As we head into the summer months we stop to remember all those who have unselfishly sacrificed and served our country. We applaud you and thank you, one and all, for your service. Words cannot express the importance of your service to our country.
A good time was had by all at the annual IMUA meeting in Austin Texas. It was great to see old friends, and wonderful to see so many new participants interested in learning about this industry. We strongly urge the cargo underwriters and claims personnel to get involved in industry events like those offered by the IMUA. Through knowledge comes power – and that applies whether it means understanding your book of business or the industry you are working in!
This month we report:
NATIONAL MEDICAL REGISTRY – It is now in place. Commercial drivers needing to renew their medical cards, or obtain a new medical certificate, must now have that examination performed by a certified examiner. Certified examiners can be located by city, state or ZIP code on FMCSA’s website. A last minute effort by the OOIDA to delay implementation was rejected.
ELECTRONIC ONBOARD RECORDERS – The FMCSA has extended the time for comments on its newest proposal on EOBR. Interested parties now have until June 26 to file comments. The proposal, which is a supplemental notice of proposed rulemaking, would amend the federal regulations to establish minimum performance standards for electronic logging devices, require the devices for all drivers who are required to log their record-of-duty status (RODS), and take measures to ensure the devices are not used by carriers or others to harass drivers.
DRIVER COERCION REGULATIONS – The FMCSA has issued a proposed rulemaking to help protect drivers from undue pressure to provide services. The proposed rulemaking will allow for the imposition of fines and license revocation on those who compel a driver to operate outside of legal hours, or require the driver to operation unsafe equipment.
CVSA ROADCHECK 2014 – CVSA will place a special focus on hazardous material haulers in the upcoming 72 hour safety program. CVSA reported that the three previous Roadchecks (2011 – 2013) show a nearly 13 percent uptick in the number of out-of-service violations for improper loading of hazardous materials, from 24.9 percent in 2011 to 37.4 percent in 2013. Each year, approximately 10,000 CVSA-certified local, state, provincial and federal inspectors at 1,500 locations across North America perform the truck and bus inspections.
FREIGHTWATCH CARGO REPORT – The latest Freightwatch report indicates that cargo theft fell 5 percent but that the price has gone up, as the average loss value per incident rose 38.5 percent compared to the same time last year. In the first quarter of 2014 FreightWatch recorded a total of 206 full-truckload cargo theft incidents, with 82 thefts in January, 46 in February and 78 in March. The average loss value per incident during the quarter was $207,982. Food and drinks were number one in target commodities, with 44 thefts (21 percent of all incidents). Home/Garden products accounted for 31 thefts (15 percent), followed by electronics with 27 thefts (13 percent).
Clothing/Shoes thefts saw the largest losses, with the highest average loss value, at $943,699, followed closely by electronics, averaging $421,008, fueled by losses of high-end projectors and computers, the report stated.
Location, location, location. California leads the way, with 56 thefts, followed by Florida, Georgia Texas and Illinois. Unsecured parking (122 thefts), primarily at truck stops, was the location most often targeted by cargo thieves when a location was recorded.
CONGESTED ROADWAYS – Congestion on the nation’s Interstate highways added over $9.2 billion in operational costs to the trucking industry in 2013, according to research released by the American Transportation Research Institute (ATRI). ATRI utilized motor carrier financial data along with billions of anonymous truck GPS data points to calculate congestion delays and costs on each mile of Interstate roadway. Delay totaled over 141 million hours of lost productivity, which equated to over 51,000 truck drivers sitting idle for a working year.
CURRENT CASES
CARGO
The Eastern District of North Carolina held that a motor carrier could not assert a third party claim against a manufacturer for alleged improper design which resulted in cargo damage during transit. The Court held that the carrier was attempting to transform what would be a complete defense to liability for the cargo claim into a third-party claim for indemnity which was not permitted by the Carmack Amendment. (Gregory Poole Equipment Co. v ATS Logistics Services, Inc., 2014 WL 1760999)
The 11th Circuit Court of Appeals held that the existence of a liability limitation in an upstream contract between the shipper and the logistics provider did not limit the carrier’s liability for theft by the cargo carrier’s contractor. The Court also held that the claim for attorney’s fees under a contract was not preempted under Carmack. (UPS v. Megatrux Transportation, 2014 WL 1816946)
A plaintiff in the Eastern District of Wisconsin was successful in recovering attorney’s fees in a Carmack claim. The Court held that the actions of the motor carrier in pushing for the enforcement of a limitation of liability which it should have known was invalid justified the imposition of the fees as a sanction. (Customer Shutters, LLC v. Saia Motor Freight Line, LLC., 2014 U.S. Dist. LEXIS 67541)
The District of New Jersey issued an extended opinion on the obligations of a carrier to provide notice of a choice of rates, including a full value rate, in order to invoke a limitation, ultimately concluding that the carrier had meet all Carmack requirements. The Court held that the terms of the Carmack Amendment do not require a full liability rate. The Court also acknowledged that procurement of insurance by the shipper is evidence of awareness of a limitation of liability and that claim can be made for the limitation. (Phoenix Insurance Co. v. Norfolk Southern Railroad Corp., 2014 US Dist. 67515)
A broker convicted of federal crimes involving his operations was defeated in his efforts to assert claims against the shipper and the downstream carrier for making false claims against him with federal law enforcement authorities. The Southern District of Ohio held that there was no contractual basis for either to be held liable for damages. (Streets v. Putnam, Inc., 2014 US Dist. 66309)
On the other side of the country the Central District of California held that a subrogating insurer was not permitted to pursue a motor carrier for a cargo loss under the doctrine of superior equities, which prevents an insurer from recovering against a party whose equities are equal to or superior to the insurer. Where the loss was caused by a theft the Court held that the insurer was required to show wrongful conduct by the motor carrier, which it had not done. Judgment was awarded to the motor carrier. (Sompo Japan Insurance Co. v. Action Express, 2014 U.S. Dist. Lexis 66487)
An insurer’s efforts to defeat a claim for breach of contract and vexatious refusal to pay a clam by seeking summary judgment failed when the insurer failed to present affidavits based upon personal facts. The Missouri Court of Appeals held that an affidavit of a claim supervisor who had no personal knowledge of the events in the affidavit was insufficient to support the request for judgment. (May & May Trucking v. Progressive Northwestern Ins. Co., 2014 WL 1887553)
A request for remand was denied in the Middle District of Alabama. The Court held that even if the complaint does not allege a cause of action under the Carmack Amendment there is complete preemption for any claim involving interstate commerce and the defendant is free to remove the case. (Morris v. Mayflower Transit, 2014 WL 189114)
AUTO CASES
The Eastern District in Kentucky remanded a declaratory judgment action back to State Court. A general liability insurer who was defending a declaratory judgment action seeking to find coverage for a truck accident lost its opportunity to have the matter considered by the federal court. The Court held it would decline to answer unanswered questions of state law that might implicate important state public policy. Those questions stemmed from the question of the applicability of a general liability policy to claims for negligent use selection and supervision of an auto. (Estate of Ferrell v. J&W Recycling, 2014 WL 1744835) A similar result was reached in the Eastern District in California where the Court dismissed the declaratory judgment action filed by the insurer, concluding that dismissal was appropriate to avoid needless resolution of state law issues and duplicative litigation. (Lexington Insurance Co v. Silva, 2014 WL 1839076)
Even when the plaintiff and a defendant agree that a defendant was not negligent in causing a loss the defendant is not automatically entitled to dismissal under Tennessee law when the co-defendants disputed that determination. The Middle District of Tennessee concluded that the co-defendants, a motor carrier and the operator of the loss location had a right to argue the negligence of another motor carrier for a driver’s injuries at the shipper’s location. Ultimately however the defendants failed to sustain their burden and the claim was dismissed. (Stone v. Marten Transport, LLC, 2014 WL 166420) In a related decision the same Court held that a claim for punitive damages against the facility was unsupported by the facts, dismissing that cause of action. (Stone v. Marten Transport, LLC, 2014 WL 1668250)
The Supreme Court in Alaska upheld a jury finding that while a shipper negligently contributed to a driver’s injuries the contribution was not a substantial factor in the event. The driver’s previous safety record was admissible to show his propensity for injury, which was determined to be the major factor in the injury. (Conley v. Alaska Communications Systems Holdings, Inc., 2014 WK 1873791)
Over in Illinois a logistics operator was denied summary judgment in an action in which a truck driver sought recovery for injuries suffered at the shipper’s facility. The Northern District held that it was reasonably foreseeable that they should have known of the potential for injury at the location. (Allen v. Schneider Logistics, 2014 WL 1884318)
As we have all seen recovery from pilot cars companies is very difficult. The Court of Appeals in Washington held that there was a question of fact as to whether a member of an LLC pilot car company had direct liability for a loss. When an LLC completely disregards the obligations of a corporation personal liability may attach for the members. (Landstar Inway v. Samrow, 2014 WL 1847001)
In the Western District of Pennsylvania the Court allowed a defaulting trucker to file a late answer to a complaint for personal injury. The Court held that where there was evidence that the defendant was not a party to transportation, and potentially a wrong party, and there was no willful failure to answer the complaint, the plaintiff was not harmed by allowing a late answer. (Courtney v. Ivanov, 2014 WL 2049775)
The Northern District of Illinois held that a contingent liability endorsement on a policy, which purported to preclude coverage when the vehicle was being operated by someone else, was irrelevant to the duty to defend when a covered cause of action was alleged. The Court found that the insurer breached the duty to defend and therefore was estopped from asserting policy defenses. (National American Insurance Co. v. Progressive Corporation, 2014 WL 1978470)
The Second District of California concluded that a jury’s verdict that a driver was negligent but that his negligence was not a substantial factor in causing the harm was not incorrect. However as there was a finding of law that the driver was negligent per se as a result of a violation of the Vehicle Code, the Appellate Court remanded the matter for a new trial. (David v. Hernandez, 2014 WL 2148928)
When does an accident arise out of the use of an auto? The Eastern District of California considered that issue in evaluating whether a general liability or an auto liability policy would apply when the driver left a gate open which ultimately impaled a third party. The Court held that the act of opening the gate and leaving it open was independent of the use of the auto and accordingly found that a defense and indemnity was owed by the general liability carrier. (Imperium Insurance Co. v, Unigard Insurance Co., 2014 WL 1671806)
A co-driver who was a passenger in the truck at the time of the accident was still an employee for purposes of the employee exclusion under the auto liability policy. The Court of Appeals In Tennessee held that the fact that she was a passenger did not change her status from being an employee. (Miller v. Northland Insurance Co., 2014 WL 1715076)
Enjoy Spring. See you next month.
