Summer is coming to a close once again and we will all start gearing up for the fall. Back to school, back to work, back to the grind. August was a fairly quiet month overall as the industry slowed down for a few quick breaths. Have a wonderful Labor Day Holiday. This month we report:
CSA ATTTACK – A coalition of 10 industry groups has asked the DOT to prohibit public access to CSA safety ratings. The coalition is made up of the Owner-Operator Independent Drivers Association; American Trucking Associations; American Bus Association; American Moving and Storage Association; National Private Truck Council; National School Transportation Association; National Tank Truck Carriers; Specialized Carriers and Rigging; Truckload Carriers Association; and the United Motor Coach Association. The coalition contends that removing the scores from public view will spare motor carriers from erroneous scores and will also prevent the public from being lulled into a false sense of security that they are hiring a safe motor carrier.
In other CSA news, the FMCSA announced the implementation of changes to allow the states to reflect the results of adjudicated citations related to roadside inspection violation data collected in the Motor Carrier Management Information System (MCMIS). The policy on recording results of adjudicated citations in FMCSA data systems only applies to citations issued during roadside inspections occurring on or after Aug. 23, 2014. MCMIS has been modified to accept adjudication results showing that a citation was dismissed or resulted in a finding of not guilty; resulted in a conviction of a different charge; or, resulted in conviction of the original charge.
ATRI STUDY – The ATRI released its study, “Evaluating the Impact of Commercial Vehicle Enforcement Disparities on Carrier Safety Performance”. The report contends that carrier safety performance as represented by BASIC scores can be dramatically impacted by where a carrier operates. The state’s varying enforcement priorities preclude uniformity in enforcement and can lead to an incorrect analysis of the true safety of the carrier.
FMCSA LEADER – T.F. “Scott” Darling has been designated the acting administrator of the Federal Motor Carrier Safety Administration effective Monday, August. 25. Darling will replace Anne Ferro. Prior to his appointment to the FMCSA by President Obama in 2012, Darling served as deputy chief of staff and chief counsel for the Massachusetts Bay Transportation Authority.
CVSA RESULTS – CVSA’s annual Roadcheck performed 73,475 truck and bus inspections during the 72-hour blitz. Of the Level I inspections conducted in Canada and the U.S., 23 percent were found with out-of-service violations, compared with 24.1 percent of the 47,771 vehicles given Level I inspections in 2013. The overall percentage of drivers who were ordered out of service rose roughly half a percent to 4.8 percent, up from 4.3 percent in 2013. There were a total of 72,415 driver inspections. In addition to those violations, CVSA inspectors issued 825 seatbelt violations. A total of 5,738 inspections included HM/TDG . The most common violations were for brake adjustments and brake systems accounting for 46.2 percent of all OOS violations issued. Hours-of-service violations were the most common violation resulting in a driver being placed out of service, accounting for 46.5 percent of all driver violations.
COMMODITY FLOW SURVEY – The BTS reports that preliminary estimates from the 2012 Commodity Flow Survey (CFS), show that nearly 11.7 billion tons of freight, valued at $13.6 trillion, was transported about 3.3 trillion ton-miles in 2012 by shippers in manufacturing, wholesale trade, and mining in the United States Said another way, on a typical day in 2012, 32.0 million tons of goods, valued at $37.3 billion, moved nearly 9.1 billion ton-miles on the Nation’s transportation network.
Trucking is the predominant mode in both value and tonnage of CFS shipments. In the 2012 CFS preliminary data, truck shipments accounted for:
- about $10.0 trillion worth of goods and 73.7 percent of the total value of all shipments (figure 1);
- about 8.2 billion tons of goods and 70.0 percent of all tonnage (figure 2);
- about 1.3 trillion ton-miles, representing approximately 38.1 percent of all ton-miles (figure 3); and
- an average distance of 216 miles per shipment (see table 1).
The CFS distinguishes between two categories of truck: for-hire and private. For-hire trucks handled more than half the tonnage and two-thirds the total value of goods moved by truck. Goods moved by private truck typically travel much shorter distances than goods carried by for-hire trucks. The average miles per shipment by private truck in the 2012 CFS was 46 miles, compared to 489 miles by for-hire truck.
BUS STANDARDS – The U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) released proposed motor vehicle safety standard to protect motorcoach and other large bus passengers in rollover crashes. The proposal aims to improve the structural design of large buses to ensure that passengers are better protected in a deadly vehicle rollover by ensuring that the space around them remains sufficiently intact and the emergency exits remain operable.
Once again we see how limitations of liability are strictly construed. The Northern District of Illinois refused to enforce a limitation of liability where the identity of the carrier and the parties to the bill of lading was unclear. The Court held that there was a question of fact as to the understanding of the parties precluding application of the limitation through summary judgment. (Frontier Supply Chain Solutions, Inc. v. Streamline Transport Solutions, 2014 WL 3705349)
When a plaintiff was precluded in a first action from filing a fraud claim against a broker for failing to insure goods because it failed to meet court ordered deadlines, the plaintiff was not allowed to file a separate action alleging the same events. The Southern District of Florida applied the doctrine of res judicata to preclude the second action. (Sodikart v. Geodis Wilson, USA, 2014 WL 3928555)
The Third Circuit Court of Appeals considered the impact of a conversion claim against a motor carrier and whether it was preempted by the Carmack Amendment. The Court held that all state law claims, including conversion, were preempted. The true conversion exception was relevant only to determining whether a carrier could limit its liability under Carmack. (Certain Underwriters v. United Parcel Service, 2014 WL 3906951)
The Northern District of Illinois held that claims against brokers, other than for breach of contract, were preempted by the Interstate Commerce Commission Termination Act. The Court held however, that a fraud claim for failing to procure insurance was not preempted, but held a question of fact existed as to whether there was such an agreement. Finally the Court held that the limitation of liability contained within the broker’s terms and conditions would not apply when the claim was for failure to procure the insurance. (Midwest Trading Group v. Global Tran Enterprises, 2014 WL 3672932)
The District Court in Maryland held the same way, concluding that a negligence claim against a broker was preempted under the ICCTA. The Court declined to rule on whether all claims against brokers were preempted under Carmack. (AIG Europe Limited v. General System, Inc. 2014 WL 3671566)
An action for cargo loss was remanded to State Court by the Court in the Western District of Michigan. The Court held that while the cargo was ultimately involved in interstate transit, the second part of the shipment was a separate leg of the journey. Since that was only intra-state, jurisdiction in the Federal Court was not to be had. (Open Systems Technologies v. Transguard Insurance Company of America, 2014 WL 3625737)
The District Court in Nevada also upheld the preemption defense in an action seeking damages for loss to goods in interstate transit, allowing the plaintiff to amend to allege a Carmack claim.. (Tanus Cabinets Designs, Inc. v. Central Transport, 2014 WL 3747694)
Over in the Second Circuit Court of Appeals the court ruled that a carrier was not liable for a cargo loss when there was an exoneration clause in the ocean carrier’s bill of lading. The exoneration clause was held not to violate public policy. The Court also held that the carrier waived any requirement that the ocean carrier pay claims before proceeding to seek contractual indemnity. (Sompo Japan Insurance Co. v. Norfolk Southern Railway Co., 2014 WL 3844155)
A trucking company in Texas was permitted to require an employee claiming personal injury on the job to proceed to arbitration when it sought damages for a job related injury. The mechanic was deemed a transportation worker under the Federal Arbitration Act for purposes of employment contracts. (Western Dairy Transport v. Vasquez, 2014 WL 3735909)
The case against a trucker’s auto insurer was remanded for additional consideration in the 6th Circuit. The insurer sought a declaration that it provided no coverage for a driver’s injuries under the employee exclusion in the auto policy. The Court held that there was a question of fact as to whether the driver, who was operating a leased vehicle, was an employee. The Court rejected the insured’s claim that an insurance clause which stated that the policy would be conformed to assure compliance with applicable law incorporated the federal regulations which made the driver an employee. (Gramercy Insurance Co. v. Expeditor’s Express, Inc., 2014 WL 3843836)
A trucker was not permitted to collect from its auto insurer for injuries caused when crude oil leaked from an above ground storage tank during the unloading process. The Court of Appeals in Texas held that the leak, which was caused by the collapse of the tank, did not arise out of the use of the auto, So while the policy actually had an expanded pollutant endorsement the insuring clause was not triggered and the endorsement was therefore held inapplicable. (Superior Crude Gathering v. Zurich American Insurance Co., 2014 Tex App LEXIS 8247)
The issue of whether co-employees can be held liable for injuries caused to a driver was addressed in Missouri this month. The driver was killed in a single vehicle accident and his family contended the co-employees were liable for sending him out to drive when he may no longer have been physically fit, The Court held that the co-employees owed no duty under common law and that obligation to insure compliance with FMCSA safety regulations rested with the employer and did not create a separate tort against the co-employees which would defeat the exclusivity of workers compensation. (Parr v. Breeden, 2013 Mo. App. LEXIS 842)
When UM coverage is rejected in the first year of coverage an insurer is not obligated to obtain rejections each year. The Court of Appeals in Louisiana held that while the insurer obtained rejections for each renewal the fact that one page was not initialed in a renewal year was not enough to establish that UM coverage had been requested. (Hughes v. Zurich American Insurance Co., 2014 La. App 1991)
The Ohio DOT was not required to indemnify a trucker for damages caused when the trucker hit a pot hole and lost control of the vehicle. The Court held that there was no implied indemnity when the parties were joint tortfeasors. The Court held that to have a right of indemnity under the active/passive negligence theory a party must be passively negligent, which the carrier was not. (Goscenski v. Ohio Dept of Transp., 2014 WL 3867533)
Over in Missouri the Court of Appeals held that an insurer was not permitted to raise a defense that the auto policy at issue did not cover the driver when he was hauling goods when it had previously lost that issue in an action by a co-plaintiff for garnishment. The Court held that res judicata barred the defense. The Court also rejected an argument that the plaintiff was not prohibited under the doctrine of claim splitting when it has previously dismissed its action and allowed the co-plaintiff’s action to go forward as each has their own claim. (Gu v. Da Hua Hu, 2014 WL 3728710)
The District Court in Utah refused to sanction a trucking for failure to properly disclose all insurance coverage when the evidence established that they only learned of the excess policy after initial discovery and promptly notified the plaintiff of the discovery. The Court also held that that the failure of the motor carrier to comply with the Utah Trucking Guide issued by the DOT could not be used to circumvent the comparative fault, also rejecting plaintiff’s expert to the extent he was to testify that state law made the carrier liable for the loss. (Ashike v. Mullen Crane & Transport, Inc., 2014 WL 3640735)
The impact of a spoliation claim was felt by a trucker in the Middle District of Georgia. A critical issue in the case was whether the driver was on the phone at the time of the loss. The driver claimed his phone malfunctioned and sent his phone back to the manufacturer, destroying all of the evidence. The Court ruled in favor of the plaintiff, permitting a negative inference to be given to the jury. (Little V. McClure, 2014 WL 3778963)
A manufacturer was not entitled to indemnity from a motor carrier under its transportation contract with the motor carrier when the manufacturer was sued by the driver for injuries. The 11th Circuit Court of Appeals held that when the indemnity provision did not expressly indicate the parties’ intent that the indemnity from the carrier would apply to the negligence of the manufacturer. (Snyder’s Lance, Inc. v. Cowen Truck Line, 2014 WL 3562727)
Once again the Northern District of Oklahoma held that there would be no direct action against the motor carrier’s insurer under Oklahoma law when the carrier was not a registered home state carrier. The Court rejected the plaintiff’s argument that Unified Carrier Registration made everyone an Oklahoma carrier. (Hobbs v. Rui Zhao, 2014 WL 3898408)
The duty to defend does not arise until such time as there is actually a suit. The Eastern District of Louisiana held that an insurer was not obligated to reimburse the insured for attorney’s fees it incurred in handling and settling a claim. As it all happened before suit was filed the expense was to be borne solely by the insured. (Meyers Warehouse, Inc v. Canal Insurance Co., 2014 WL 3866471)
Two motor carriers were successful in having a personal injury action dismissed when the plaintiff waited more than 3 years to complete service. The plaintiff’s argument that the requirement of prompt service should be stayed because the action was stayed against a third defendant due to bankruptcy fell on deaf ears. The Court of Appeals in California dismissed the case. (Hills v. J.B. Hunt Transport, Inc. 2014 WL 3962483)
The Northern District of Illinois agreed that under Illinois law there could be no claim for negligent training or supervision against a motor carrier who had already admitted vicarious liability for the actions of the driver. The Court further held that Illinois recognizes a cause of action for spoliation, leaving open a question as to whether the motor carrier had destroyed evidence. Finally the Court held that there was no valid cause of action against the broker when the plaintiff could not allege sufficient facts to show that the broker was involved in a joint venture with the motor carrier. (Meyer v. A&A Logistics, 2014 U.S. Dist. LEXIS 100625)
Summary judgment on the issue of liability was granted against a carrier who hit an overpass resulting in personal injury to a third party when cargo fell off the truck. The Southern District in New York held that violation of NY Vehicle and Traffic Law which prohibited over height vehicles established negligence against the carrier as a matter of law. (Manlapig v. Jupiter, 2014 WL 3906464)
The Southern District in Alabama held that a driver was not entitled to UM benefits when the benefits were rejected by the named insured. The fact that the driver had an insurance certificate which indicated he was an additional insured did not create statutory rights for the driver. In addition, as he was the owner of the vehicle he was required to have PIP coverage, not the motor carrier. (Protective Insurance Co. v. Plasse, 2014 WL 3898084)
The Western District in New York analyzed the impact of the Graves Amendment, which, as a general matter, precludes claim against leasing companies absent their own negligence. The Court held that the amendment did not preclude a claim against an affiliated company of the motor carrier (i.e. the leasing company and the carrier were owned by the same holding company), and that both the vehicle owner and the owner’s affiliate must be free from negligence in order for the leasing company to be shielded from vicarious liability. (Stratton v. Wallace, 2014 WL 3809479.)
The applicability of the California statutory scheme which addresses the primacy of insurance coverage was a topic in the Court of Appeals in California. The Court held that a policy which specifically rated the vehicle was primary over one which did not. The Court held that an additional provision of the Insurance Code, Sec. 11580.9, which held that when two motor carrier policies covered a loss the policy which covered the motor carrier whose business was being performed would be primary, was inapplicable because the vehicle was specifically rated on one policy. (Scottsdale Indemnity Co. v National Continental Insurance Co., 2014 Cal App Unpub LEXIS 5853)
A defense verdict in favor of a motor carrier was upheld in the Court of Appeals in California The Court agreed that defendant’s expert, who testified that the driver acted properly in checking his mirror a few seconds before making the left and could not have seen the plaintiff, was not testifying outside the scope of his expertise. The Court held that the expert could testify that the only eye witness could not have reasonably seen whether the driver had a turn signal on. (Seamoans v. Xang Xiong, 2014 Cal. App. Unpub LEXIS 5167)
Choice of law anyone? The Court of Appeals In Indiana held that the law of Illinois would apply to determine liability for an accident involving two Indiana residents when the accident occurred in Illinois. The Court rejected plaintiffs’ argument that the negligent supervision and failure to comply with safety regulations actually occurred in Indiana was insufficient to change the applicable law when the accident was in another state. (Melton v. Stephens, 2014 Ind. App. LEXIS 335)
The validity of Mary Carter agreements was considered by the Court of Appeals in Tennessee. The Court held the plaintiff and a defendant trucking company could settle and enter into an agreement that they would work together against a second trucking company. The Court held that the agreement was not against public policy. (Borne v. Celadon Trucking Services, Inc., 2014 WL 3778743)
See you in the Fall.