Dead of winter – here we are again already a month into 2015 – how did that happen? Time flies quicker and quicker these days. There clearly is not enough time to get everything done. We will continue to keep it short and to the point as we know your time is valuable. This month we report:
CAB FINANCIAL RATINGS – The breakdown of the percentages of the financial rating assigned to carriers in 2014, along with prior years it available here. While the percentage of carriers rated SATISFACTORY or FAIR increased, so did the percentage of carriers rated POOR or UNSATISFACTORY. Expected continued economic growth and lower fuel prices are considered likely to make 2015 a good year for the trucking industry but as our ratings distribution shows even in a good year a large percentage of trucking companies have financial weaknesses so it is always important to monitor the financial condition of insureds and prospective insureds.
CRASH INDICATOR REPORT – The FMCSA released a study on crash indicators this month. The study examined (1) whether Police Accident Reports provide sufficient, consistent, and reliable information to support crash weighting determinations, (2) whether a crash weighting determination process would offer an even stronger predictor of carrier crash risk than the current assessment method, and (3) how the agency might reasonably manage and support a process for making crash weighting determinations, including the acceptance of public input. Independent research has demonstrated that a motor carrier’s involvement in a crash, regardless of their role in the crash, is a strong indicator of their future crash risk. According to the FMCSA changing the crash weights based on a motor carrier’s role in the crash did not appear to improve the ability to predict future crash rates when all crashes are considered. There also was concern about the reliability of using Police Accident Reports to make this determination. The study pointed out that implementing a crash weighting effort on a national scale would require a method for uniformly acquiring final Police Accident Reports, a process and system for uniform analysis, and a method for receiving and analyzing public input. The report to Congress can be viewed here.
DRUG TESTING – The FMCSA announced that random drug testing will be required for at least 50% of drivers in 2015. The decision to keep the 50% requirement was based on “the data from motor carrier industry-controlled substance lab test results, the 2012 drug and alcohol testing survey and additional investigations” The transportation industry had hoped to reduce the percentage of required testing.
NTSB MOST WANTED LIST – The NTSB announced that strengthening commercial truck safety is one of the new issues on its Most Wanted List of policies and actions. It released its annual listing of its top 10 areas of safety improvements. The other three new areas of focus are: requiring that transportation operators be medically fit for duty; increasing safe movement of rail tank cars that carry crude oil, ethanol and other hazardous materials across the country; and requiring pilots to strengthen procedural compliance. A copy of the NTSB press release can be viewed at here.
INTERMODAL SHIPMENTS – The Intermodal Association of North America reported that preliminary 2014 totals showed 16.3 million truck-rail shipments in 2014, a 4.8% increase. During 2014, total international shipments rose 4.4% to 8.17 million slightly more than the 8.11 million domestic total. The 2014 domestic total included a 5.7% rise in container cargo and a 2.9% increase in trailer freight.
NAFTA – The DOT has announced that Mexican carriers will be able to apply for authority to conduct cross-border long haul operations. The policy change is expected to result in the permanent termination of more than $2 billion in annual retaliatory tariffs imposed on the U.S. Fifteen trucking companies from Mexico enrolled in the pilot that concluded in October, crossing the border more than 28,000 times, traveling more than 1.5 million miles in-country, and undergoing more than 5,500 safety inspections by American officials. Data collected on the pilot carriers, and an additional 952 Mexican-owned trucking companies that also operated long-haul in the U.S. during the same 36-month period under a pre-existing authority, showed that companies from Mexico had violation, driver, and vehicle out-of-service rates that met the level of safety as American and Canadian-domiciled motor carriers. Companies from Mexico that apply for long-haul operating authority will be required to pass a Pre-Authorization Safety Audit to confirm they have adequate safety management programs in place, including systems for monitoring hours-of-service and to conduct drug testing using an HHS-certified lab. Additionally, all drivers must possess a valid U.S. Commercial Driver’s License or a Mexican Licencia Federal de Conductor, and must meet the agency’s English language proficiency requirements. A copy of the report can be viewed here
2014 BRAKE SAFETY WEEK INSPECTION RESULTS – CVSA released the results of its annual brake inspections which is used to identify out-of-adjustment brakes and brake-system violations. Improperly installed or poorly maintained brake systems can reduce the braking capacity and stopping distance of trucks and buses. 13,305 vehicles were inspected during Brake Safety Week and 2,162 commercial vehicles were placed out of service (OOS) for brake violations. Of the vehicles inspected, the OOS rate for all brake-related violations conducted in North America was 16.2 percent, compared with 13.5 percent for the 2013 event. The OOS rate for brake adjustment rose to 10.4 percent from 9.0 percent in 2013. The OOS rate for brake components was 9.3 percent, up from 7.1 percent in 2013.
POCKET GUIDE TO TRANSPORTATION – The Bureau of Transportation Statistics (BTS) has published the 18th edition of its annual Pocket Guide to Transportation 2015 – a quick reference guide to significant transportation statistics. The Pocket Guide covers data on moving people and goods, system use and performance, the economy, safety, infrastructure, and the environment. A copy of the Pocket Guide to Transportation 2015 is available for free from BTS. You can view a copy here.
Plaintiff’s failure to complete service of a filed complaint until after the statute of limitations ran was a boon to a trucker in the Court of Appeals In Texas. The Court held that the plaintiff was time barred from pursuing a suit for personal injuries. (Jackson v. Saia Motor Freight Line, 2014 WL 7404613)
The Appellate Court in Ohio held that trial Court abused its discretion in entering a protective order that allowed plaintiffs’ counsel to share confidential and trade secret materials produced in discovery in a negligence and wrongful death action against trucking company with attorneys and experts involved in other lawsuits or potential lawsuits against company. The Court held that the order was extraordinarily broad and lacked procedural protections, in that it allowed sharing without any requirement that the litigation be similar or even that there be litigation at all, gave plaintiffs’ counsel almost unfettered discretion to share documents without any real Court supervision, failed to provide company with any prior notice or opportunity to object, and allowed company’s information to be maintained by others in perpetuity. (Byrd v. U.S. Xpress, 2014 WL 7358477)
A truck driver who suffered a serious head injury was unable to recover from the carrier where he picked up the goods where there was no evidence as to how the event occurred. He has no memory of the event. Where there was an absence of any evidence of an instrumentality under the control of the carrier, and no one at the carrier purported to have seen what happened, the Appellate Court in Illinois ruled that plaintiff lost his case. (Rahic v. Satellite Air Land Motor Service, Inc., 2014 WL 7403855)
The Middle District of Louisiana held that an auto liability policy would not provide coverage for injuries to the driver of a vehicle who was contracted to provide services for the owner of the vehicle who was leased on to a motor carrier. The Court concluded that the employee indemnification and employers liability exclusion was applicable, addressing the current legal status of the term “employee”. (Barnett v. Bullock, 2015 WL 58869)
The continuing question of whether claims for negligent hiring and supervision can remain when a motor carrier has conceded vicarious liability for the acts of a driver was answered in the Western District of Oklahoma. The Court held that no such causes of action could continue when vicarious liability was conceded. (Fisher v. National Progressive Ins., 2015 WL 7399185) A similar decision was reached by the Court in the Eastern District of Oklahoma. (Hodge v Stan Koch & Sons, 2015 U.S. Dist. LEXIS 6034)
The impact of the Georgia direct action statue which permits direct suits against truck insurers was called into question The Court rejected the insurers argument that it be dismissed as a direct defendant when it already conceded coverage, concluding that as long as the insurer was properly a defendant at the inception of the case it would not be permitted to get out during the suit, even when there was a potential prejudice by the inclusion of the insurer in the underlying action. The Court also held that a large deductible did not make the insurer an excess carrier. Excess carriers are not subject to the direct action statute. (McGill v. American Trucking and Transportation Ins. Co., 2015 WL 115163)
The 8th Circuit affirmed a trial court ruling in favor of the excess insurer and the insured, declaring that the primary insurer had to provide primary insurance coverage for the underlying accident even when the vehicle was not scheduled on the policy. The Court concluded that the factual issue of whether the insured requested an agent of the primary insurer to change which of his trucks was insured was the pivotal issue in the case, not whether the excess insurer had attempted to reform a contract to which it was not a party. The Court also held that the insured was properly allowed to participate at trial even though he had settled with the primary insurer as the effect of his participation was de minimis and did not adversely affect the jury’s verdict. (Acuity v. Johnson, 2015 U.S. App. LEXIS 622)
A coverage action was stayed by the District Court in Kansas when the Court concluded that the factual issue of whether the driver was operating within the scope of her employment at the time of the truck accident would more properly be decided in the underlying personal injury case. While there were factors which weighed in favor of allowing the coverage action to proceed the critical factor – the factual resolution which would be made in the underlying case, was the tipping factor in favor of staying the action. (National Casualty Company v. Thomas & Sons Trucking, LLC., 2015 U.S. Dist. LEXIS 6601)
The Middle District in Louisiana remanded a case by a trucker against his cargo insurers and his brokers for alleged failure to cover a cargo loss for damaged cargo. The monetary minimum of $75,000 required for removal based upon diversity was not clearly spelled out in the documents and so the Court could not conclude that the limit to support removal was present. (Rouege Trucking v. Canales, 2015 WL 127870)
A motor carrier’s efforts to utilize a possible limitation of liability in an upstream contact failed in the Northern District of Illinois. The Court held that when the motor carrier failed to establish that it was in compliance with the Carmack amendment requirements for limitations it could not get the benefit of the limitation. (Fubon Ins Co v. Travelers Transportation Services, 2015 WL 156807)
The Middle District in Florida held where there were questions of fact as to whether a timely claim was filed with the carrier within nine months summary judgment was inappropriate for either party. (Ceva Logistics v. National Distributors Inc., 2015 WL 136041)
The myriad of issues which arise when trying to apply a limitation of liability, whether under a warehouse receipt or a bill of lading was considered by the District Court in New Jersey. The Court ultimately held that where the evidence was not clear that the customer agreed to the limitation the matter would have to be decided by a jury. The Court did conclude that the limitation, if applicable, would apply to a claim for gross negligence. (OFI International, Inc. v. Port Newark Refrigerated Warehouse, 2015, WL 140134)
The Southern District of Ohio dismissed a Carmack action against a motor carrier for damage to a shipment being transported from Virginia to California. The Court concluded that while the Carmack Amendment allowed for suit in any district in which the delivering carrier operated the plaintiff was still required to establish that the defendant was subject to personal jurisdiction under the state law in Ohio. As plaintiff had not met its burden of establishing jurisdiction the Court transferred the case to a more proper venue. The Court also denied a request for a default against a connecting carrier on the chance that it might impact the claim against the delivering carrier. (JM-Nipponkoa Insurance Co., Ltd., vs. Dove Transportation, LLC, 2015 U.S. Dist. LEXIS 3081)
In the Western District of Arkansas the Court held that prejudgment interest and costs were recoverable in a Carmack action. (Architectural Contractors. Inc. v. Schilli Transportation Services, Inc., 2014 WL 7369254)
See you next month.