Here we are at the end of the year again We hope you are all enjoying the holiday season as much as we are. It is amazing how quiet it gets in this industry at this time of the year. Is anyone working? Our year in review will be coming in January so we will keep this short.
DRIVER INSPECTION REPORTS – The FMCSA has delayed implementation of driver inspection reports required under the agency’s new regulations for intermodal chassis. The deadline for having a process to handle reports has been pushed to June, 2010, although all other rules went into effect December 17, 2009.
CONGRESSIONAL MOVES – Before departing for any holiday break, Congress approved more than $40 billion in new highway spending for 2010. They also approved a truck-weight exemption which allows trucks weighing up to 100,000 pounds to use interstate high-ways in Maine and Vermont. They also dropped the prohibition for funding the federal pilot program allowing trucking across the U.S./Mexico border. Of course as the program is no longer in place funding it is not important.
TRUCK TONNAGE – The U.S. Department of Transportation’s Research and Innovative Technology Administration Bureau of Transportation Statistics and the U.S. Department of Commerce’s Census Bureau recently released their survey on truck tonnage for 2007. The Commodity Flow Survey is undertaken every five years, in the years ending in 2 and 7. Trucking lead the class, hauling 71 percent of the value, 70 percent of the tonnage and 40 percent of the ton-miles. In 2007, all U.S. freight transportation systems combined moved 12.5 billion tons of raw material and finished goods, valued at $11.7 trillion. The highest value goods were electronics and electrical and office equipment totaling $1 trillion. The survey also measured goods movement by industry, with shipments by manufacturing industries amounting to $5.2 trillion and 4.8 billion tons. Wholesale industries accounted for 41 percent of the total value, $4.7 trillion, and nearly 3.6 billion tons, or 29 percent of the total weight. A copy of the report can be viewed here.
INSURANCE PREMIUMS – NIP Group, Inc. released its Transportation Insurance Pricing Survey (TIPS™) for the third quarter of 2009. This quarter they report that there is intense competition and overall rate decreases. The survey revealed that most respondents were seeing rate reductions and very few rate increases. The soft market is reflected in these numbers. The report measures ten different transportation segments, including , Trucking Operations, Intermodal Carriers, Messenger/Courier Services, Ambulance/Paratransit, School Bus Contractors, Bulk Transportation, Airport Ground Transportation, Charter/Tour Bus Operators, Specialized Carriers & Riggers and Limousine Services. You can get the results here. We are doing our own survey on premium base and would appreciate your response to this month’s poll on this issue. Please take a moment to vote on the poll on the right of this page. We will publish our own poll results in next month’s issue.
FLEET FAILURES – Avondale Partner’s report on the third quarter in trucking was released and it indicates that less than 0.7 percent of trucking capacity was lost in the third quarter. That number is comprised of 405 companies with an average fleet size of 35 trucks, which represents roughly 14,135 trucks. And on a year-over-year basis, Avondale said 785 companies with an average fleet size of 50, representing 39,030 trucks, left the playing field. The number of trucks pulled from the 6,725 in the second quarter and 14,135 in the third quarter-more than doubled with the average fleet size nearly doubling from 18 to 35. Even this number of vehicles pulled from service is not enough to offset the reduced freight demand in this economic climate.
CURRENT CASES
CARGO
The Northern District of Illinois awarded summary judgment against a freight forwarder who arranged for transport of various vehicles in interstate transport. Of interest is that fact that the court did not award the shipper his anticipated selling price for the damaged vehicles – he was awarded only his landed cost. The court also awarded judgment against the plaintiff by an intervenor who was an owner of the vehicle, concluding that the plaintiff, who did not have authority to act as a carrier or a freight forwarder, held itself out as providing transportation services. (Ace Motors, Inc. v. Total Transport, Inc., 2009 WL 4673864)
The Eastern District in Virginia dismissed a third party complaint brought by an entity which may have been a carrier or a broker. In the action the third party plaintiff sought indemnity from the party who built the equipment, alleging that the shipment was not properly prepared for transport. The court held that the complete lack of any fact alleged in the complaint to support such a claim would require that the complaint be dismissed. (Dominion Resource Services, Inc. v. 5 K Logistics, 2009 WL 4279876)
And now for our preemption cases. The Southern District of Ohio dismissed a plaintiff’s complaint because the cause of action was subject to Carmack and the plaintiff had not properly pled the action. The court rejected the argument, accepted in some jurisdictions, that the court should simply construe a breach of contract claim as a Carmack cause of action. The court also held that it could look to documents outside the pleadings to determine if the $10,000 per claim jurisdictional requirement was met. (Techdisposal.com v CEVA Freight Management, 2009 WL 4283090)
The Southern District in Texas considered whether Carmack preempted state law claims against a carrier for failure to collect COD payments. The court concluded that it did, dismissing all other actions against the carrier. The court also enforced the carrier’s limitation of liability. It was interesting to note that the court held that shipments registered on line, when the shipper does the way bill, would be sufficient to meet the requirement for valid limitations, that a bill of lading be issued. (Trans Enterprises, LLC v. DHL Express (USA), 2009 WL 4604660)
The Court of Appeals in Texas upheld a carrier’s limitation of liability, despite plaintiff’s attempts to avoid its impact. The court refused to consider the plaintiff’s contention that the driver told the plaintiff he only had to sign the bill of lading and never disclosed that he had to declare a value. (Texas Tape & Label Co. v. Central Freight Lines, 2009 WL 4852235)
The Northern District of Illinois has joined those circuits which have held that the Carmack Amendment does not apply to the domestic portion of an international shipment when there is a through bill of lading, rejecting the 2nd and 9th Circuit rulings. The court held that the international bill of lading, which had a shorter period of time for suit would be upheld and also that the rail carrier’s contract terms would apply. (Riducco v. A.P. Moller-Maersk, 2009 WL 4680197
MISCELLANEOUS
An insurer’s audit and investigation files were held not subject to attorney client privilege or work product privilege in the Western District of Arkansas. The Court held that the truck insurer, who immediately undertook an investigation of an accident, was not doing so in anticipation of litigation as it had not received a claim. (Lee v. Overbey, 2009 WL 4672148)
Similar issues were considered in the Northern District of Indiana in which the court held that a driver’s report of a sideswipe was not subject to the attorney client or work product privileged, nor was the trucking company’s DOT Accident report form. However the accident report itself was subject to a statutory privilege under 49 U.S.C. 504(d). (Sajda v. Brewton, 2009 WL 4061356)
The Appellate Division imposed tough sanction on a trucking company as a result of a failure to fully comply with disclosure rules. Apparently a second trucking was involved in delivery of the goods which fell on the plaintiff during unloading. As a result of the delay in producing relevant information, the statute of limitations ran against the other trucking company. The court held that the defendant, who did not deliver the goods, was precluded from denying that it delivered the goods. (Cahn v. Ward Trucking, 2009 WL 4672136)
AUTO
The basic economic loss recovery which is permissible under New York No-fault must be deducted from a judgment awarded against a trucking company which injured a pedestrian. (Braun v. Edwards Trucking & Warehousing, 2009 WL 445537411)
The Court of Appeals in Georgia addressed other insurance clauses in a trucker’s policy and a shipper’s policy. The court held that both policies were co-primary, and each insurer was obligated to pay its pro-rated share. The fact that the shipper’s policy had a large deductible was irrelevant as the deductible wording was an agreement impacting the shipper and not others who might be insured under the policy. (Northland Insurance Co. v. American Home Assurance Co., 2009 WL 4827853)
In the Western District of Pennsylvania, the United States was held not to be the employer of a driver who delivered mail. The postal service routinely utilizes third party carriers to transport the goods and the court held that while defendant had some limited control over what the drivers did, it was insufficient to create the employer/employee relationship. (McLelland v USA, 2009 WL 4595954)
The Court of Appeals in California held this month that an omnibus clause in a policy will require the defense and indemnity of a defendant who is potentially vicariously liability under the peculiar risk doctrine. Under this doctrine an entity which hires an independent contractor can be liable for the actions of the contractor or its employees when there was a special and unique risk to the actions to be undertaken. The court held that a vicarious insured is no different that a permissive user. (American States Insurance Co. v. Progressive Casualty Insurance Co., 2009 WL 4757453)
Happy New Year One and All.
