It has been a busy month here at CAB.  We have moved down to the Jersey Shore.  Our new offices, complete with a lovely lake in the back, are located at 150 Airport Road, Lakewood, NJ 08701.  All our other contact information remains the same and we look forward to visitors, after we finally settle in and unpack!

Thanks for all of the great feedback on the new upgrades to the website data.  Glad to see that interest in these new features is high and that it most definitely assists in your underwriting and claims practices.  Comments and suggestions are always welcome.

This month we report:

CSA MODIFICATIONS – The SMS methodology has now been modified to include violations on cell phone use and to provide additional data on brake, wheel and coupling regulations.  Of course, our Submission Report™  reflects all of this new data.  Below is a chart of the new violations, which were all given severity weights of 10:

Added Carrier SMS Unsafe Driving BASIC Violations
Section	Violation Description Shown on Driver/Vehicle Examination Report Given to Commercial Motor Vehicle (CMV) Driver after Roadside Inspection	Violation Group Description	Violation Severity Weight
177.804(b)	Failure to comply with 49 CFR 392.80 – Texting while Operating a CMV – Placardable HM	Texting	10
177.804(c)	Fail to comply with 392.82 – Using Mobile Phone while Operating a CMV – HM	Phone Call	10
392.80(a)	Driving a commercial motor vehicle while texting	Texting	10
392.82(a)(1)	Using a hand-held mobile telephone while operating a CMV	Phone Call	10
392.82(a)(2)	Allowing or requiring driver to use a hand-held mobile tel while operating a CMV	Phone Call	10

CARRIER SHUT DOWNS – A small Indianapolis trucking company, U&D Services has been shut down as an imminent safety hazard by the FMCSA.  In 26 roadside inspections 12 drivers were found to be operating without CDL licenses, and 21 were not proficient in the English language.  In other news a Pa trucking company, D.A. Landis and its owner have been indicted on charges of conspiracy to prepare false drive logs.

HOURS OF SERVICE – Will the battle ever end?  The ATA has filed suit on the newest edition of the hours of service rules.  The ATA has opposed the 34 hour restart provision and the requirement that drivers take a break no later than 8 hours into driving time.  Shortly thereafter   Advocates for Highway and Auto Safety, Public Citizen, the Truck Safety Coalition also filed on the rules.  And off we go to the next battle.

HEAVIER TRUCK OPERATIONS – It seems that larger heavier trucks will have to wait a while. The provisions of the Highway Reauthorization Bill which would have allowed heavier trucks have been removed in the House version, and instead there is a proposal that it be sent to committee for an extended 3 year study.  The study would address crash rates, VMT, pavement performance, bridge reliability and other factors.  We will report further as it moves to the Senate.  Increased weight limits are expected to be contentious issues.

BACKGROUND CHECKS – The Transportation Security Administration has decided that the back ground checks for 11 states and the District of D.C. are sufficient for TWIC and hazmat endorsements, removing the necessity of double checks.  The valid credential – either the TWIC or the hazmat endorsement – must be good for at least another year for the background check to be considered valid when applying for or renewing the other credential.   Those states are Arizona, California, Delaware, Hawaii, Missouri, Nebraska, North Carolina, Oregon, South Dakota, Utah and West Virginia.

EOBR – The FMCSA has advised that there will be an even further delay before they issue any final rules on EOBR.  A possible supplemental rule will be issued late in 2012 or early 2013. The earlier rule, as you may recall, was invalidated after being struck down by the courts.

CASES:

AUTO

The Court of Appeals in Ohio held that an injured plaintiff who was being paid to teach a young driver how to drive was the statutory employee of the motor carrier when he was fatally injured in the truck.  The court held that the employee exclusions under the policy were applicable and that the terms of the MCS-90 did not extend to provide coverage for his injuries.  (United Financial Casualty Co. v. Abe Hershberger & Sons Trucking, 2012 WL 457715)

What happens when the principle of an insured uses vehicles he owns in his company’s trucking operations?  The Southern District in Mississippi held that an insured could not obtain coverage under the temporary substitute non-owned vehicle clause when the individual was in essence the insured under the policy.  The court also held that telling the insurance agent about the vehicle was not enough to obtain coverage and that the burden rested with the insured to ask for an MCS-90 endorsement.  The Court refused to imply that an endorsement was present.  (Canal Insurance Co. v. Herrington, 2012 WL 463712)

When a trucking company has an internal accident review panel which determines whether a truck driver is chargeable with an accident for purposes of his employment the records of the review will be admissible in Texas. The Appellate Court in Texas held that it was an admission by a party and therefore not subject to hearsay rules and also that it was not prepared in anticipation of litigation.  The court also held that the vehicle owner was obligated to make sure that the driver maintained the appropriate safety taping on the trailer and kept it in good condition.  (Pilgrim’s Pride v Burnett, 2012 WL 381714)

The Court of Appeals in Ohio upheld a jury verdict against a shipper for a latent defect in loading which led to the death of a driver.  In addition the court spent considerable time evaluating whether the shipper could point the finger at the trucking company, who was an absent defendant because it was paying worker’s compensation benefits.  The court held that liability could not be apportioned to the employer under those circumstances.  (Romig v. Baker Hi-Way Express, Inc., 2012 WL 258563)

Oklahoma provides for direct actions against the insurers of motor carriers licensed in the state of Oklahoma.  The Northern District of California held that even though the shipment which was being performed at the time of the loss was interstate in nature, and therefore not subject to Oklahoma statutes, it would allow for a direct action because the carrier was otherwise registered in the state.  Only insurers of carriers who were not registered, and were hauling interstate would not be subject to direct action. (Sallee v.  L.B. White Trucking, 2012 WL 314237)

When a serious windstorm prevented visibility in Arizona, the trucks on the road stopped suddenly to avoid collisions.  Unfortunately   a passenger vehicle struck one of the stopped trucks resulting in serious and fatal injuries.  The Appellate Court upheld the application of the sudden emergency doctrine which limited the basis for liability against the carriers and affirmed a defense verdict. The court also upheld the trial court’s decision to not allow testimony concerning possible higher standards set forth in the FMCSR.  (Cameron v Westbrook, 2012 WL 385633)

The Court of Appeals in Alabama refused to allow an appeal to proceed on a partial summary judgment entered in favor of a trucker on a negligent entrustment claim.  As there was a continuing claim for wanton entrustment the ultimate issue, the driver competency needed to be resolved before an appeal could proceed.  (Hetzel v. Fleetwood Trucking Co., 2012 WL 415475)

Multi-vehicle accidents were a common topic this month. The Western District of PA considered summary judgment motions arising from injuries suffered in an accident involving 3 tractor trailers  The driver of the third vehicle, which struck the second vehicle, sought recovery against both carriers and the drivers.  The claim of negligence per se against the first driver, who was operating his vehicle below the speed limit, was not allowed as the roadway had no minimum limit at the time.  In a detailed opinion the court also concluded that the third driver could not be found at fault for the accident and that a plaintiff could assert both vicarious liability and negligent entrustment against the trucking company.   (Keifer v. Reinhart Food Services, 2012 WL 368047)

CARGO

While removal is generally an option under the Carmack Amendment, be careful to make sure that you have a reasonable argument for carrier liability.  The Middle District of PA. awarded costs to a plaintiff when an action was remanded because the defendant had no reasonable argument that it was a carrier and therefore removal under Carmack was unreasonable.  (Daily Express v. Maverick Transportation, 2012 WL 407148)

A cargo insurer’s subrogation suit against a rail line which caused damage to cargo took a turn for the worse when the court in the North District of California held that the rail line could in fact pursue an indemnity claim against the plaintiff’s insured who was allowed to be brought into the suit directly as a third party defendant.  (Navigators Insurance Company v. Union Pacific Railroad, 2012 WL 314878)

The 11th Circuit Court of Appeals reversed the judgment granted to an insurer and remanded the case back for further action under an open marine policy. The insured had sought coverage under the policy after the loss occurred. The Court held, despite the likely intentions of the insurer that coverage could attach after the loss had already occurred.  Ultimately the court remanded the case back to determine whether the insurer had in fact accepted the premium for the insurance with knowledge of the loss.  If so, the court held that it voluntarily agreed to insure a known loss.  (ITN Consolidators v Northern Marine Underwriters, 2012 WL 443250)

As we all know, the issue of imposter theft is on the rise.  This month The Northern District in California considered a claim brought by a transportation broker against a motor carrier for two shipments stolen by someone representing itself as the carrier.  The broker sought to recover from the motor carrier on the basis that the motor carrier had failed to respond to the broker’s confirming emails on the shipment because it had failed to notify the broker that the contact information under the broker carrier contract has changed. The Court held that the claim against the carrier was subject to Carmack dismissing a breach of contract and negligence claim.  (BNSF Logistics v. L&N Express, 2012 WL 525526)

The Eastern District in New York addressed the rights of a broker to collect payments from a shipper for freight charges when there are outstanding cargo losses.  While granting reimbursement to the broker for all of the unpaid freight charges, and costs, fees and interests, the court held that the broker bore no liability for the cargo claims.  The court found that the broker did not hold itself out as a carrier and that even if it had the shipper did not establish a prima facie case for recovery. (Trans Pro Logistic v. Coby Electronics Corp., 2012 WL 526764)

MISCELLANEOUS

A word to the wise.  When insurers have multiple insureds on the policy, make sure that the policy is clear as to who owes the deductible.  The 7th Circuit remanded a case back to determine the ambiguities which were raised by policy clauses which made it unclear whether all insureds were jointly and severally liable for deductibles.  (St. Paul Fire & Marine Insurance Co. v. Schilli Transportation Services, 2012 WL 470261)

An excess insurer was unable to assert a bad faith claim against the primary insurer following a verdict which exposed the excess insurer for large payments. The 8th Circuit court held that insofar as the insured had never demanded that the primary insurer settle within the policy limits there could be no claim for bad faith.  (American Guarantee and Liability Ins. Co. v. United States Fidelity & Guaranty, 2041391)

The Superior Court in Connecticut considered whether an insurer would be required to pay monies incurred by a shipper when electronic data tapes with confidential employee information were lost in transit.  The insured was forced to pay millions for costs associated with protecting the information.  The court held that the policies issued to the insured would not respond to the damages for the data as it was not tangible property.  The court also held that there was no duty to defend until such time as a formal proceeding was commenced. (Recall Total Information Management v Federal Ins. Co. 2012 WL 469988)

The requirements for expert qualifications were addressed by the Supreme Court in Indiana.  The court held that a biomedical engineer, Charles Turner was qualified to testify concerning the issue of whether a rear end collision by an automobile into a tractor trailer could have resulted in back and neck injuries to the tractor-trailer operator.  He concluded that they could not.  Because of his experience and qualifications he was also allowed to testify as to medical causation, despite the fact that he had no medical certifications.  Person v Shipley, 2012 WL 274012

See you next month!  Jean Gardner