Fall is upon us and the weather has been glorious in New Jersey. We hope you are enjoying this lovely time of year. This month we have a pinch hitter writing the first part of the Bits for Jean, (Jean still wrote the Cases section) so if things seems a little different you will know why.
In September we held our first open-session training on the CAB Basics and our new SALEs program. We were very pleased by the attendance and feedback. Many of you have asked when the next sessions will be, and we are excited to announce that we will offer both sessions again in October. These are open to anyone and we would encourage you to take advantage of this opportunity to learn about our new SALEs program and the CAB Basics. The SALEs training will be approximately 30 minutes and will demonstrate effective use of the system. The CAB Basics will be an hour and will include an overview of our new features as well as a refresher of the features and navigation of the CAB website. To register click on the following
October 16th at 3:00 p.m. EST CAB SALEs
October 17th at 3:00 p.m. EST CAB Basics
For those of you who will be attending TIDA’s annual seminar this year, we have a great training opportunity. CAB will be holding a subscriber training meeting prior to this year’s TIDA conference. On Wednesday November 13, 2013, from 3:30 PM – 5:00 P.M., prior to the Cocktail Reception, CAB will hold a hands-on training session on effective use of the CAB’s premier website to enhance claim handling. This session is only open to CAB Subscribers and space is limited. Please reserve your space here.
This month we report:
FMCSA RULEMAKING – There were a couple of actions by the FMCSA on the rulemaking front. First, the FMCSA along with the Pipeline and Hazardous Materials Safety Administration changed the regulations to prohibit a driver of a commercial motor vehicle or of a motor vehicle transporting certain hazardous materials or certain agents or toxins from entering onto a highway-rail grade crossing unless there is sufficient space to drive completely through the grade crossing without stopping. It is estimated that there are almost 20,000 grade crossings nationwide where this is an issue. The rulemaking is available here.
Second, The FMCSA is withdrawing its proposed rulemaking that proposed new entry-level driver training standards for CDL’s. According to the FMCSA the rulemaking was withdrawn following the acknowledgement of substantive issues which have led the agency to conclude that it would be inappropriate to move forward with a final rule based on the proposal., and since the NPRM was published, FMCSA received statutory direction on the issue of entry level driver training from Congress via the Moving Ahead for Progress in the 21st Century Act (MAP-21) reauthorization legislation and finally because the FMCSA tasked its Motor Carrier Safety Advisory Committee (MCSAC) to provide ideas the agency should consider in implementing the MAP-21 requirements.
NEW CARRIER AUDITS – The FMCSA is currently running a test program in California, Florida, Illinois, Montana and New York to perform many of its required new-entrant audits through the electronic submission of information rather than in person. Currently all new entrants need an initial audit within 18 months and MAP-21 will reduce that to 12 months. The test will continue through July 2014.
TRANSFER OF OPERATING AUTHORITY The FMCSA has determined that carriers will have to notify the agency only when a transfer of operating authority occurs, rather than having to apply ahead of time. Currently, operating authority is transferred only when a trucking company is sold. The authority is tied to a U.S. Department of Transportation number, and the two cannot be transferred independently. Since DOT numbers are used to track safety, FMCSA prohibits transfers that are designed to mask a poor safety record and said receiving a notice of transfer helps it find “chameleon” carriers.
SLEEP APNEA – The House passed legislation to require the FMSCA to address sleep apnea in a formal rulemaking rather than as guidance. Action in the Senate is unclear but the FMCSA has indicated that it will use a rulemaking to address this issue.
CARGO THEFT – FreightWatch International reported that a total of 202 cargo thefts were recorded in the three-month period between June and August which is a 5% increase from the rolling three-month period prior. The value per load lost also rose in the quarter to $166,454, a 9% increase from the preceding May-July period. California continued to experience the most thefts followed by Texas, Illinois and Florida. Those four states accounted for 66% of the incidents. Unsecured parking was the cause of 55% of the thefts.
ROADCHECK 2013 RESULTS – During this year’s Roadcheck, 4.3% of driver inspections resulted in the driver being placed out-of service, with half of these resulting from hours-of-service violations, and 22.4% of vehicle inspections resulted in the vehicle being placed out of service, with just under half of these resulting from a brake violation. This year’s Roadcheck made cargo securement its area of focus because of its importance in the safe operation of carriers. Cargo securement related violations represented 11.7% of all OOS violations during Roadcheck.
NEW BROKER AND FREIGHT FORWARDER BOND REQUIREMENTS – The new broker and freight forwarder bond requirement of $75,000 takes effect October 1. That date will start a 60-day roll-in period after which the authority of brokers and freight forwarders that have not complied will be revoked. In addition, the FMCSA clarifies that all motor carriers that broker loads, even if only occasionally, must register as a broker with the FMCSA. The FMCSA has issued guidance on these requirements that can be viewed here. This guidance also includes a good basic explanation of what a freight forwarder and broker is under FMCSA regulations. The Association of Independent Property Brokers and Agents has filed suit against DOT and FMCSA claiming that the $75,000 financial security portion of FMCSA’s recent guidance is an unlawful violation of AIPBA’s “substantive due process rights under the 5th amendment.
IMMINENT HAZARD ACTION – There was only one imminent hazard action by the FMCSA this month. It was against the Laredo Texas-based REDCO Transport, Ltd., USDOT No. 1670585. This carrier had been involved in a fatal accident on August 12, 2013 and the FMCSA found that the carrier “routinely failed to ensure its drivers comply with federal hours-of-service regulations” and further that it “failed to ensure its drivers complied with controlled substances and alcohol use and testing regulations, and failed to ensure its drivers were properly qualified.” The order can be viewed here.
CARGO:
Stipulating to facts to move a case to quicker conclusion can backfire. The 9th Circuit, in addressing a limitation of liability matter, concluded that when the stipulated facts failed to confirm that the carrier’s rates were available for review or that the agreement to limit liability was in writing, the limitation was invalid. (Certain Lloyds Underwriters v. Baldwin Distribution Services, 2013 WL 4800626)
Inter-related companies seem to be the newest target in transportation cases. The Southern District in Florida concluded that there was ample evidence of pierce the corporate veil and go after a company related to the carrier that lost a shipment of goods. The Court also held that COGSA applied to the loss under a through bill of lading, but that the carrier was sufficiently negligent to warrant liability for the theft. (LIG Insurance Co., Ltd. V. Inter-Florida Container Transport, 2013 WL 4516104)
The Southern District of New York held that a limitation of liability was not void under the material deviation doctrine when there was no evidence of payment for increased services. It did conclude, however, that there was a question of fact as to whether reasonable notice of the limitation was given to the shipper. Finally the Court held that there was a question of fact as to whether the carrier was advised of the potential for consequential damages. (Stephenson Equip v. ATS Specialized, Inc., 2013 WL 4508444)
These days we see shippers routinely making unilateral decisions to dispose of cargo that may have suffered some impact. The Southern District of Illinois held that a shipper who disposed of its entire product stored in a warehouse when there was some temperature variation was not entitled to summary judgment when there were serious questions of fact as to whether the entire product was harmed. (Cargill Meat Solutions v. Freezer Refrigerated Storage, 2013 WL 4854419)
The Middle District in Tennessee concluded that it could in fact simply treat plaintiff’s state causes of action as Carmack Amendment claims in lieu of dismissing the action entirely. (Tennessee Wholesale Nursery v. Wilson Trucking Corp., 2013 WL 5236733)
A household goods’ plaintiff was awarded an injunction against the sale of her household goods in the Eastern District of North Carolina. Where the carrier made repeated threats of sale when fees were not paid, and the court concluded that it was reasonably likely that the plaintiff would succeed in a suit against the carrier, the Court enjoined any harmful action by the motor carrier. (Hargrove v. Universe Express, Inc., 2013 WL 5218108)
A motor carrier’s efforts to recover from the vehicle manufacturer for a fire which resulted in the loss of a shipment of cigarettes failed. The Eastern District in Texas held that where there was no evidence of any defect or malfunction in the tire inflation system or other part of the trailer judgment in favor of the trailed manufacturer was warranted. (TransCorp Carriers v. Great Dane Limited Partnership, 2013 WL 5230821)
Buyer beware. The 4th Circuit held that an action would not lie against a logistics provider for the alleged damage to a shipment which a buyer purchased at auction “as is and where is”. While the Court concluded that the Carmack Amendment encompassed accessorial services such as dismantling, there was no claim when the shipper took the risk of purchasing an old outdated machine and shipping it 6000 miles. (Rush Industries v. MWP Contractors, LLC, 2013 WL 4532191)
What came first? The broker/carrier contract or the bill of lading? The S.D. in Texas held that there was a question of fact as to whether the broker/carrier agreement governed the motor carrier’s liability or whether the bill of lading was the governing documents. (Siemens Water Technology v. Trans-United, 2013 WL 4647658)
The 2 year suit clause in an inland marine policy was held applicable from the time of the insured’s notice of a possible loss, not later when the insured was found responsible for the value of the goods. The Court in Connecticut also appeared to indicate that there was a question of fact on the defense obligation, despite the fact that the policy had an option and not a duty. However as the tender was also more than two years later the Court did not fully address the issue. (VP Electric v Graphic Arts Mutual Ins. Co., 2013 WL 4737327)
AUTO:
The District Court in Minnesota held that there were questions of fact which precluded judgment in a declaratory judgment action between two insurers. A federally regulated carrier was in an accident while operating a vehicle that he was in the process of purchasing under a lease purchase agreement from a second carrier. The Court concluded that there was a possibility that a jury could find that the second carrier actually hired the first carrier for the haul, thereby qualifying the first carrier as an insured under the second carrier’s policy. (Canal Insurance Co. v. Great West Casualty Co., 2013 WL 5268929)
The widow of a truck driver was unsuccessful in her efforts to recover from the transportation broker who she contended was responsible for the maintenance of the vehicle. The motor carrier and the broker were affiliated companies. The Supreme Court in Alabama held that under the loaned servant doctrine the broker’s employee was working for the carrier only. These cases stress the additional exposure for multi-related companies. (Eastman v. R. Warehousing & Port Services, 2013 WL 4618594)
The Appellate Division in New Jersey held that an insurer was obligated to provide notice to a UIIA member when the policy of a trucker was cancelled for non-payment. The Court concluded that the UIIA agreement could be construed to be a “lease” under a contractual provision which obligated the insurer to give notice of cancellation to lessors. Failure to give the notice resulted in coverage and an award of attorney’s fees to the lessor. It should be noted that the court allowed the recovery of higher fees then is generally paid by insurers, noting that it was a risk of the insurer when it failed to provide a defense. (Willey v. DD Transport, 2013 WL 4516039)
The 6th Circuit considered the definition of an auto in the context of a personal injury claim under a general liability policy. The Court concluded that a truck with an attached tree spade was an auto and not mobile equipment, concluding that coverage rightly belonged under the auto and not the general liability policy. (Hartford Casualty Insurance Company v. Ewan, 2013 WL 4564679)
Simply because a truck driver struck a vehicle which had been in an accident was not evidence of negligence per se. The Western District in Pennsylvania held that there was a question of fact as to whether the second accident caused the death of the plaintiff and whether, under the circumstances the driver should have been operating his vehicle in a way which would have provided ample opportunity to stop. (Shropshire v. Shanefelt, 2013 WL 4504390)
What facts will be considered by a court in a non-jury personal injury action, and whether a plaintiff can recovery substantial damages when there is limited evidence that the accident caused all of the injuries was a subject for the Western District in Oklahoma. The analysis of the evidence on the scale of justice for a civil proceeding is a complex issue and the court lays an excellent analysis of how that is done in a lengthy evidentiary opinion. (Brown v. USA Trucking, Inc. 2013 WL 4848837)
The Northern District of West Virginia, applying New Jersey law, concluded that New Jersey does not preclude recovery for PIP benefits paid by one insurer when the accident did not occur in the state of New Jersey. The New Jersey statute prohibiting recovery of PIP benefits from another insurer is limited to accidents occurring in the state of New Jersey. (USAA Casualty Ins. Co. v. Smith, 2013 WL 4881383)
Anticipating the direction which would be taken by the Nevada state courts, the District Court in Nevada concluded that it would not follow the majority rule that a plaintiff is precluded from bringing an action for negligent hiring when the defendant motor carrier has conceded vicarious liability. Acknowledging that many of the factors were the same, the Court still concluded that these separate causes of action should proceed. (Wright v. Watkins & Shepard Trucking, 2013 WL 5209044)
MISCELLANEOUS
A suit against an insurance broker for failing to provide notice of a loss to the insurer was dismissed in the Western District of Virginia. The Court held that when the fidelity bonds and the general liability policy would not have covered the loss anyway there was no basis for a suit. (White v. BB&T Insurance Services, Inc., 2013 WL 4678477)
Another highly fought jurisdictional battle in Illinois. The Appellate Court upheld the Trial Court decision transferring a case to Indiana when the accident occurred in that statue. While the Court acknowledged that the plaintiff’s choice should be awarded some deference the level of deference should be different when the plaintiff was the heir of the estate of the injured party, ultimately concluding that public and private factors support transfer. (Khan v. Stockdale Trucking, 2013 WL 520930
