I attended the National Cargo Theft Summit in Washington D.C. It was good to see a number of insurers attending the summit as the number of cargo thefts continue to grow. Ultimately it is the insurers who pay for these losses.
We’ve almost completed picking out the finalist entries for our contest. Check back on our website over the next week or two for a chance to vote on the name for our new Carrier Research and Analysis system.
This month we also report:
LOG BOOKS – The ATA won a victory this month against the FMCSA. A Federal Appeals court has advised the FMCSA that they have until Dec. 30 to advise what documents trucking fleets need to retain to verify their drivers’ hours-of-service logbooks. The rule was mandated by a 1994 statute and the FMCSA had never issued its required rulemaking.
FREIGHT FORWARDER PRICE FIXING – Six international freight forwarders admitted that they were guilty in fixing prices from 2002 through 2007. They have agreed to pay $50.3 million in fines. The Department of Justice has indicated that this is an ongoing investigation into price fixing in the freight forwarding industry. The six forwarders are EGL Inc., Houston; Kuhne & Nagel International, Schindellegi, Switzerland; Geologistics International Management, Hamilton, Bermuda; Panalpina World Transport, Basel, Switzerland; Schenker AG, Essen, Germany; and BAX Global, Toledo, Ohio.
EOBR – The Owner-Operator Independent Drivers Association has filed a petition for review of the recently implemented on-board recorder rule. The organization contends that the rule, which targets motor carriers who are found to be in violation of log and service requirements, is invalid and should be redrafted. The government has until early November to respond to the petition. At the end of September, the Commercial Drive Compliance Act was introduced in the senate which would require EOBR’s on all trucks.
DRIVER AND VEHICLE INSPECTIONS – This month the FMCSA was considering the new and improved ways that inspections can be done to ensure that states and other government agencies are providing the most accurate data when reporting on inspection results. The new data includes Wireless Roadside Inspection (WRI) which uses a fixed site or mobile vehicle, and is designed to conduct up to 25 times more vehicle inspections a year than the current, in-person inspection process. In real time, an inspector can obtain driver and carrier identity, vehicle condition and hours-of-service violations while the vehicle is traveling at highway speed. Other possible new programs include the Smart Infrared Inspection System (SIRIS), which detects brake, wheel and tire problems by comparing infrared thermal images of wheels as the vehicle enters a weigh station and the Performance-Based Brake Tester (PBBT) which provides an accurate and objective assessment of a vehicle’s brake force and overall performance.
SPEED – LEADING CAUSE OF FATAL ACCIDENTS – Crash data from 2009 shows that in 7.3 percent of crashes, speed was the top cause of the crash, followed by driver overcorrection (1.8 percent), failure to obey traffic signs (2.0 percent ), failure to yield the right-of-way (3.5 percent ), inattention (5.7 percent), failure to keep in the proper lane, (6.5 percent of crashes), followed by fatigue (1.4 percent). The list was rounded out with driving under the influence of alcohol, drugs and medications, following improperly, making an improper turn, reckless driving and driving on the wrong side of the road. The analysis was released by the FMCSA’s Office of Analysis, Research and Technology. You can see the report here.
TRUCKING CONCERNS – The ATRI released its top 10 critical issues facing the North American trucking industry based on its survey of more than 4,000 trucking industry executives. While the economy continues to be number one, the CSA 2010 and its impact on companies is right behind, followed by government regulation, hours of service, driver shortage, fuel issues, transportation funding/infrastructure, onboard truck technology, environmental issues and truck size and weight.
CSA 2010 – The results of the FMCSA 30-month field test have been released. Phase I indicated the test group reached 44 percent more carriers than the non-test group and 62 percent of investigations included a follow-up with the carrier to address safety deficiencies, such as a Notice of Violation, compared with 32 percent in the non-test group. Phase II preliminary results included the following indications:
The test group reached 37 percent more carriers than the non-test group.
CSA 2010 has conducted carrier investigations with fewer resources, demonstrating a 52 percent increase in the number of investigations per investigator.
Forty-eight percent of test group investigations included a follow-up with the carrier to address safety deficiencies, compared with 33 percent in the non-test group.
A copy of the field test report can be viewed here.
OPERATION AIR BRAKE – The Commercial Vehicle Safety Alliance Operation Air Brake’s Brake Safety Week showed a drop in the number of out-of-service defects for brake components and overall out-of-service defects. 30,472 vehicles were inspected, and only 2,717 vehicles were placed out of service for brake adjustments, 2,435 for brake components and 4,117 for brakes.
TIRES RULES– The National Highway Traffic Safety Administration has announced its proposed rules for more stringent tire inflation and load tests and will also add a requirement that load specifications must be contained on tire labels. Comments on the proposed rules are due at the end of November. The rulemaking can be viewed here.
CURRENT CASES
MISCELLANEOUS
A broker’s attempt to have the Federal Court accept jurisdiction over a freight charge issue failed in the Eastern District of New York. The court held that 14101, the contract carrier statute does not confer federal jurisdiction. The court also held that only cases arising from filed tariffs, which are household goods carriers and non-contiguous domestic trade carriers, are entitled to the benefit of federal question jurisdiction. (GMG v. PDK Labs Inc., 2010 WL 3718888)
While not a trucking case, inland marine losses also reveal issues which are of concern to all. In the First Circuit in Louisiana, the court held that a certificate of insurance issued by the insurer of a crane operator conferred no benefit on a crane owner when the crane was damaged. The crane damage was still excluded under the care, custody and control exclusion of the general liability policy. (All Crane Rental of Ga. v. Vincent, 2010 WL 3516825)
In another non-trucking but related case, the court in Western District of Wisconsin considered whether a policy which covered a boat and which contained a named operator endorsement was an ocean or an inland marine policy. The court defined what constituted inland marine insurance, which by statute requires filed approved forms. The court held that the policy which covered the vessel on navigable waters was an ocean marine policy and the insurer was not required to get Insurance Commissioner approval for a named operator endorsement. (Markel American Insurance Co. v. Bachman, 2010 WL 3909832)
Two bites at the apple? Not permitted when dealing with removal to Federal Court. The Southern District of California remanded, for the second time, a defendant’s efforts to move the case to federal court. The first time it was remanded was because the consent from the co-defendant was untimely. When the plaintiff later amended the complaint the defendants tried again. However as the essential allegations of the complaint were no different, removal was denied. (Citizens Watch Company v. Expediters International of Washington, 2010 WL 3834337)
The Southern District in Florida refused to allow a trucking company to have a personal injury action heard in Federal Court. The court remanded the action because the complaint did not specifically seek damages in excess of $75,000. The fact that counsel had made a pre-suit demand of $300,000 could not be used to support a finding that the diversity jurisdictional limits of $75,000 were met. (Calhoun v. Con-Way Freights Inc., 2010 WL 4062590)
The same was true in South Carolina where the court held that it was not fraudulent for the plaintiff to name the driver of her vehicle in the suit to defeat diversity even after testifying that she believed he was not at fault in the accident. (McDuffie v. Meade Trucking Co., 210 WL 4027976)
A forum selection clause in an open marine policy was upheld in the Northern District of California. The court held that a clause which required that suit be brought in the Federal Court of the United States or the courts of the State of New York, County of New York, required that plaintiff file suit in New York for a loss arising from a Singapore to California shipment. (Nikolas Weinstein Studios, Inc. v. State National Insurance Co., 2010 WL 3703713)
As parties posture in litigation, decisions on what to produce in discovery always have to be made. Sometimes it does not work. The District Court in Montana imposed various sanctions on one carrier for failing to comply with various discovery demands. While monetary sanctions can be harsh, it can be worse when the court, as it did here, precludes the defendant from asserting or arguing points because of failure to produce relevant information – essentially giving the plaintiff a win on certain factual issues. (Parrick v Fed Ex Ground Package Systems, 2010 WL 3724825)
CARGO:
Well I guess you would not have expected a ruling that states causes of action were subject to preemption when Carmack was involved. This time it was the Middle District of North Carolina. The court also held that consequential damages were not recoverable against the carrier as it was not advised of the potential for the damages before the transport. Interestingly the court also conferred those benefits on the rigger, who was not the carrier, had no operating authority and simply was handling the overall job. (Rush Industries v. MWP Contractors, 2010 WL 3607963)
The Carmack Amendment provides for specific venue locations against carriers. The Eastern District of New York would not allow a plaintiff (subrogation case) to bring suit in New York when the shipment actually went from California to Georgia. Although the carriers may have operated in New York, the jurisdiction really had little to do with the case and the court sent it packing. (Federal Insurance Co. v BAX Global, 2010 WL 3738033) In the Southern District of Texas the Court also considered venue options in a Mexican cargo loss with a purported through bill of lading. The court held that since all of the relevant issues occurred in Laredo, where the shipment transferred to the Mexican carrier and the loss occurred right over the border, Mexico was the appropriate place for the suit. (Transportation Services, Inc. v Dicex International, Inc. 2010 WL 3909261)
An insurer in subrogation pursued a motor carrier for recovery of a cargo payment. When the insurer was paid by the motor carrier’s insurer it entered into a release with the carrier which released all claims related to the cargo loss. When the cargo owner sought recovery for other damages stemming from the accident the Eastern District of Michigan held that it was foreclosed by the release, effectively concluding that the insurer had given away all rights. Although not needing to do so in light of that ruling, the court also held that the cargo owner was a third party beneficiary of the motor carrier/broker contract, that the claim for non-cargo damages was subject to the No-Fault statute since it arose from an auto accident and that there were question of fact as to the contractual arrangement with the broker. (American Bridge Manufacturing Co. v. Walter Toebe Construction Co., 2010 WL 3790076)
Broker or a Carrier – that is the question. In the Eastern District of Illinois the court held that an entity which only had broker authority could still be held liable as a carrier depending upon the nature of its relationship with the party who engaged it. The court held that as there was evidence that the broker agreed to transport the goods, that the broker never told his customer who would transport the goods and that the customer only filed the claim with the broker, the broker would be liable as carrier. Of even more interest was the fact that the court said that arson could possibly fall within the defense of “public enemy”, leaving the question open since the cause was not yet known. (Travelers Ins v. Panalpina, Inc., 2010 WL 3894105)
In the Northern District of California the court also considered the causes of action against a broker who might be a carrier. The broker/carrier filed an indemnity claim against the actual carrier. The court denied the motor carrier’s request for dismissal where the motor carrier claimed there was no indemnity if the party was a broker. The court held that it would not reach a decision until the factual issues in the case were explored. (Travelers Property Casualty v. Legacy Transportation Services, 2010 WL 3854243)
The saga of the through bill of lading continues. Now we will see a plethora of cases dealing with who is a receiving carrier. The 2d Circuit Court of Appeals ruled this month that the Carmack Amendment did not apply to an international intermodal shipment which went from Japan to North Carolina. The Court held that the rail carrier was not a receiving carrier. The court held that under the new rules, which would be applied retroactively, there is a two part question – the inland carrier must be subject to the jurisdiction of the Surface Transport Board and the carrier must receive the property for transportation during a time that the STB has jurisdiction over the transportation. (Mitsui Sumitomo v. Evergreen Marine Corp., 2010 WL 3666757)
The Southern District in Ohio held that the burden was on the plaintiff to show that goods were delivered in good order and condition. Even though there was a signed bill of lading, wrapped and shrink wrapped cartons of used computers were only received in apparent good order. Since the burden rests with the cargo owner to prove its claim it must produce evidence of good order or it fails to meet its prima facie case. The court also held that even if a prima facie case was met, the motor carrier raised a defense of improper packing which was undisputed and therefore a conceded defense. The court also upheld the standard limitation of liability under the NMFC for used computers. (Ohio Star Transportation v. Roadway Express, 2010 WL 3666982)
AUTO:
When a shipper undertakes to load and secure cargo it undertakes an obligation to make sure that it exercises reasonable care. The Third Circuit Court of Appeals, applying PA law, held that there were questions of fact as to the driver’s reliance on the shipper’s representations that the load was properly secured and loaded and that the driver might be able to recover from the shipper for injuries which he suffered when the load shifted and the vehicle overturned. (Spence v. ESAB, 1010 WL 405578)
The Court of Appeals in Nebraska considered primary excess issues when determining the status of two auto insurers following an accident. One insurer insured the tractor owner who had lent his tractor to a company he routinely hauled for when he was going to be unavailable for a few days. The shipper used its own driver during those days of operation. That shipper’s insurer contended that it was excess over the owner’s insurance. The Appellate Court determined that under the terms of the two policies both were excess because the shipper was actually acting as a trucker for the purpose of the relevant provisions of the owner’s policy. Under Nebraska law, in that situation, the insurer who insured the tractor and its owner would be primary. (Great West Casualty Co v. Michigan Millers Mutual Ins. Co. 2010 WL 3959064)
The Middle District of Pennsylvania considered the applicability of the temporary employee exception to the standard employee exclusion in an auto liability policy. The court was required to determine the meaning of “furnished to you” in the policy, holding that an employee who had two jobs was not furnished to the insured by the other employer. (Empire Fire & Marine v. Jones, 2010 WL 3632530)
The Supreme Court in Alabama held that a trucking company could not be liable for negligent hiring when a jury also held that the driver was not negligent in its operation of the vehicle. Unfortunately for the motor carrier the court remanded the case back for a better determination as to the driver’s negligence. (Jones Express v. Jackson, 2010 WL 3724744)
Happy Halloween, and since we will not send another Bits until the end of November we would like to take a moment to wish you all the best this Thanksgiving. We hope you have the time to enjoy food, friends and family and remember what is most important in your life. We are grateful for your support and friendship over these years. Slainte!!
