest changes to the voluntary 34-hour restart provision and the requirement that any voluntary restart provision include two 1 a.m. to 5 a.m. overnight periods and the restriction on using a restart only once every seven days. A counter amendment was presented during the floor debate that would remove the suspensions of the overnight provisions and the one restart every seven days but keep the mandate for a study. Consideration of the bill was pulled from the Senate floor after disagreements over procedural rules prevented the bill from moving forward for debate.
TRUCKING TRENDS – The ATA released the latest edition of American Trucking Trends. Among the findings in American Trucking Trends:
In 2013, trucks moved 69.1% of all domestic freight tonnage, up from 68.5% the previous year.
The industry also collected 81.2% of all freight revenue, up from 80.7% in 2012.
Trucks move the majority of all NAFTA trade, hauling 55.4% of all trade with Canada and 65.4% of all trade with Mexico.
Trucking employed more than 7 million people in 2013.
The industry paid $37.8 billion in state and federal highway user fees.
CARGO THEFT – Freightwatch has indicated that reported cargo theft incidents in the United States fell roughly 11 percent from March to May but the average loss value per incident rose almost 90 percent. FreightWatch recorded a total of 183 thefts in the United States, with 80 thefts in March, 55 in April and 48 in May. The average loss value per incident during the period was $242,010. The FreightWatch report indicated that electronics were the product type stolen most often during the quarter, with 34 thefts, or 19 percent of all incidents. Food and drinks experienced 30 thefts, or roughly 16 percent of the total. There were also 20 reported thefts in the home/garden product type, accounting for roughly 11 percent of all thefts. The report states that six of the 13 product types FreightWatch tracks experienced fewer thefts this quarter than during the previous three months. Among the product types that saw drops in incidents were auto/parts, clothing/shoes, metals, and pharmaceutical supplies.
Despite an overall decrease in thefts from the previous rolling quarter, seven product types increased in theft volume this quarter, according to the report. Electronics thefts almost doubling from 20 to 34 incidents, alcohol/tobacco increased from five to 12 incidents, personal care thefts increased from six to 11, and thefts targeting pharmaceutical medications increased from one to two. Florida led the pack followed by California Texas, Georgia, and Illinois.
NAFTA TRADE – Pipelines and trucks carried more U.S.-NAFTA trade in April 2014 than in April 2013. The most recent TransBorder freight data released Thursday by the U.S. Department of Transportation’s Bureau of Transportation Statistics shows that the increases came in two modes that combined carry more than two-thirds of total U.S.-NAFTA trade. Trucks, at 60.3 percent of the April trade, and pipeline, at 8.6 percent, carried a total of 69.0 percent of the trade. A 4.2 percent increase in imports by truck offset a 2.5 percent decline in exports from year-to-year. Imports from Canada and Mexico both increased while exports by truck on each of the borders decreased. An increase in both imports and exports by pipeline across the Canadian border pushed pipeline’s share of total trade to 8.6 percent from 6.8 percent in April 2013. Trucks carried 60.3 percent of U.S.-NAFTA trade in April 2014, accounting for $30.6 billion of exports and $29.8 billion of imports. In other NAFTA news, the Supreme Court declined to review a writ by the Owner-Operator Independent Driver Association to overturn a lower court ruling that upheld the Mexico cross-border trucking program.
HIRING STANDARDS. A bill has been introduced to create a “national hiring standard” for motor carriers. The bill would require that before contracting the services of carrier a shipper, broker, freight-forwarder or receiver ensure that the carrier is:
**Registered with the Federal Motor Carrier Safety Administration (FMCSA);
**Has obtained the minimum insurance; and
**Has not been given an “unsatisfactory” safety rating in the USDOT safety rating system.
The proposed legislation prohibits states from imposing liability “on an entity that hires a motor carrier for the transportation of property or household goods if such liability arises from a claim or cause of action related to the negligent selection of such motor carrier … for personal injury, death, or damage caused to cargo or other property by such motor carrier.” We will let you know where that goes.
CSA VIOLATION CORRECTIONS – The FMCSA announced that beginning August 23, 2014, motor carriers and drivers will be able to request the removal of roadside inspection violations from agency data systems to more accurately reflect outcomes of judicial proceedings. The updated policy will enable carriers and drivers to request through the DataQs system the removal of violations that were previously uploaded into FMCSA’s Motor Carrier Management Information System by state enforcement agencies when a driver is found not guilty or if a violation is dismissed in court. FMCSA systems will continue to retain and display violations that result in a conviction or payment of fine. Persons who plead to or are convicted of a lesser charge will also have that information reflected.
INSURANCE LIMITS – The issue of motor carrier insurance limits continues to be a focus in the news and in the government. The U.S. House of Representatives passed an amendment this month preventing any increase in limits during fiscal year 2015. The amendment seeks to prohibit the FMCSA from initiating a rulemaking that would increase the minimum required insurance on trucks in the industry, something the FMCSA has indicated it would look at in the coming months.
OOIDA ATTACKS DOT ADMINISTRATOR – The Owner-Operator Independent Drivers Association has asked the Secretary of the U.S. Department of Transportation to seek the resignation of FMCSA Administrator Ferro. A number of other groups have now extended their support for Ms. Ferro, stanchly refuting the OOIDA charges.
OUT OF SERVICE ORDER – Passenger carrier On Eagles Wings Charters, Inc., DOT #1100785, of Lakeville, MN was declared an imminent hazard and ordered out of service. FMCSA safety investigators found that On Eagles Wings Charters had failed to ensure that its buses were systematically inspected, repaired and maintained.
Over in Louisiana, the Court of Appeals evaluated whether a trucker’s policy was primary over the policy issued to a shipper. Both parties were sued for injuries caused in a bus-truck accident. The Appellate Court overturned the Trial Court’s ruling that all of the insurers were excess, concluding that the trucker’s insurance was primary and that the truck insurer owed defense costs to the shipper’s insurance carrier. (Kemp v. Clarendon America Insurance Co., 2014 WL 2499409)
The 5th Circuit refused to overturn a defense verdict in favor of a motor carrier. The Court held that the plaintiff’s arguments that the jury reached the wrong decision based upon the weight of evidence did not, standing alone, allow for reversal of fact finding made by the jury. (Bovie Clark v. Sentry Select Insurance Co., 2014 WL 2016777)
When a shipper also operates trucks in its other operations is that shipper always subject to the regulations imposed on carriers even when not the motor carrier for the shipment? The District Court in Kentucky held the answer to be no, concluding that the plaintiff could assert no colorable claim against the shipper under federal safety regulations and was therefore improperly joined for the purposes of determining whether the case should be remanded. (Christensen v. ATS, 2014 WL 2441253)
The Southern District of New York evaluated the impact of the MCS-90 endorsement when it was unclear whether the insured was acting as a carrier in interstate commerce. The Court concluded that the driver was operating in interstate commerce at the time of the accident, but that questions remained as to whether the insured was the carrier for purposes of the endorsement. The Court did conclude that if the endorsement applied it would be limited to recovery only against the named insured and not the other defendants. (Park Insurance Co. v. Lugo, 2014 WL 2453335)
Unfortunately it is often the case that a truck accident will result in subsequent accidents on the same road. The District Court in Nebraska concluded that the truckers involved in the first accident bore no liability for a subsequent truck accident which occurred during the post-accident traffic snarl. The action of the second trucker in colliding with the plaintiff was a sufficient intervening cause. (Baumann v. Slezak, 2014 WL 2116977)
When a plaintiff alleges in the complaint that it was an employee of a trucking company it cannot later claim that it was not an employee when faced with the exclusive remedy of worker’s compensation. The Eastern District of California concluded that the plaintiff was bound by the admissions in the complaint. (Kaur v. Singh, 2014 WL 2208114)
A trucking company was not so lucky in the Court of Appeals in California where the Court concluded that while the jury verdict was supported by the evidence, a finding that the driver violated a section of the vehicle code was enough to overturn the verdict and require a new trial on the comparative fault of the driver. (David v. Hernandez, 2014 WL 21489280)
The Court of Appeals in Texas concluded that a worker’s compensation carrier that had paid benefits to an accident victim was entitled to collect against the MCS-90 in place for the trucker involved in the accident. The Court held that the MCS-90 did not preclude a subrogation action by another insurer. (Southern County Mutual Ins. Co. v. Great West Casualty Company, 2014 WL 2153963)
A truck broker was able to avoid a default in a personal injury action by asserting that it thought it was the wrong party to the suit. The Western District of Pennsylvania held that the fact that the defendant sent a letter to the plaintiff advising that they were not the carrier was enough to allow the defendant to vacate a default. (Courtney v. Ivanov, 2014 WL 2049775)
When a carrier is transporting its own materials, including parts for its trucks, the MCS-90 endorsement attached to the policy was inapplicable. The Appellate Court of Connecticut concluded that when the motor carrier was not operating as a for hire carrier the injured plaintiff could not seek the protection of the endorsement. (Martinez v. Empire Fire & Marine Co., 2014 WL 2723936)
The Appellate Division in New Jersey held that a non-trucking policy did not apply when the driver, who was under permanent lease to a carrier, was acting on behalf of the carrier while driving to repair his vehicle. The Court also held that the bob tail insurer was not permitted to recover attorney’s fees from the trucker’s insurer who had sought a declaration that the non trucking policy applied. (Strunk v. M&A Trucking, 2014 WL 2765646)
A chameleon carrier group was unable to avoid their criminal conviction in the Western District of Missouri. It is an interesting read on the steps taken to defraud the industry. (US v Dickerson, 2014 WL 2807682 and US v. Dickerson, 2014 WL 2807685)
Threadbare statements of willful misconduct would not withstand the court’s scrutiny in the Easter District of Missouri. The Court dismissed plaintiff’s claims for aggravated circumstances, which could lead to punitive damages, when there was no factual support for the allegations. (Dery v. Landes Trucking, 2014 WL 2712511)
Expert Christina Kelly withstood two separate motions to exclude her testimony by various trucking defendants. The Eastern District of Missouri held that she could testify as to her expertise in evaluating owner operator leases but not the legal obligations under the lease, (Rayburn v. Lezgi Motors, Inc., 2014 WL 2642111) and also as to causation and how to safely change lanes, (Rayburn v. Lezgi Motors, Inc., 2014 WL 2648219)
A shipper brought a third party action against a trucker company in an action commenced by the driver for injuries. The District Court in Oregon held that the third party claim could not stand, concluding that as there was a contract between the shipper and the carrier there could be no joint tort liability, a core requirement for a contribution claim. The Court also concluded that that there was no breach of contract by the carrier so the third party complaint was dismissed. (Haile v. Hickory Springs Manufacturing Co., 2014 WL 2574738)
The applicability of the non-trucking use endorsement on a driver’s policy was addressed by the Southern District of Mississippi. The Court concluded that it was applicable to a loss in which the driver was transporting cargo at the time of the loss. The Court also held that the insurer would not be equitably estopped to deny coverage to the carrier simply because it issued a certificate of insurance and an additional insured endorsement. Neither changed the terms of the policy. (Progressive Gulf Ins. Co. v. Kennedy, 2014 WL 2515213)
The Court of Appeals in Washington upheld a defense verdict which concluded that a motor carrier was not liable for an accident when oil allegedly spilled from the truck, coating the road and causing the plaintiff to slide. The evidence showed that that carrier has performed its mandated pre-trip inspection and that there was insufficient evidence to show that the trucker had actually dropped all of the oil which caused the accident. (Mattson v. American Petroleum Environment Services, 2014 WL 2768736)
The Southern District of New York refused to dismiss a complaint for declaratory relief addressing the applicable insurance coverage for a truck accident. The Court held that as the injured party had sued the trucker there was a justiciable controversy ripe for evaluation. (National Continental Ins. Co. v. Lugo, 2014 WL2453306)
The Superior Court in New Jersey held that the shipper was not entitled to coverage under the motor carrier’s policy when sued by the driver for injuries during unloading. The Court held that the motor carrier was not obligated to indemnify the shipper for its own negligence and therefore the carrier’s policy was not triggered. (Burlington Coat Factory of NJ v Jay Dee Trucking, 2014 WL 2440729)
The Appellate Court in Illinois upheld a jury verdict concluding that the truck driver was the agent of the shipper for the purposes of determining the shipper’s responsibility for the loss to equipment. Of interest was the fact that the broker was also sued as a party defendant and entered into a hi-lo agreement with the injured plaintiff. The Court held that the shipper and motor carrier were not entitled to any benefit of the hi-lo agreement because the motor carrier was not entitled to seek indemnity from the broker. (Hoffman v. Crane, 2014 WL 2565691)
The 5th Circuit Court of Appeals held that the Trial Court’s use of the wrong law was a harmless error where the existing law on the preemption of federal common law over state law for an interstate shipment was unclear. The Court concluded that the carrier owed for the cargo damage, as well as for the loss of use of the equipment because a jury instruction requiring that the loss of use be proximately caused by the loss was sufficient to show it reasonable foreseeable. (Eagle Suspensions, Inc. v. Hellman Worldwide Logistics, 2014 WL 2566082)
The Appellate Division in New Jersey held that the claim filing requirement for household goods carriers in New Jersey was a valid defense to a claim against a motor carrier. Interesting the court also held that the failure of the plaintiff to pay the freight charges and provide the original bill of lading was also fatal to recovery. (Kelsey v J.D. Carton & Son, Inc. 2014 WL 2574051)
Were the goods in transit for the purposes of insurance coverage when being installed? The Court of Appeals in California held that the transit policy did not apply to art work while being installed. It concluded that the general liability policy did, however, provide coverage. The care, custody and control exclusion was held inapplicable because the artwork was not in the exclusive custody of the carrier and the “your work” exclusion was equally inapplicable because the action – improperly removing part of the piece, was not part of the required work. (Those Interested Underwriters v. Transguard Insurance Co., 2014 WL 2528656)
It is rare that we see cases which address the issues raised with contingent coverage. This month the Court of Appeals in Texas considered whether a contingent policy required that the insured exhaust all options for recovery against the carrier before recovering under the contingent policy. The Court evaluated the meaning of contingent policies, concluding that the insured was not required to exhaust all remedies before recovering under the policy (Certain Underwriters at Lloyds v. Cardtronics, Inc., 2014 WL 2617273)
The Eastern District Of Michigan held that even under the newest version of the Carmack Amendment a carrier was required to show that the shipper was given a reasonable opportunity to choose between two options before a limitation of liability would be enforced The Court also held that a claimant would not be limited to the initial claim presentation amount and could seek to amend to a higher amount. (Medvend v. YRC, Inc. 2014 WL2440066)
The Southern District of New York upheld the preemptive effect of the Carmack Amendment, at least as to the claim against the interstate motor carrier. However, the agent of the carrier, who also provided storage services, was not granted the preemption automatically. The Court concluded that there were issues as to whether the storage was part of a contemplated interstate move or were purely state related services. State Causes of action against the agent were not dismissed. (Brody v. Liffey Van Lines, Inc., 2014 WL 245087)
A motor carrier and its insurer were successful in a fraud claim against a a broker who represented that there had been a contract to sell the cargo. The Second Circuit held that it was not necessary that the broker accomplished his intended fraud in order to succeed on its common law fraud claim. (Ensign Yachts v. Arrigoni, 2014 WL 2058080)
The District of New Jersey upheld a limitation of liability entered into between the rail carrier and the broker. The Court concluded that the subrogating insurer was bound by the limitation as there was evidence that two choices were given, and holding that one of the choices did not have to be for full value. In addition the court held that shipper was bound by the relationship between the carrier and the broker. (Phoenix v. Norfolk Southern Railway 2014 WL 2008958)
An international household goods carrier was unable to get a complaint dismissed on the basis that a forum selection clause required suit in Israel for a loss arising out of Hurricane Sandy. The Western District of Pennsylvania held that as there were questions as to whether the forum selection clause was part of the contractual agreement dismissal of the complaint without discovery was premature. (Roman v. Unigroup Worldwide, 2014 WL 2504586)
Southern District in Texas refused to remand a cargo claim back to state court. The Court held that the fact that the broker had agreed to provide additional specialized services, i.e. building a trailer, would not make the claim against the broker a claim under contract carriage. The Court held that there was no express waiver of Carmack Amendment and that a purchase order could not be used to support a claim that this was contract carriage and not common carrier. Finally while the Court noted that the claims against brokers were not subject to Carmack, the broker was still permitted to remove the case where there was a Carmack Amendment claim against the carrier. (Air Liquide Mexico v. Talleras Willie 2014 WL 2526914)
Have a great month.