I know it has only been two short weeks since you received our annual report and so we will keep this month’s report short. I don’t want you to get tired of hearing from us! We appreciate all of the feedback that we get on these reports and invite any and all comments that can better help us focus this to be a timely and pertinent report for you.
CAB LABS:
We are excited to introduce this month our new Workspace, Carrier ‘Sneak Peek’ and Shared Email Alert features.
The Workspace tool will assist you in comparing multiple entities that are interrelated by different characteristics, allowing you to do a variety of searches by phone, address, email address, etc. and provides quick access to useful tools that will help you analyze your Workspace contents. Carriers you add to the Workspace will stay there until you remove them, even if you log out or sign in to your account on a different computer.
To help sort through search results returned by our Carrier Search page, we’ve offered a ‘Sneak Peek’ feature allowing you to get a high level overview of the safety and operation information of a returned entity by hovering over the magnifying glass adjacent to the DOT number. This month we’ve added the ability to ‘pin’ this information onto the page to make it easier to compare and identify trends across multiple entities.
Similar to the alerts that identify other entities using the same address or phone number which were designed to alert you to possibly related entities, the Shared Email Alert identifies whether or not the email address used to register this carrier was used to register any other carriers. If there is a match, clicking on the new email icon will load up all the other entities that used that email address.
To learn more about these exciting new features, you can download the most current version of the User Guide or contact us to set up a training session.
This month we report:
DOT SECRETARY – Although a few weeks ago it looked like Secretary LaHood would be staying around for a bit longer he has now announced that he will be leaving his post. President Obama has not yet announced his replacement.
TRUCKING BANKRUPTCIES – Avondale Partners states that 150 carriers left the industry in the 4th quarter, bringing the yearly total to 495. This resulted in 7,370 trucks coming off the road. Avondale indicates that these numbers were fueled by weakening used-truck prices, lower freight demand and higher costs.
HOURS OF SERVICE – The ATA has requested a further extension on the implementation of the most recent proposed hours of service rules. Oral argument is scheduled for March with a decision from the court expected in early summer. Rather than implement changes which may be impacted by a court decision, a delay is probably the best action.
2013 AGENDA FOR CONGRESS – The House Transportation and Infrastructure Committee announced its oversight plan for the 113th Congress. Highway funding, the CSA program and hours of service are listed as top priorities for the Subcommittee on Highways and Transit. Last year they requested an audit of CSA, which is expected to be completed this year.
TRUCK TONNAGE – End of the year results are coming in. The ATA reports that truck tonnage rose 2.3% for the year, smaller than the 5.8% increase in 2011 but at least a change on the positive side.
ANTI INDEMNITY STATUTES – Michigan was the 36th state to join the ban on indemnification clauses in trucking contracts. Michigan’s rule takes effect in March.
OUT OF SERVICE – FMCSA has pulled the operating authority of Mi Joo Tour and Travel Bus Company, a Canadian based operation. The order comes less than two weeks after the company’s bus was involved in a fatal wreck in Oregon that resulted in nine deaths and 39 passenger injuries. The driver was found to have surpassed the 70-hour hours-of-service maximum. In addition, two of the company’s drivers have now had their driving privileges pulled by the FMCSA.
MARIJUANA RULES – The FMCSA has issued its notice that the federal regulations which prohibit the use of marijuana trump any state legalization of the substance. On the plus side the DOT reports that the percentage of truck drivers testing positive on random drug tests during 2011 dropped to the lowest level since mandatory testing began almost two decades ago.
CVSA BRAKE SAFETY REPORT – The CVSA report on its annual enforcement blitz was released. They reported that nn 2012, 21,255 vehicles were inspected and 15.3% had a significant enough brake maintenance problem to warrant the vehicle being pulled out of service. Canadian commercial vehicles fared better on inspections with 15.5% of U.S. vehicles and 10.8% of Canadian vehicles placed out of service due to brake problems. More specifically, – 1,993 vehicles, 9.4%, were placed out of service for brake adjustment problems. 1,664 vehicles, 7.8%, were placed out of service for brake components and 3,248 vehicles, 15.3%, were placed out of service for brakes overall.
FREIGHTWATCH CARGO REPORT – FreightWatch recorded 940 cargo thefts in 2012, slightly lower than the highs of 2011. For 2012, there was an average of two and half reported cargo thefts each day and just over 78 every month. Of these, 760 were full truckload or container thefts, while 41 were less-than-truckload losses. As we have been reporting, frauds are on the increase. They reported that there were at least 60 deceptive/fictions freight pickups, an increase of 763% from 2009s levels. In addition, meat and metal are now the hot target commodities. As for hot spots for thefts, California still takes the lead. Florida and New Jersey saw some decline but are still considered prime targets. Texas, Georgia, Illinois and Pennsylvania saw increases in theft.
CASES
CARGO
The Supreme Court in Texas reversed a lower court ruling which prevented a plaintiff from asserting a Carmack claim in an action for breach of a settlement agreement. The Court held that the Carmack claim did in fact relate back to the cause of action for breach of the cargo settlement agreement and therefore would not be time barred as the first cause of action was timely. (Lexington Ins. Co. v. Daybreak Express, Inc., 2012 WL 275965)
Will they never learn? The Southern District in Mississippi addressed the preemptive effect of the Carmack Amendment, concluding it was applicable to a cause of action for fraudulent misrepresentation. The plaintiff unsuccessfully sought to avoid the preemptive effect of Carmack by asserting that the denial by Fed Ex was based on fraudulent grounds. (Pipe Freezing Services v. FedEx Ground Package System, 2013 WL 276048)
Lions and tigers and bear, oh my! The District Court in Maryland held that an air carrier was liable only for the limited liability under an airway bill when a shipment of lion heads was misdelivered to Canada and lost for months by a cargo handler. Deviation to Canada was not enough to defeat the limitation. The Court further held that the collateral source rule precluded the carrier from offsetting its liability against the insurance monies paid by the plaintiff’s insurer. (Danner v International Freight Systems of Washington, LLC, 2013 WL 78101)
Whether discussing the procedures for removal or remand of a Carmack action, compliance with deadlines is critical. A plaintiff in the Southern District of West Virginia found that out when it failed to seek timely remand of an action for procedural deficiencies within the 30 day time limit. The court also refused to enter a default judgment when there was clear evidence that the defendant fully intended to defend the action, even if the answer was not timely filed. (Geyer v. United States Van Lines, 2013 WL 65458)
Federal Express had a good month. In the Court of Appeals in Texas it was successful in its action against a security service. The service had allegedly failed to provide required security at its terminal which suffered a cargo theft. The failure to provide adequate patrols was a breach of the contract. (Smith Protective Services, Inc. v. FedEx National, LTL, Inc., 2012 WL 241938)
Is he or isn’t he a carrier? The Court of Appeals in Arkansas held that a broker was responsible for a cargo loss where it failed to disclose that it was acting as a broker and never told the shipper who the actual carrier would be. It was interesting because the lower court found that the broker was liable as a broker for failing to oversee the motor carrier and failing to determine that the corporate charter was revoked – essentially a breach of broker obligations claim, which the appellate court switched and held that the liability was based upon its position as a motor carrier. (Titan Transportation, Inc. v. OK Foods, 2012 WL 245253)
The Civil Court in New York held that an insurance broker was not responsible for failing to make sure that inland marine equipment was covered by insurance. The Court held that the simple fact that an insured asked for a certificate of insurance reflecting inland marine coverage was not enough to establish a special agreement to obtain coverage. (AGCS Marine Ins. Co. v. Bayview Real Estate Consulting, 2013 WL 214847)
The Second Circuit Court of Appeals held that neither the Carmack Amendment nor federal common law bailment extended a carrier’s limitation of liability to a third party subcontractor when the shipper/carrier agreement did not specifically extend the benefit to the subcontractors. (Royal & Sun Alliance v. International Management Services, 2013 WL 57847)
A common problem in the transportation industry is the failure to follow through with the execution of contract amendments. That failure was felt by a plaintiff in the Central District of California who lost a bid for summary judgment based upon an unsigned amendment to a contract. The Court held that there was insufficient proof that the parties intended the amendment to apply to the cargo loss. (Nipponkoa Insurance Co. v. CEVA Logistics, 2013 WL 140233)
AUTO
When is a vehicle in the use of the motor carrier? According to the Court of Appeals in Wisconsin, it is not in use by the motor carrier when the driver was involved in an accident while taking his vehicle in for some needed grille work. The Court considered various factors which would support a conclusion that the vehicle would be in the business of the motor carrier and ultimately concluded that the claim rested with the non-trucking use policy as the necessary facts were simply not present. (Casey v. Smith, 2013 WL 150176)
The District Court in Minnesota held that a plaintiff could argue both that a vehicle was used in the operation of a motor carrier for purposes of recovery under the commercial auto policy and also argue in a separate action that it was not for the purpose of recovery under a different policy. The court concluded that resolution of the issue of “logo liability” (placard liability) was unclear and therefore judicial estoppel would not preclude the alternative argument. The Court then went on to conclude that the vehicle was not in the use of the carrier, and therefore coverage was triggered under the non-trucking use policy, when the driver was returning from having work done on the vehicle which was not for the benefit of the motor carrier. (Occidental Fire & Casualty Co. v. Soczynski, 2013 WL 101877)
The Court of Appeals in Wisconsin addressed the omnibus statute in Wisconsin and concluded that a driver’s auto policy covered the shipper’s employee who injured the driver when loading the driver’s vehicle with lumber. The Court held that the employee was using the vehicle for its intended purpose, triggering the applicability of the statute. The court noted, of course, that it was somewhat offense that the injured plaintiff’s insurer actually had to defend the tortfeasor. (Blasing v. Zurich American Insurance Co., 2013 WL 28071)
Over in Ohio the court determined that a carrier’s general liability policy would cover its liability for injuries to the plaintiff when the plaintiff struck an unattached flatbed trailer sitting on the side of the road. The Court concluded that the trailer was mobile equipment and not an auto. The court further held that term “cargo” which would have triggered the exclusion for mobile equipment used to haul cargo was ambiguous and therefore would have to be ignored. (Sauer v. Crews, 2013 WL6738667)
The 10th Circuit Court of Appeals addressed the “transportation use” requirement of the Oklahoma UM statute when applied to a derrick which was fully rigged and stationary at the time of an accident. While the court concluded that the transportation use requirement applied, it concluded that a rig in stationary mode was not being used in the transportation mode at the time of the accident. The Court, recognizing that bad faith can exist even when there is no coverage, concluded that there was no bad faith on the part of the insurer in the delay in its decision to deny coverage. (Bituminous Casualty Corp v Pollard, 2013 WL 285550)
Have a great month!
