The new CAB website will be up and running any day now! We are excited about the changes which are being implemented on the site. If all goes well the new interactive site will be up and running in November. We plan on incorporating industry polls and RSS feeds, as well as providing an open forum to allow readers to share comments with the industry. Comments are appreciated and we look forward to your feedback on items that we can add to the site to better inform the industry of relevant events and to facilitate interaction between companies insuring the transportation industry.
For our premium subscribers, we also note an addition to the Submission Report™ . We now include the ISS-D (Inspection Selection System-Driver) and SEA (Safety Evaluation Scores) scores for your motor carrier. For those of you not familiar with these scoring categorizations, both are promulgated by the FMCSA to evaluate the safety performance of a motor carrier. As a general principle that will occur if the motor carrier has, within the past 24 months, either a poor safety record or has had very few safety inspections relative to the number of vehicles it operates.
In addition, the ISS-D is used to determine whether a truck or driver should be selected for inspection after entering an inspection station. A carrier’s ISS-D score will alert the inspector on whether a full inspection of either or both should be undertaken.
This month I also attended the National Insurance Crime Bureau Cargo Theft Summit in Arlington, Virginia. It was good to see a number of cargo insurers at the session as these are issues which do concern you. Theft is, unfortunately, on the rise especially in this down economy. It makes it even more important to monitor the operations of your carrier to insure that they are operating from a sound financial and safety perspective. The North Texas Commercial Theft Task Force Initiative released a white paper at the seminar which I am pleased to include here in Bits & Pieces. The paper in very informative on the issue of cargo and heavy equipment theft. You can view it here.
In other news we report:
HOURS OF SERVICE – The FMSCA has agreed to reconsider the hours-of-service rule for commercial drivers, putting on hold a federal court challenge by a coalition of interest groups. The agreement gives the FMCSA nine months to submit its review to the White House and up to 21 months to issue a new final rule to replace the current one. In the meantime the status quo remains.
FMCSA DRUG/ALCOHOL STRIKE FORCE – The FMCSA undertook its first drug and alcohol strike force for ten days in September. FMCSA safety investigators examined the drug and alcohol safety records of commercial drivers employed by bus companies, including school bus drivers, interstate passenger carriers, hazardous material transporters and general freight long-haul trucking companies. 77 commercial bus and truck drivers were taken off the road and over 80 carriers face enforcement action as a result of the strike, The goals of the strike force were to identify motor carriers in violation of federal drug and alcohol testing requirements and to remove from the road commercial truck and bus drivers who jump from carrier to carrier to try and evade federal drug and alcohol testing and reporting requirements.
FMCSA ENFORCEMENT CASES – The FMCSA publishes a yearly report which addresses all claims which the FMCSA has resolved with motor carriers in the preceding year. An enforcement case is deemed “closed” once FMCSA issues a carrier a “Notice of Claim” ( NOC) and the carrier has (1) paid the penalty in full, (2) signed a settlement agreement, or (3) defaulted on the NOC, upon which a “Final Agency Order” was issued. FMCSA enforcement cases are initiated following compliance reviews, complaint investigations, terminal audits, roadside inspections, or other investigations. The 2009 report, which can be viewed here, indicates that 5214 cases were resolved with penalties paid in the total amount of $25,244.699.00. If you are a premium subscriber and are interested in knowing which of your carriers were included, please contact us for an individual report.
DRIVER PRE-EMPLOYMENT SCREENING PROGRAM – The FMCSA announced that next month it will start its new Driver Pre-Employment Screening Program. This program is designed to allow commercial motor carrier companies to electronically access driver inspection and crash records during the hiring process. In accordance with federal privacy laws, drivers must first give written permission
WAREHOUSE SPACE – Prologis Resources has released its report on the current trends in utilization and construction of warehouse space. The report indicates that the average vacancy rate for bulk distribution space in the top markets grew 10 percent in the second quarter. New construction fell to five million square feet for the first half of the year. A copy of the report can be viewed here.
TRUCKING CONCERNS – The American Transportation Research Institute, an arm of the ATA has released its report on the top concerns of the trucking industry. The report, based upon a survey of 4,000 truckers, ranks the economy as the number 1 concern, followed by government regulation, fuel, congestion/infrastructure and hours of service as the top five. A copy of the report can be viewed here.
CURRENT CASES:
As you may have noticed, over the past few months we have split the cases into cargo/inland marine and auto categories. This month we are adding a third category for cases which overlap both arenas – a more general category. These cases will generally include those which address procedural, jurisdictional, trial and discovery issues, as well as cases which are generally important for anyone writing transportation insurance.
GENERAL
The use of a letter of credit as a means of protecting an insurer’s filing exposure, insuring premium collection and deductible payment, among other things, is a protection often recommended by CAB. The District Court in Delaware held that a letter of credit is not an asset of the trucking company if they file bankruptcy. The insurer is not obligated to return the proceeds of the letter of credit to the estate, unless it exceeds the obligations of the motor carrier. However, if the trucking company gives the insurer a cash deposit in lieu of a letter of credit, that deposit is an asset of the trucking company and subject to return under the bankruptcy code. (In re S-Tran Holdings, Inc.In re S-Tran Holdings, Inc., 2009 WL 3185771)
We routinely see claims asserted for indemnity under UIIA agreements, whether for bodily injury or cargo. This month the court in the Southern District of Georgia considered whether the container owner was entitled to recover all of its investigation expenses after a fatal loss. The court interpreted the UIIA to permit indemnification when the motor carrier failed to defend or pay claims. The court held a question of fact remained as to whether the container owner should have undertaken its own investigation. If the motor carrier had previously advised that it was investigating or that it would undertake the indemnity, the container owner was not free to undertake its own inspection at the expense of the motor carrier. (United Arab Shipping Co. v. Eagle Systems, Inc. 2009 WL 3055299)
Decisions on motions in limine (motions to exclude certain evidence) are very interesting reading in trucking cases. In the Eastern District of Arkansas the court considered, among other things, whether the plaintiff’s prior criminal history, the independent negligent acts of the trucking company, the fact that plaintiff’s expert was previously used by defense counsel, the use of escort vehicles, lack of vehicle warning, and prior tire blow outs on the vehicle could be used at trial. To see the results, Regions Bank v. White, 2009 WL 3148732.
The District of New Jersey dismissed an action filed against a Canadian carrier where there was no evidence of jurisdiction over the carrier in New Jersey. The court held that having operating authority and a BOC-3 filing was insufficient to establish personal jurisdiction. The court would also not consider transfer to an alternative jurisdiction in the United States as plaintiff had not established any significant contacts between the defendant and the alternative jurisdiction. (Davis v. Quality Carriers, Inc., 2009 WL 3335860)
AUTO
The Eastern District of Virginia addressed the applicability of a MCS-90 endorsement to a judgment which was not against the carrier named in the endorsement. The Court held the endorsement applicable only to the named insured and did not extend it to include other parties. The trailer, owned by a regulated carrier, was not scheduled on the auto policy. However as judgment had been entered only against the driver, the plaintiff was unable to recover under the endorsement (Sentry Select Insurance Co. v. Thompson, 2009 WL 3366928)
The Court of Appeals in Kentucky vacated a punitive damages award against a trucking company. The court held that the simple fact that there was a fatal accident was insufficient to establish the gross negligence necessary to support a punitive damages claim even where the carrier may have been aware that there was some concern with the operation of the fifth wheel. (Fuel Transport v. Gibson, 2009 WL 3047578)
Who is responsible for a driver’s injury when a load overturns due to alleged improper loading of the cargo by the shipper? The Middle District of Pennsylvania held that the obligation for properly loading the vehicle rests with the driver, distinguishing an older state case which held otherwise. The Federal regulations on proper cargo securement clearly placed the onus on the driver. The Court also granted judgment to the defendant on plaintiff’s claims for failure to warn, misrepresentation, assumed duty and gross negligence. (Spence v. ESAB Group, 2009 WL 3287389)
An insurer’s reliance on the worker’s compensation exclusion in an auto liability policy was upheld this month, even when the trucking company failed to maintain worker’s compensation insurance. The Court held that the driver’s suit against his employer was still subject to the workmen’s compensation statute and therefore the exclusion applied. (Robertson v. Home State County Mutual Insurance Co., 2009 WL 3246787)
CARGO
Preemption! The District Court in Tennessee dismissed a plaintiff’s state law claims under the Tennessee Consumer Protection Act and the Florida Deceptive Trade Practices Act. (Mashburn v. Atlas Van Lines, 2009 WL 3152195) The Northern District of Mississippi also dismissed a plaintiff’s state law claims arising from goods which were in storage for over 2 years, holding that the stop was temporary. (Akin v. Williams Transfer & Storage, 2009 WL 3258762)
The Interstate Commerce Act exempts transportation which is part of a prior or subsequent shipment by air. This month the Eastern District of Missouri held the Carmack Amendment did not apply to a ground transport loss when the shipment was destined for subsequent air transport. The court also refused to permit the carrier to limit its liability when the bill of lading did not have a place to declare a value and the limitation was not noted on the bill of lading. While the bill of lading did reference the carrier’s tariff, the court did not consider that notice and also held that the carrier had not even complied with its own tariff requirements. (Nipponkoa Ins. Co. v. Towne Air Freight, LLC, 2009 WL 4257868)
The Southern District of California held that it would apply the “last served” rule in determining whether removal was proper. In other words, even if the first served defendants fail to timely remove a case, a later served defendant can still remove with their consent. The court also addressed the federal jurisdiction granted by the Carmack Amendment. The court also held that the Carmack Amendment prohibits forum selection clauses in a bill of lading as it contravenes the statues on where actions may be filed against carriers. (Smallwood v. Allied Pickfords, LLC, 2009 WL 3247180)
Last month we reported that a District Court in Arizona has upheld the right of a downstream carrier to limit its liability, even when the originating carrier had accepted a declaration of value from the shipper. The plaintiff’s request for reconsideration of the motion was denied. (Pacific Indemnity Co v. Pickens Kane Moving & Storage Co., 2009 WL 3241844)
In the Southern District of New York the court held that an exception at delivery that a carton was crushed was insufficient to establish a complaint that the cargo was damaged. The shipment was subject to air transportation, specifically the Montreal Convention. Since no complaint of damage was asserted within 14 days the claim was time barred. (American Home Assurance Co v. Kuehne & Nagel, 2009 WL 3109839)
As you may recall from earlier cases, a shipper can recover attorney’s fees from a household goods carrier if the statutory requirements are met. This month the Eastern District of Michigan rejected a plaintiff’s efforts to recover those fees when his cargo, which was a lamp, was damaged in the possession of a carrier who was not a regulated household goods carrier. The statutory right for fees is limited to those carriers who are defined household goods carriers. (Osman v. International Freight Logistics, 2009 WL 3273840)
Happy Halloween to all. As the next Bits & Pieces will not be released until after the Thanksgiving holiday, we wish you a wonderful holiday.
