Hopefully many of you are packed and on your way to North Carolina to attend the annual IMUA meeting. Looking forward to some warm weather and seeing so many old friends. We send a special congratulation shout out to Jim Cunningham of Markel who is receiving the Life Time Achievement Award this year. Thank you for all of your service to the industry!
This month is fairly short on news. Everything in the transportation industry is focused on the political maneuverings over CSA and the future of SMS and carrier reporting. It seems like every day there is a report of another legislator introducing a bill or calling out the agency on CSA. That leaves little else happening. But we always find some news. This month we report:
ANTI-INDEMNITY STATUTES – Arkansas has climbed up on the bandwagon to join the many other states to prohibit unfair clauses in trucking contracts. The newest law forbids provisions in contracts that provide for shippers to be indemnified for losses caused by their own negligence, making those clauses void and unenforceable. Over in New Jersey the Senate Transportation Committee voted unanimously to move forward with their own bill to outlaw indemnification clauses in trucking contracts. To date, 42 states have acted to protect truckers from these clauses.
TOW LEGISLATION – Towing operations are often a nightmare for claims adjusters as they try to get reasonable charges from tow companies following accidents. Arkansas, apparently having a busy month, has moved toward reform of tow operations. Arkansas, as of July, 2015, will requires that consumer complaints be resolved within 45 days and permit the Arkansas Towing and Recovery Board to order tow companies to make restitution payments under certain conditions. Another new law taking effect this summer requires the towing board to set up a complaint process for the removal or suspension of a towing company from a non-consensual rotation list, and set fines for companies that violate rotation list policies.
U.S. DOT TRANSPORTATION STATISTICS ANNUAL REPORT – The U.S. Department of Transportation’s Bureau of Transportation Statistics has released its Transportation Statistics. The report, which can be viewed here is too long to summarize here. For those interested it presents key transportation indicators along with an overview of the transportation system. It also includes data and statistics on passenger travel, freight movement, transportation and the economy, system reliability, safety, energy use and environmental impacts.
ECONOMIC INDICATORS – While we have seen months of increased growth in jobs it has now stalled and, in transportation, slipped backwards. Trucking lost 6,800 jobs for the first time in almost two years. Economic indicators have always looked to trucking as a harbinger of the future. Let’s hope that this report is not indicative of future events. In other news, the HireRight 2015 Transportation Spotlight reports that the driver shortage is getting worse as fewer young drivers join the ranks. Although the report indicates that the hiring outlook is positive, with 83% indicating that they will be looking to hire new staff, the absence of a job pool may limit their ability to fill those spots. The American Trucking Associations estimates that the current driver shortage is 35,000 drivers and if current trends prevail, the industry could need an additional 240,000 new truck drivers by 2023. 96,000 new drivers are needed every year to meet current demand. Interestingly the report indicates that the following are the key focus of background checks: motor vehicle records checks (97 percent), previous employment verification (91 percent), checks of the Commercial Driver’s License Information System (82 percent), and reports from the Pre-employment Screening Program data (79 percent), yet only 73 percent check criminal and other public records searches.
IMMINENT HAZARD OUT-OF-SERVICE ORDER – The FMCSA declared Carnell Pomoy D/B/A Mortise Trucking Company (DOT # 1339109) of South Carolina an imminent hazard for multiple violations.
The Middle District of Alabama held that a motor carrier and a driver were both entitled to summary judgment on claims of wantonness in operation of the vehicle and wantonness in driver training. The Court held that a trucking company would not be liable for those extra damages when there was no evidence that the trucking company was aware of any prior incidents involving the driver. (Craft v. Triumph Logistics, Inc., 2015 WL 1565003)
The Court of Appeals in Wisconsin upheld a defense verdict against a trucker and his insurer (Wisconsin is a direct action state). The jury found both the plaintiff and the driver negligent, but concluded that the negligence of the trucker was not the cause of the accident, awarding the plaintiff only $5,000 for pain and suffering. The Court also awarded the plaintiff $5,000 as a discovery sanction against the defendants for spoliation of evidence for failure to maintain the trailer black box. (White v. Rasner, 2015 WL 1471115)
The Eastern District of Kentucky denied a plaintiff his action against a trucking company where there was no evidence that the trucking company was subject to jurisdiction in Kentucky. There was no evidence that the trucking company transacted business in Kentucky, the loss did not occur in Kentucky and the trucking company’s action did not subject it to long arm jurisdiction. (Wilson v. Hirschbach Motor Lines, 2015 WL 1585338)
The Southern District in New York concluded that an insurer was obligated to pay the MCS-90 limits and not the lower policy limits when the facts revealed that the named insured was acting as a carrier, received compensation for the transport and actually owned the vehicle. The insurer had disputed that the insured was acting as a carrier for the particular transport involved. (Park Insurance Co v. Lugo, 201 WL 153791)
The Southern District in Mississippi agreed that a general liability policy issued to a motor carrier provides no coverage for the liability of the motor carrier for an auto accident. It all arises out of the use of the auto which is a standard exclusion under the policy. (Nautilus Ins Co. v. Wonderland Express, Inc., 2015 WL 1279987)
An insurer was successful in its efforts to avoid coverage based upon the employee exclusion in an auto liability policy. The Southern District in Georgia held that the federal statute which concluded that an independent contractor was a statutory employee was enough to support the application of the exclusion. (Progressive Mountain Insurance Co v. Madd Transportation, 2015 WL 141948)
A shipper is not entitled to recover damages against an intermediate carrier under the Carmack Amendment. The Middle District in Florida concluded that the Carmack Amendment allowed for recovery only against the originating and delivering carrier, leaving open the question of whether there could be two delivering carriers. (Tech Data v Mainfreight, Inc, 2015 WL 1546639)
Once the cargo owner settles with the broker and the motor carrier does the Federal Court have the authority to continue the cross-claims between the two? The District Court in Nevada held that it would not exercise jurisdiction and remanded the case back to state court for a resolution of the cross-claims between those parties. (Tanus Cabinets v. Central Transport, 2015 WL 1548948)
Although not specifically MTC related, the Southern District of New York considered the carrier exception to the dishonest act exclusion under a property policy The Court held that were the warehouse, which also operated as a trucker, was simply warehousing product it could not claim the benefit of the exception to the exclusion. The fact that there was a separate trucking operation performed was irrelevant when the claim was based upon theft from the warehouse. (Warehouse Wine & Spirits v. Travelers Property Casualty Company of America, 2015 WL 1454883)
In the Court of Appeals in California one shipper actually sued UPS when his shipment was seized by the FBI. The Court dismissed the action and concluded that the plaintiff could not allege a claim under the Carmack Amendment when any possessory interest he had in the goods was forfeited to the government. The Court also held that the actions of the FBI in seizing the goods constituted an act of a public authority for which the carrier was exempt from liability. It is not often that we see act of public authority cases. (Gibson v. UPS, 2015 WL 1850278)
The Eastern District in Pennsylvania held that the Carmack Amendment preempted a plaintiff’s claim for consequential damages for a lost sale and for the value of the cargo. The Court then dismissed the action as the actual damage for the goods was less than the jurisdictional minimum of $10,000. (Acel International v. Plummer, 2015 US Dist LEXIS 43797)
See you next month!