Are you about as sick of this winter as we are? Some days it seems like we will never see warm weather again. I, for one, am ready to move this operation to an island – they have cargo and trucks there too.
February is a short month, but still packed with news. Although not an issue reported on much in the general transportation papers, the demise of the BMC-32 endorsement is an issue at the forefront for many insurers as the end date of the endorsement looms. We can tell you that there has been no further directives from the FMCSA and each insurer must decide how best to address this issue. For premium subscribers, we can advise you which of your carriers have authority to operate as household goods and therefore need a filing. If you need that information, please contact Mark Schweber to obtain a listing.
The recent news article in Transport Topics addressing the effect of CSA on insurance rates, and the fact that CAB has the ability to advise insurers of “chameleon operations” has generated a lot of interest from you. This is included as part of our superior Premium Service and anyone that needs a little extra training on how to look for that information, please give us a call and we would be happy to walk you through it. Those who are interested in obtaining the premium service, and the ability to ferret out those operations, please contact our customer service and we will be happy to discuss the details with you.
TRUCKING MERGERS – The buzz in the transportation industry is that trucking mergers will pick up this year, as carriers look to align themselves with carriers which will help expand business. So far there have been at least 3 purchases by some of the larger carriers, including Greatwide Logistics Services’ purchase of Overton Transportation, Vitran Corp’s purchase of Milan Express and Transport America’s purchase of Southern Cal Transport.
EOBR REQUIREMENT – The FMCSA has proposed requiring almost 500,000 motor carriers to have EORB, up from the current 5,700 carriers currently impacted. The use of the recorders, while a large expense to carriers, would allow for a reduction in the paperwork needed to keep HOS documentation. The proposal is receiving mixed reviews, in part due to the expected expense to carriers. The final rule is expected to be in place by June 2012, with a extended time frame for compliance.
HOURS OF SERVICE – Speaking of hours of service, the FMCSA has begun its listening sessions on the new hours of service rules and much of the speaking is not happy. The new rules which may cut driving hours back to 10, and modify the 34-hour reset provision by requiring that it include two rest periods of at least six hours between midnight and 6 a.m. appears to be disfavored by the majority of the trucking industry. This will be a bone of contention this year.
CARGO THEFT – Where is it occurring? According to Freightwatch, Texas and New Jersey were the leaders in cargo theft in January. Its January report, can be viewed here. Over the course of the last year they have reported more than 120 alleged thefts at truck stops. More than 20 cargo thefts were reported from public access parking lots. They also note the growing trend of “fictitious pickup” involving identity theft.
ANTI- INDEMNITY LEGISLATION – Arizona has moved to add itself to the growing list of states that are looking to enact legislation to prohibit indemnification clauses in motor carrier transportation contracts. The clauses generally hold shippers harmless from losses during shipment, placing the burden on motor carriers for all events. The bill has passed through committee and is now being considered by the house in Arizona.
FREIGHT REPORT – The Bureau of Transportation Statistics has released its report on the modes of freight transport. The BTS has given trucking the nod as the leading mode of transportation of freight in the U.S. The report is based on the 2007 Commodity Flow Survey and concluded that 60% of the total value of shipments for 42 states and DC were carried by truck. You can see the report here. They also released their report on the transport of hazardous materials which can be viewed here. The BTS found that 54% of hazardous materials are moved by truck and 18% of the weight of all freight is made up of hazardous materials. It is especially important to monitor carriers who are hauling hazardous materials and CAB is here to help you do that.
TRANSPORTATION BUDGET – The new proposed budget includes $556 billion for transportation over the next six years. The first $50 billion would be used for a long-term surface transportation authorization so that we do not continue to have short term funding problems, a concern which has existed for the last year and a half. In addition the budget includes slightly over 50 billion for cross border operations, potentially reviving the opening of the trucking border into Mexico. The DOT Budget highlights can be viewed here.
NEW LEGISLATION – Trucking seems to be a focus in the legislative arena this month, with new bills being introduced. The Safe and Efficient Transportation Act of 2011 seeks to permit a sixth axle on trucks and an increase in the GVW from 80,000 to 97,000 pounds on interstate highways. Heavy truck users will be required to pay increased taxes. Another piece of legislation seeks to have the DOT study detention time for trucks at loading docks and use those study results to establish a maximum number of hours drivers may be detained without compensation.
USED VEHICLE REGISTRATIONS – Polk has reported that the registration of used commercial vehicle registrations (GVW 3-8) in the U.S. was at its peak in 2010, with approximately 672,000 used units registered, an increase in used commercial vehicle registrations of 21.7 percent over 2009. Over 65% percent of the total registrations in 2010 were used vehicles. This is the first time that the number has gone over 600,000 units. What does that mean for an underwriter? It means that it is important that you evaluate the track record of these vehicles prior to the time of purchase by your insured. Our VITAL system, available to premium subscribers, will help you track who operated it before and whether it has been placed out of service for violations.
CURRENT CASES
CARGO
Forum selection is often critical in Carmack cases, with different courts taking different positions on limitations of liability and claim filing requirements. Where your case is decided can be critical. This month a motor carriers efforts to have a case transferred from a court which applies a liberal analysis to claim filing requirements failed. The court held that while the while the contacts with the forum state was minimum, the cargo was returned to that jurisdiction and the claim filing and mitigation issues could be easily addressed in that jurisdiction. (Valerus Compression Services v. Lone Star Transportation, 2011 WL 288881)
Many carriers use forum selection clauses in bills of lading to ensure that cargo losses will be litigated in convenient forums. The Southern District of Texas declined to transfer a case to the selected forum, holding that a motion to dismiss for improper venue was unavailable when the carrier had not raised it as a defense and then refused to transfer the case, holding that forum selection was only one element on considering the fairness of the transfer request. Since other factors outweighed removal, the case stayed in Texas. (Williamson Dickie Manufacturing Co. v. Heinrich, 2011 WL 320098)
Subject matter jurisdiction was the issue in the Southern District of Alabama when a court, on its own, remanded a removed case back to state court. Although the plaintiff had ultimately pled a Carmack claim, that claim was not pled until after the removal. The removal petition was therefore deficient as there was no Carmack claim at the time of removal. (Stabler v. Pack & Load Services, 2011 WL 245491)
The District Court in Nebraska did not allow a shipper to break a contractual limitation of liability. In this case the parties had a contract which contained a limitation of liability. The court held that as the contract allowed for an election of an increased liability it fully complied with the Carmack Amendment requirements for choice of rates. (Amlin Corporate Insurance v. Union Pacific Railroad Co., 2011 WL 250420)
Getting all of the evidence before the court is critical and the failure to do so can be fatal to a request for summary judgment. The Southern District in New York addressed the applicability of a limitation of liability in a UPS contract. The court held that there was insufficient evidence to determine what terms and conditions the parties actually agreed to. The court also considered the different factors to be used to determine whether UPS was a carrier or a broker, also concluding that it was a question of fact. (AIG v. UPS Supply Chain Solutions 2011 WL 536426)
UPS was involved in another action in the 9th Circuit Court of Appeals. This time UPS paid the shipper for a cargo loss and sought recovery from the air carrier on whose line the loss occurred. The court held that the two year limitations period under the Montreal Convention and the Warsaw Convention did not apply to a claim for indemnity between carriers. (Chubb Ins Co of Europe v. Menlo Worldwide Forwarding, 2011 WL 451953)
AUTO
A truck driver’s attempt to pursue a shipper for injuries he suffered when transloading a shipment failed in the District Court in New Jersey. The shipper had placed a corrosive chemical in a tanker trailer, necessitating the removal of the goods into another tanker. The court held it was not foreseeable that the transfer would be done at a truck stop in the dark of night, after a rain fall and would result in the new driver being injured. The court also held that the second driver could not recover against the first driver even though both had independent contactor agreements with the motor carrier. (Flint v. Langer Transport Corp., 2011 WL 253646)
The right to seek to recover punitive damages against a trucking company and its driver was permitted to continue in the Middle District of Pennsylvania. The court held that the fact that the driver failed to follow protocol and the motor carrier failed to monitor the drivers hours of service was potentially sufficient to support a claim of punitive damages. (Tuck v. Calhoun, 2011 WL 398285)
The District Court in Florida held that the husband of an injured plaintiff was entitled to recover for damages for loss of consortium when the plaintiff was injured when rear ended by a trucker. The court held that the jury must award some damages when there was evidence that the accident resulted in some negative impact on the marriage. (Peterson v Sun State International Truck, LLC., 2011 WL 309424)
A motor carrier was granted a directed verdict in a personal injury action in the Appellate Division in New Jersey stemming from injuries suffered by the plaintiff during the unloading of a container at a third party warehouse. The court held that while the warehouse was an agent of the carrier for the purpose of soliciting freight and drivers that would not make the carrier liable for a loss during operations performed by the warehouse for its customers and not the motor. (Marroquin v. Halcor, 2011 WL 535908)
Calling all experts. At least that was what the Southern District of Ohio was considering when addressing the motion of a motor carrier to exclude all three of a plaintiff’s experts in a wrongful death suit involving a tractor trailer accident. The court set forth the standards for expert testimony and ultimately admitted the testimony of Gary Derian as an accident reconstructionist, Spephen Wistar, as a meteorologist on the effect of wind causing a trailer to overturn, and Michael Napier, as an expert in industry standards for tractor trailer operations. (Gruenbaum v. Werner Enterprises, 2011 WL 445508)
In that same case the court addressed the question of whether a motor carrier could rely on an Act of God defense in a personal injury action. The court held that it was a question of fact as to whether the driver’s negligence contributed to an accident alleged to have been precipitated by high winds, and whether the motor carrier has properly trained and supervised the driver on the impact of high winds on empty trailers. The court did dismiss a claim for punitive damages in the wrongful death case. (Gruenbaum v. Werner Enterprises, Inc., 2011 WL 563912)
The District Court in New Jersey determined that when interpreting a policy the New Jersey “deemer statute” (statute requiring minimum insurance coverages) would apply to an accident which occurred in New Jersey, although all other relevant facts, including the issuance of the policy occurred in Pennsylvania. The insurer was not permitted to rely upon provisions in the policy on who fell within the definition of an insured. The court also held that an accident which occurred when someone dropped a wrench from his pocket while unloading a vehicle arose from the use of the vehicle and that under the statute, if the insurer failed to have a step down provision it would be exposed to the full value of the policy. Finally the court held that the insurer could not contest the amount of the settlement entered between the plaintiff and the party seeking coverage in the absence of evidence that it was unreasonable, that it was responsible for all defense costs, as well as all attorneys fees incurred for the motions. (Burlington Insurance Co. v. Northland Insurance Co., 2011 WL 383939)
In the Middle District in Alabama the court discharged any claim against an insurer, except for defense obligations, once it had paid its policy limit into the court. The court would not, however, grant attorney’s fees to the insurer for the cost of the interpleader, concluding that the insurer was not a disinterested party, as its payment of the policy limit arose out of its ordinary business operations. (Canal Ins. Co. v. Fenn, 2011 WL 624597)
See you next month. Happy St. Paddy’s Day.
