Happy May. I am looking forward to seeing many of you in a few weeks at the annual IMUA meeting in Atlanta. Please stop by our table during the breaks and visit. It is always a good event. Check it out at imua.org.
This month we report:
DOT CABINET POST – Anthony Foxx, the mayor of Charlotte, North Carolina, will be put forward as the new leader of the DOT. Foxx doesn’t have any specific experience as a transportation executive.
CARRIER OUT OF SERVICE REPORT – It was a busy month over at the FMCSA. The FMCSA has ordered four Olathe, Kan.-based trucking companies – Royal Transport, Inc.; Nationwide, Inc.; Freight, Inc.; and Midwest A, Inc. – to immediately cease all interstate transportation service based on evidence that they are chameleon carriers ™ for an unsafe truck company previously shut down by the agency. Atlanta-based Southern Transportation Inc. was also ordered to stop operating, for refusal to release safety records to investigators. General Trucking, Inc. also based in Atlanta, Ga., was shut down as an imminent hazard to the public due to a pattern of serious safety violations, as well as Washington DC Party Shuttle, which also does business under the name Onboard DC Tours. The FMCSA rounded out the month placing Best Limo Service, also from Georgia out of service as an imminent hazard. With all of their new enforcement power, the FMCSA also declared Johnny Allen Spell from North Carolina to be an imminent hazard to public safety and has ordered him not to operate any commercial motor vehicle in interstate commerce.
STATISTICS – For those of you who are number junkies, the BTS has updated a number of its statistical reports on transportation, including stats on various accidents by mode of transportation, and information on various state laws on distracted driving. Anyone interested can view the report here.
HOUSEHOLD GOODS CARRIERS – The FMCSA has issued a clarification on the limited service exclusion that held that trucking companies that provide and move containers are not household goods carriers. They concluded that when companies also provide the laborers with the containers they will be considered movers and subject to all household goods movers regulations. FMCSA’s notice said it would consider the issue on a case-by-case basis, and it outlined eight factors the agency would consider in determining eligibility for the limited service exclusion, including whether the container company advertises itself as a mover, how it handles referrals to companies that pack goods and the corporate or employment relationships between the parties.
In other household goods news, the FMCSA launched its new moving fraud prevention campaign to inform consumers about how to spot the “red flags” of fraudulent or dishonest movers- the “Protect Your Move” campaign. Resources include a moving fraud prevention checklist, a moving broker checklist and tips for a successful move. Consumers can also search a company’s complaint history and compare safety records of companies nationally. In 2012, FMCSA received over 3,100 consumer complaints about household goods movers, up from 2,851 in 2011. Among the most common complaints are shipments being held hostage; loss, damage or delay of shipments; unauthorized movers; and deceptive practices, such as overcharges. Nationwide, the top ten cities with the greatest number of consumer complaints in 2012 were New York, Los Angeles, Chicago, Houston, Las Vegas, Atlanta, Seattle, Orlando, San Antonio, and San Diego.
CDL RULES – The FMCSA has withdrawn a rule which currently requires both states and drivers to report an out-of-state traffic conviction to the driver’s home state. Starting at the end of the month drivers will no longer have to report the conviction if it occurs in a state that is CDL certified as the state is already required to report the information.
HAZARDOUS MATERIALS REGULATIONS – The Pipeline and Hazardous Materials Safety Administration announced that carriers now face increased civil penalties for violations of federal hazardous materials transportation regulations that lead to death, serious injuries or extensive property damage. Civil penalties are assessed for knowingly violating a hazardous material transportation law or a regulation, order, special permit or approval issued under that law. The maximum civil penalty is increased from $55,000 to $75,000 for knowingly violating Federal hazardous material transportation laws and regulations, the maximum civil penalty for knowingly violating laws and regulations that result in death, serious illness, severe injury to any person or substantial destruction of property is increased from $110,000 to $175,000, there is no longer a minimum civil penalty and the civil penalty for violations related to training has reverted to $450.
DANGEROUS JOBS – The Bureau of Labor Statistics has recently revised its 2011 fatal work statistics .The largest net increase in fatal work injuries among occupations involved drivers of tractor-trailers or other heavy trucks, putting the total fatalities for trucker drivers at 670. Also, roadway accidents were higher by 28 cases or up 3 percent, bringing the 2011 total fatal, work-related roadway incidents to 1,103, BLS reported.
NEW JERSEY CARGO THEFT LAW – New Jersey, which had classified cargo theft as a property crime has now moved to include truck theft as a criminal offense, with jail time for convicted offenders. In addition, the bill specifies criminal charges for operating facilities used for storage or resale of property stolen from motor carriers. The bill is now before the governor for signature.
CARGO THEFT REPORT – Speaking of Cargo theft, FreightWatch International reports a 20 percent decrease in cargo thefts from the first quarter of 2013 compared with the last quarter of 2012. FreightWatch recorded a total of 199 US thefts in the first quarter, with an average load value of $133,711. The report listed the most commonly stolen cargo as food/drinks, with 49 incidents and 20 thefts of various metals. Jurisdictionally, Florida experienced the most thefts during the quarter, with 34 incidents, followed by Texas with 30 thefts, and Georgia with 27. California, dropped to fourth place with 21 thefts. About 61 percent of all thefts occurred in unsecured parking areas when locations were recorded on the theft reports. Facility thefts were the second most common with 17 incidents. Nine thefts from secured parking and seven in-transit thefts together composed about 8 percent of all incidents.
NAFTA. Court petitions seeking review of the cross-border program were rejected by the Court this month, allowing the program to go forward. Two Mexican carriers failed safety audits this month while a third is up for public comment as it passed the initial safety evaluation. The BTS also released its border crossing statistics, reporting that there were 10.7 million commercial truck crossings into the United States from Canada and Mexico in 2012, a 3.6 percent increase from 2011. The cross border statistics can be viewed here.
ELECTRONIC ONBOARD RECORDERS – The FMCSA announced it will miss the October deadline for regulations on mandated electronic logging devices. The will instead release a supplemental notice of proposed rulemaking for the mandate in September.
CURRENT CASES
CARGO
Often there is a question as to whether a shipment is truly in good order when delivered to the carrier. In the Southern District of New York the court considered the issue when looking at a shipment of frozen vaccines. The Court held that while the signed bill of lading was rebuttable the “nature of the damage” theory could be used to determine whether a prima facie claim was met. Since the freezing was determined to only possibly happen in transit that was enough to establish the prima facie case. In addition the court held that that fact also supported damage at destination. Finally the court addressed the application of a limitation of liability in the contract, concluding that it applied. (Great American Ins Co. v. USF Holland, 2013 WL 1313841)
Those of us here in the North East have spent a considerable amount of time addressing the Act of God defense and its application to transit and warehouse losses. The Southern District in Texas held this month that while Hurricane Ike was an act of god, there was a reasonable question of fact as to the whether there were actions which the carrier could have taken to move the freight or notify the customer of the pending storm. (BBC Chartering & Logistics GMBH & Co v. Gulf Stream Marine, 2013 WL 1415106)
A defendant’s motion to dismiss allegations of negligence and breach of contract under a theory of preemption failed in the District Court in Oregon. The Court concluded that the allegations were not asserting a separate cause of action and it was immaterial to the suit and therefore unnecessary to dismiss. (OHL North America v. Chris Crossley’s Trucking Adventures, 2013 WL 1684106)
One defendant’s attempt to obtain sanctions for an action filed against it for a cargo loss failed in the District of Utah. The court held that as the plaintiff could state a claim that the carrier potentially bore legal liability despite the fact that it had not handled the cargo gave it a basis for continuing the action. (Almac v. Panalpina, 2013 WL 1701116)
The District Court in Massachusetts held that a shipper’s state law claim against a motor carrier for indemnity for costs and expenses related to the clean up of hazardous materials stemming from an accident was preempted by Carmack. The Court directed the plaintiff to re-pled the suit or face dismissal. (Clean Harbors Recycling Services v Harold Marcus Limited, 2013 WL 1329532)
Carriers must make sure that all services are encompassed by its transportation agreements. The Southern District in California held that a limitation of liability in a master service agreement was inapplicable because the particular transportation at issue was not a defined service. However, as it had a second customs broker contract it might be able to use that limitation to limits its exposure when it did not actually carry the goods if the facts, at the end of the day, allow for such a conclusion. (Rohr v. UPS-Supply Chain Solutions, 2013 WL 1411898)
AUTO
The Court of Appeals in Kentucky overturned a defense verdict and directed verdict in favor of the plaintiff for a truck accident. The Court concluded that the driver had a statutory obligation to stay in his lane of traffic and was required to drive on the right side of the road. His failure to do was the precipitating cause of the accident. (Carroll v. Wright, 2013 WL 1365941)
A truck auto insurer was held to have not properly cancelled a policy for non-payment of premium and therefore liable to indemnify the motor carrier for a personal injury loss. The insurer, who followed all of the procedures, failed to use premium which it was holding in reserve to pay the outstanding premium. The policy has been changed mid-stream by the removal of vehicles and the premium was recalculated. (Auto Owners Insurance Co. v. Yocum, 2013 WL 1281828)
The Eastern District of Michigan granted judgment to the non-trucking insurer where there was undisputed evidence that the vehicle was transporting cargo at the time of the loss and was under dispatch. (Atwell v. National Union Ins. Co. 2013 WL 123328)
An insurer, who likely sought to resolve a physical damage claim before a suit, ran into a snag and was not permitted to obtain recovery from the motor carrier. The policy did not provide coverage for the loss and the insurer issued payment under the MCS-90. The court held that when the insurer did not do so as a result of a judgment it was precluded from seeking reimbursement. (Northland Ins Co. v. Burton, 2013 WL 1281856)
The United States District Court has determined that a Nevada Court will likely adopt the majority rule which prohibits negligent training and entrustment causes of action against a trucking company when it admits that it is vicariously liable for the actions of the driver. (Adele v. Dunn, 2013 WL 1314944)
The Middle District in TN dismissed a pro se plaintiff’s claim for loss to a shipment of household goods. The court held that the plaintiff had been given sufficient time and opportunity to plead a proper cause of action and the failure to do so was fatal to the suit. (Davis v. North American Van Lines, 2013 WL 1211595)
The extent of indemnity clauses has been a hot topic in the last year. This month the 7th Circuit concluded that an indemnity clause in a crane lift loss was inapplicable when the suit against the lessor sought recovery for its sole negligence. Since the agreement did not clearly establish that the lessee had to indemnify the lessor for its own negligence the lessor would not get that benefit. (NES Rentals Holdings v. Steiner Cold Storage, 2013 WL 1395700)
The Southern District in Ohio concluded that principles used to determine the application of coverage might not apply when the issues existed between two insurers. The court concluded that even though a vehicle was added to a policy when there was no evidence that the vehicle was being used by the named insured, the operator would not be an insured under the policy. The court then address the application of the MCS-90 on both policies, concluding that the MCS-90 which was on the policy which covered the auto, but not the operator involved, would also be inapplicable. While it recognized that it might have taken a different position if the matter was not between two insurers, it refused to do so here. (Carolina Casualty Insurance Co. v. Canal Ins Co., 2013 WL 17009920)
Applying Georgia law, the 11th Circuit held that an accident when the driver was bobtailing was covered under the auto and not the bobtail policy where the driver’s normal practice was to bobtail to carrier’s terminal to receive and dispatch order and used the vehicle only for work operations. (Occidental Fire & Casualty Co of North Carolina v. National Interstate Insurance Co., 2013 WL 1196949)
A household goods carrier was not liable for an auto accident when there was no evidence that the truck was being operated under an agency agreement with the carrier. The Court in the Western District of Oklahoma did not accept the old standard of “logo liability” (McCurley v. Shapkoff Moving Services, Inc., 2013 WL 1680008)
The Sixth Circuit also considered a coverage analysis between two insurers concluding that an insurer can tender a defense to another insurer on behalf of the insured and also that the driver’s policy, which named the trucker as an additional insured, provided coverage for the vicarious liability of the carrier and was primary over the carrier’s policy. (LM Insurance CO v. Canal Insurance Co., 2013 WL 1458923)
