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2024

CAB Bits & Pieces February 2024

Hello All,  

What weather anomalies we’ve seen of late! Hope you are safe, dry, and minimally affected.

It’s month 2 of 2024 and crazy schedules are already underway. We here at CAB along with the rest of our sister companies and parent entity have been working furiously and the change has come to fruition. Perhaps you have seen the news already. CAB, Central Analysis Bureau, is now CAB by Fusable. However, in a strategic separation, CAB and other Randall Reilly data and media entities have transitioned over to our new company, Fusable. The Talent division remains identified under the Randall Reilly name.

Our system, service, and people remain unchanged. We are still here to help you “Make Better Decisions.” The News section below includes the official press release. Feel free to check out our new Fusable website or reach out to your rep with any questions. Common question: invoices remain the same.  

Thank you,

Chad Krueger and Pam Jones

CAB Live Training Sessions

Tuesday, February 13th | 12p EST – CAB for Underwriting

Sean Gardner will review our platform from an underwriter’s standpoint. He’ll share tips on how the system supports the decision makers role of the fleet’s exposure.

Tuesday, February 20th | 12p EST – How to Update Motor Carrier Data

Mike Sevret will cover the steps to update motor carrier data including company names, power units, DataQs, and much more! 

To register for the webinars, sign into your CAB account. Then click live training at the top of the page to access the webinar registration.

Explore all of our previously recorded live webinar sessions in our webinar library.

Follow us on the CAB LinkedIn page and Facebook.

CAB’s Tips & Tricks

The necessary and important government MFA, multi-factor authentication, came out and CAB’s solution allows our users to continue to access their clients’ government details. The government expanded the use of the login.gov application for accessing the FMCSA’s Portal.

Pre-FMCSA’s MFA implementation, users could access the motor carrier’s SMS through the CSA site with the fleet’s PIN. This is no longer an option. The user now needs to access data through the FMCSA portal (see image below). Many CAB clients only utilize the CAB platform to see motor carrier activity, and this remains the same. Your clients will need to set up their login.gov and FMCSA portal correctly so that CAB should be able to access it. 

Our amazing development team created a solution that meets FMCSA’s security requirements and continues to allow our users access to driver data. In order for CAB to continue to integrate driver data, users need to be able to access the FMCSA data through the motor carrier’s FMCSA Portal account.In short, the motor carrier needs to be able access this site.

Refer to the January 9th webinar titled “New Enhancements – Changes to FMCSA Portal Login.gov” where we covered our solution for the MFA enhancement.  

screenshot of FMCSA portal

THIS MONTH WE REPORT

Randall Reilly Launches New Business, Fusable, in Strategic Separation from Talent Acquisition Business. Randall Reilly LLC is strategically separating its talent acquisition business and its industrial data business with its accompanying services. The talent acquisition side will be doing business as Randall Reilly, while the data business is launching as a new brand, doing business as Fusable. The move positions Fusable, with its best-in-class data products such as EDA, Central Analysis Bureau, EquipmentWatch, Iron Solutions, RigDig BI Price Digests and Fusable Digital, to leverage data-driven solutions for industrial sectors, fostering its growth as a standalone entity. Fusable will also retain the media brands such as Commercial Carrier Journal (CCJ), Overdrive, and Equipment World, renowned for their industry expertise and thought leadership. Read more…. 

Freight cycle poised for new stage in ’24: ACT Research. The nation’s freight cycle fundamentals will improve in 2024, according to the latest release of the Freight Forecast, U.S. Rate and Volume OUTLOOK report. Freight demand is below trend, but starting to recover, as post-pandemic effects fade, both real disposable incomes and retail sales are accelerating, and disruptions in ocean shipping are likely catalyzing the end of the 18-month destock. Read more… 

Bill Introduced to Keep CFPB Out of State Insurance Regulation: The Business of Insurance Regulatory Reform Act of 2024 from senators Tim Scott, R-S.C., and Joe Manchin, D-W.V., was referred to the U.S. Senate’s Committee on Banking, Housing, and Urban Affairs to make sure the Consumer Financial Protection Bureau (CFPB) “does not overstep their statutory authority.” Read more… 

New Rules on Independent Contractors Could Affect Trucking’s Owner-Operator Model: Is that driver an employee or an owner-operator? Complex new rules from the U.S. Department of Labor set out a multi-factor approach to determining when a worker is an independent contractor.The department has adopted a “totality of the circumstances” analysis, so no single factor should make or break an IC determination, and additional factors may be considered. Read more… 

FMCSA Weighs Carrier Fitness Determination Rewrite: The Federal Motor Carrier Safety Administration is reviewing six research papers as it weighs revision of its motor carrier safety fitness determination rules, the  agency said. “As FMCSA pursues the development of a new methodology to determine when a motor carrier is unfit to operate, the agency must avoid relying on the Compliance, Safety, Accountability and Safety Measurement System programs,” the Owner-Operator Independent Drivers Association wrote. Read more… 

FMCSA Administrator Robin Hutcheson to resign: Nation’s top truck safety regulator, Robin Hutcheson, will step down Jan. 26, according to DOT. Sue Lawless, FMCSA’s assistant administrator, will head the agency in an acting administrator role after Hutcheson’s departure. Lawless also serves as the agency’s executive director and chief safety officer. Read more… 

February 2024 CAB Case Summaries
These case summaries are prepared by Robert “Rocky” C. Rogers, a Partner at Moseley Marcinack Law Group LLP.

AUTO

Davenport v. Bonini, 2024 WL 69062, No. 1:22-CV-469 (E.D. Tex. Jan. 4, 2024). In this personal injury action, the court granted in part and denied in part a motion for summary judgment by the CMV driver and motor carrier. The plaintiff filed suit against a trucking company and its driver following a collision with a tractor trailer. The plaintiff brought a negligence claim against the driver and negligent hiring, training, entrustment, supervision, retention, and monitoring claims against the company.  It does not appear the plaintiff maintained a vicarious liability-style claim against the company premised upon the alleged negligence of the driver.  The driver and company alleged that unknown motorists caused the collision and later moved for summary judgment, arguing that the plaintiff could not present any admissible evidence to support her claims. The plaintiff did not specifically respond the motion of the company seeking dismissal of the negligent hiring, training, entrustment, supervision, retention, and monitoring claims, and accordingly the court deemed those claims against the company abandoned and granted summary judgment in favor of the company.  With respect to the negligence claim against the driver, however, the court found the driver’s testimony, specifically that he had potentially allowed himself to become boxed in by other vehicles and possibly not slowed down at the time of the collision, could possibly support a jury conclusion the driver was driving negligently at the time of the collision and was a proximate cause of the plaintiff’s injuries. Accordingly, the driver’s summary judgment motion was denied.   

Dong v. Cruz-Marte, 2024 WL 117238, No. 2023-02016 (N.Y. App. Div. Jan. 11, 2024). In this personal injury action stemming from a bicycle v. tractor-trailer collision in which the cyclist was killed, the New York appellate court affirmed the lower court’s denial of the defendants’ motion for summary judgment. The plaintiff’s decedent was killed when he rode an electric bicycle around a double-parked vehicle and was struck by a tractor-trailer. The lower court denied the trucking company and driver’s motion for summary judgment, as the driver’s testimony indicated that he did not know how close the bicycle was to his truck before impact and that he did not adjust his operation of the vehicle despite seeing the cyclist three or four car lengths ahead of him before impact. As for the company, the court found that they did not present any evidence to overcome a potential vicarious liability claim. Thus, the denial of summary judgment was affirmed.

Hockaday v. Hessel, 2024 WL 117266, No. 2023-01642 (N.Y. App. Div. Jan. 11, 2024). In this personal injury action stemming from a tractor-trailer v. a wheelchair/motorized scooter, the New York appellate court affirmed the lower court’s grant of partial summary judgment to the plaintiff as to liability and striking of the defendants’ affirmative defenses of culpable conduct and comparative fault. The court found that the plaintiff made a prima facie showing as to her entitlement of judgment as to liability.  While the court acknowledged there was some conflicting evidence regarding whether the plaintiff was within the crosswalk at the time of the accident,  it nevertheless found that, regardless of this evidence, there was enough evidence to support the truck driver’s failure to exercise due care to avoid colliding with pedestrians.

Guthrie v. Monteagudo, 2024 WL 264075, No. 22-1610 (W.D. Pa. Jan. 24, 2024). In this personal injury action arising from a collision between a passenger vehicle and tractor-trailer, the court awarded sanctions against a trucking company following its failure to cooperate in discovery. The plaintiff sued the truck driver and the trucking company following the accident and, thereafter, propounded discovery upon both. In the court’s view, the defendants were not forthcoming in providing responses to the plaintiff’s discovery requests, and defense counsel was only able to produce limited documentation from the defendants’ insurer, as it could not locate or obtain the cooperation of the driver or trucking company. Following a continued failure to produce information or appear for depositions, the plaintiff filed a motion for sanctions. The court, while noting defense counsel’s continued efforts to try to locate the defendants and obtain their cooperation, it awarded the following as sanctions: (1) all factual averments asserted against the motor carrier in the Complaint were accepted as true, including for purposes of trial; (2) at the trial of this case, the jury will be instructed that it must presume that GPS data and dashcam video from the tractor-trailer, along with the driver’s employment and driver qualification files as well as driver logs, were unfavorable to the motor carrier.

Finaldi v. Knight, 2024 WL 26712, No. A-0315-22 (N.J. Super. Ct. App. Div. Jan. 3, 2024). In this personal injury action, the New Jersey appellate court affirmed the lower court’s grant of summary judgment in favor of a Delivery Service Provider, Cornucopia Logistics, and Amazon Logistics, Inc./Amazon Fulfillment Services, Inc. (collectively “Amazon”).  At the time of the accident, Cornucopia had an agreement with Amazon to deliver groceries ordered through Amazon Fresh as an independent contractor.  Per the terms of the Agreement, Cornucopia had exclusive responsibility for its personnel and exclusive control over its policies relating to wages, hours, working conditions, and other employment conditions.  Cornucopia Delivery vans were leased to Cornucopia by EAN Holdings and were stored at Amazon’s facility where Cornucopia also had an office. When vans were not in use, the keys were kept in a cabinet behind a dispatch table at the office, and dispatchers were supposed to lock the cabinet after checking drivers into the facility. One of the dispatchers fell asleep while driving a Cornucopia van that he had stolen, and he ran through a red light and struck the plaintiffs. The plaintiffs sued the driver, EAN, and later Cornucopia as the dispatcher’s employer, and Amazon. Amazon moved for summary judgment as to the plaintiffs’ claims, and the plaintiffs consented to dismissal of the negligent hiring, retention, training, entrustment, and supervision claims against Amazon, as there was no evidence the driver was an Amazon employee. General negligence claims against Amazon remained in the case, however, as the trial court initially found there was enough evidence to support Amazon’s control over Cornucopia, rendering it liable for Cornucopia’s actions. The court later granted Cornucopia summary judgment on all claims, finding that the driver was not working at the time of the accident, that Cornucopia had taken reasonable precautions to prevent theft of its vans, and declining to impose liability on an employer for all senseless and unanticipated actions of employees. Following the grant of summary judgment to Cornucopia, Amazon moved for reconsideration of the denial of its motion for summary judgment, and the court agreed with Amazon, finding that, if no liability could be imposed upon Cornucopia, similarly, no liability could be imposed upon Amazon. On appeal, the appellate court agreed with the dismissal of the claims against Cornucopia and Amazon, finding that the lower court properly found the actions of the driver were unforeseeable.

BROKER

Montgomery v. Caribe Transport II, LLC, 2024 WL 129181, No. 19-CV-1300 (S.D. Ill. Jan. 11, 2024). In this follow up opinion in a case on which we previously reported in November 2023, the United States District Court for the Southern District of Illinois granted the defendants’ motion for judgment on the pleadings, dismissing the plaintiff’s claims against a broker for negligent hiring of a carrier and its driver. This ruling followed the U.S. Supreme Court’s denial of the petition for a writ of certiorari in Ye v. GloablTranz Enters., 74 F.th 453, 456 (7th Cir. 2023), meaning the Seventh Circuit’s holding that the FAAAA preempted such negligent hiring claims will stand—at least within this jurisdiction. The Court in Caribe previously granted the defendants’ motion for summary judgment, dismissing plaintiff’s vicarious liability claim, and it issued some additional procedural rulings in this instant decision, allowing the plaintiff to appeal the vicarious liability claim to the Seventh Circuit.

Carrier v. County Hall Ins. Co., 2024 WL 187709, No. 2:22-CV-00937 (W.D. La. Jan. 17, 2024). In this broker liability action, the Louisiana district court dismissed negligent hiring, training, supervision, and management claims against a freight broker, while allowing other claims to remain pending additional briefing. The action arose following a motor vehicle accident involving a passenger vehicle and a commercial vehicle operated by a driver for the carrier, TDKD. The occupants of the passenger vehicle also sued Covenant Transport, alleging vicarious liability for TDKD and its driver, agent/principal liability, and direct claims for negligent hiring, training, supervision, and management of the TDKD driver. Covenant moved for summary judgment on the ground that it was only the freight broker, that it could not be vicariously liable as it exerted no control over the carrier or its driver, that it relied on the FMCSA and Federal Regulations to select carriers, and that it played no role in hiring, selecting, dispatching, and supervising the carrier’s drivers. The court agreed that Covenant could not be liable for the driver’s actions, as it did not exert any control over him and as the plaintiff failed to provide any evidence to the contrary. Similarly, the court dismissed the negligent hiring, training, supervision, and management claims levied against Covenant related to the driver on the basis that there was no evidence of an employer-employee relationship between the two. As for the claim alleging negligent hiring of TDKD, the court also dismissed it on the basis that TDKD had active operating authority with the FMCSA and sufficient insurance at the time Covenant hired it. As for the negligent training, supervision, and management claims against Covenant as to TDKD, the court temporarily withheld a grant of summary judgment to allow the plaintiff to provide a responsive brief but indicated that it would dismiss these claims without additional proof that Covenant exercised control over TDKD as to how it selected, managed, or supervised its drivers. The court also declined to dismiss claims related to applicable insurance coverage for Covenant to allow the parties additional time to brief the issues.  Interestingly, the court’s decision made no mention of FAAAA or preemption as a defense to Covenant. 

CARGO

Int’l Cargo Loss Prevention, Inc. v. Mediterranean Shipping Co. (USA) Inc., 2024 WL 37072, No. 23-CV-1312 (S.D.N.Y. Jan. 3, 2024). In this action brought under COGSA by a subrogated insurer of a shipment of frozen shrimp transported by the defendants from India to Chicago, Illinois, the United States District Court for the Southern District of New York granted in part and denied in part the defendants’ motion to dismiss. The defendants, which were common carriers, had contracted to transport the frozen shrimp from India to Chicago, as memorialized in a Sea Waybill. The plaintiff alleged that the defendants delivered the shipment in damaged condition and brought suit under COGSA, further alleging that the defendants had breached their contractual obligations pursuant to the Sea Waybill. The defendants moved to dismiss the action, arguing it was time-barred under COGSA’s statute of limitations and on the ground that one of the defendants, MSC USA, was not a party to the Sea Waybill and could not be liable as an agent for the other defendant, MSC SA. In considering the motion to dismiss, the court rejected the argument that the claim was time-barred and determined a minor delay in the acceptance of the complaint by the clerk’s office due to a technical filing error did not void the initial filing date for purposes of considering the statute of limitations. However, the court did find that the plaintiff failed to state a claim against MSC USA, as it was merely the agent for MSC SA. In considering this argument, the court looked to the Sea Waybill and applied general common law rules of agency to its interpretation, finding that “if an agent executes a contract on behalf of its principal, and if the agent has properly disclosed its principal, then the agent is not itself a party to the contract and is not liable for claims arising out of it.” (Internal citations omitted). Instead, the court found that an agent may be held liable for a breach of contract only if the agent “clearly manifests an intent to be so bound, instead of, or in addition to, its principal.” (Internal citations omitted). Here, the court found that MSC USA’s signature on the Sea Waybill clearly stated that it was signing “as Agent on behalf of the Carrier MSC . . . SA.” The court further found that the plaintiff could not allege any facts to support MSC USA’s manifestation of intent to be bound to the Sea Waybill, and the court granted the motion to dismiss MSC USA.  The court further denied the plaintiff’s motion to file a Second Amended Complaint, finding the plaintiff had previously been afforded the opportunity to file an amended pleading in response to MSC USA’s first motion to dismiss, yet the plaintiff “failed to plead any facts to address Defendants’ argument in this regard or indicate in any way that it has facts to support such an allegation.”

HMD America, Inc. v. Q1, LLC, 2024 WL 167374, No. 23-21865 (S.D. Fla. Jan. 16, 2024). In this action involving the alleged theft of over $3 million worth of cellphones, the United States District Court for the Southern District of Florida granted a defendant logistics company’s motion to dismiss. The plaintiff, HMD, owned and stored merchandise at the defendant Q1’s warehouse in Orlando. The parties also had an agreement whereby Q1 would perform various logistics services on behalf of HMD pursuant to a written contract. Pursuant to this agreement, HMD asked Q1 to arrange and transport a shipment of twenty pallets of cellphones from the Orlando warehouse to a consignee in Indiana. Q1, in turn, “subcontracted” with a broker, World Wide Express, to arrange for the transport of the shipment, and World Wide contracted with Aldon Mega, to transport the load. Aldon Mega then “subcontracted” with another entity, RPM, which was to actually transport the load. While the shipment was picked up in Orlando, it never made it to Indiana and was apparently stolen in transit. HMD filed suit on behalf of its insurer against Q1 and Aldon Mega, alleging breach of contract and negligence-based claims against Q1. Q1 moved to dismiss on the basis of FAAAA preemption and on the basis of failure to state a claim. HMD countered, arguing FAAAA only applied to intrastate, not interstate, transportation and that it also did not apply to Q1, as it was only a shipper, not a licensed broker. The court rejected the preemption argument as to the breach of contract claim against Q1, finding that prevailing caselaw rejected preemption over such contract-based claims. However, the court did find that the negligence claim was preempted, rejecting HMD’s argument that FAAAA applied only to intrastate transportation, as it found that FAAAA had “been broadly and repeatedly applied to preempt state-law claims related to interstate transportation of property.” The court also rejected HMD’s argument that FAAAA did not apply to Q1 as the shipper, instead agreeing with Q1 that it applied as Q1 was involved in arranging for the transportation of the cargo. In revisiting the breach of contract claim on Q1’s argument that HMD failed to state a claim, the court agreed, finding that the allegations were too conclusory and vague to support a breach of contract claim under Florida law. In alleging the claim, HMD had cited to two provisions of the agreement, one labeled “Liability” and another labeled “Transport Concept.” HMD also alleged, without citing to the agreement, that Q1 “was responsible for and had the risk of loss of the subject cargo” from the moment it received the goods at its warehouse. The court found these allegations too conclusory to set forth a viable cause of action, rejecting the notion that the claim could survive simply because the cargo was stolen. Finding that HMD failed to “connect the[] dots” between the theft and the contract, and finding that HMD’s allegations had mischaracterized the contract, the court granted Q1’s motion to dismiss the breach of contract claim.

Vegas Fab & Finish v. AMG Freight LLC, 2024 WL 166759, No. 2:23-cv-01336 (D. Nev. Jan. 16, 2024). In this action involving alleged damage to a shipment of pieces of brass door inlay, the United States District Corut for the District of Nevada granted the plaintiff’s motion to remand the case to state court for further proceedings, rejecting the defendant’s argument that removal to federal court was proper on the basis of Carmack preemption. The plaintiff, VFF, contracted with AMG to ship the pieces of brass door inlay to its client in Canada. Upon delivery of the shipment, the client informed VFF that the shipment was damaged. VFF learned that AMG had apparently subcontracted with another entity, ABF, to deliver the freight, and AMG denied being responsible for the damage to the shipment. VFF then filed suit in Nevada state court, alleging breach of contract, breach of the covenant of good faith and fair dealing, and negligence against AMG. AMG then removed the action to federal court on the basis that all of VFF’s claims were preempted by the Carmack Amendment. In arguing against VFF’s motion to remand, AMG also argued that the FAAAA and ICCTA preempted VFF’s claims. The court disagreed with AMG, finding that it had failed to establish federal jurisdiction under Carmack. The court found, and the parties acknowledged, that VFF had not presented a well-pleaded federal claim in its complaint. However, in addressing AMG’s argument that Carmack still preempted the claims, it analyzed whether AMG should be characterized as a carrier or a broker. AMG argued that, accepting the allegations of the complaint as true, it had to be classified as a carrier, but VFF argued AMG should be classified as a broker, as it never alleged that AMG was a carrier in the complaint. The court found that, when looking to the four corners of the complaint, AMG could not be considered a carrier and, moreover, that AMG had not adequately supported its assertion that it must be considered a carrier. Instead, the court found that AMG, its motion to dismiss, had expressly denied that it was the carrier for VFF’s shipment. Thus, the court rejected AMG’s Carmack preemption argument. Next turning to the FAAAA and ICCTA preemption argument, the court rejected AMG’s claim that they conferred exclusive federal subject matter jurisdiction, finding instead that each was an “ordinary preemption” affirmative defense that must be considered at the state court level following remand.

Federal Ins. Co. v. Kelton Wrecker, 2024 WL 85875, No. 4:22-cv-00083 (N.D. Ala. Jan. 8, 2024). In this action between the subrogated insurer of a motor carrier and a towing company, the court denied the towing company’s motion for summary judgment. The motor carrier, carrying 40,000 pounds of carpet, ran off an Alabama highway, and the towing company was called to the scene by law enforcement, as it was a member of law enforcement’s wrecker rotation list.  The motor carrier specifically inquired of the towing company whether it had the necessary equipment to adequately perform “the recovery,” which the towing company responded that it did.  The towing company began towing the tractor-trailer back toward the highway, but in the process the trailer began falling apart. In response, the towing company unloaded half of the carpet with a track hoe. The motor carrier’s employees asserted there was no damage to the trailer before the towing company began its work and that the carpet was unlikely to be damaged in the accident, as it was packed tightly within the trailer. The motor carrier’s employees also testified that “plenty” of towing companies had equipment necessary to haul the vehicle back to the roadway without having to unload the carpet. The towing company’s employees testified the trailer was damaged in at least three places prior to their arrival and that, once they started pulling the trailer, the prior damage caused it to start falling apart, necessitating the removal of the carpet. The towing company’s employees also testified that no other wrecker would have been able to pull the trailer without unloading the carpet. Following the incident, the subrogee insurer of the motor carrier brought claims for negligence and breach of contract against the towing company. As to the negligence claim, the insurer argued the towing company was negligent in damaging the carpet while the towing company denied owing a duty to the carrier, and, even if it did owe a duty, it did not breach the duty because its conduct was reasonable. The court denied the towing company’s motion for summary judgment on this claim, finding that a reasonable jury could conclude the towing company undertook a duty to recover the trailer, that damage to the cargo was foreseeable, and that the towing company did not exercise reasonable care by attempting to remove the carpet with a pole hyster as opposed to a track hoe. As to the breach of contract claim, the court found that a reasonable jury could conclude that the motor carrier entered into an oral contract with the towing company to remove all carpet from the trailer without causing damage to the carpet and that the towing company breached the agreement by damaging the carpet. Thus, the court denied the towing company’s motion for summary judgment.

COVERAGE

Great West Cas. Co. v. Nationwide Agribusiness Ins. Co., 2024 WL 98402, No. 23 C 2178 (N.D. Ill. Jan. 9, 2024). In this coverage matter involving two insurers, the court entered a declaratory judgment, finding both insurers were excess insurers and allocating costs and liability on a pro rata basis. The matter was filed following a fatal collision between a commercial vehicle and a passenger vehicle. The commercial driver’s employer, DFS, owned the tractor and leased it to a related entity, DFT2. The trailer was owned by an unrelated entity, Conserv, and also leased to DFT2. The driver of the passenger vehicle died after the DFS driver allegedly failed to stop at a stop sign. Great West provided liability insurance to DFT2, and Nationwide provided liability insurance to Conserv. Both Great West and Nationwide agreed that, based on the language of the Nationwide policy, Nationwide’s coverage was “excess” insurance, as the covered auto, the trailer, was connected to another vehicle, the tractor, which Conserv did not own. The dispute arose as to the extent of Great West’s coverage. Under the Great West policy, which was governed under Illinois law, a “covered ‘auto’” was one “hired or borrowed by [DFT2] from another ‘motor carrier.’” Additionally, Great West provided primary coverage for a covered auto for a “written agreement between the other ‘motor carrier’ as the lessor and [DFT2] as the lessee [if the agreement] does not require the lessor to hold [DFT2] harmless, and then only while the covered ‘auto’ is used exclusively in [DFT2’s] business as a ’motor carrier’ for hire.” However, Great West’s coverage would be excess, and not primary, for “any other collectible insurance if a written agreement between the other ‘motor carrier’ as the lessor and [DFT2] as the lessee require the lessor to hold [DFT2] harmless.” Additionally, the policy provided that Great West would provide “primary insurance for any covered ‘auto’ [DFT2] own[s] and excess insurance for any covered ‘auto’ [DFT2] do[es] not own.”  First, the court determined that the tractor was a covered auto under the Great West Policy, as it was hired or borrowed by DFT2 from “another motor carrier”—DFS.  The court found the language “hired or borrowed” broad enough to encompass the leasing of the tractor. The court also rejected the argument that “borrowed” did not equate to “leased” dismissing the argument that something “borrowed” did not have to be repaid. Nationwide and the passenger vehicle driver’s estate also argued that DFS was not a “motor carrier” within the meaning of the Great West policy because it did not meet the USDOT definition of a motor carrier. The court rejected this argument as well, finding that the Great West Policy itself defined a motor carrier as “a person or organization providing transportation by ‘auto’ in the furtherance of a commercial enterprise” and that DFS met this definition. Next, the court concluded that Great West’s coverage was excess, not primary, because there was a hold harmless agreement between DFS and DFT2 within the lease between the parties. Specifically, DFS was required to “defend, indemnify, and hold [DFT2] harmless from and against any and all injuries (including death), claims . . .” The court also rejected the argument that an interchange agreement between Conserv and DFT2 constituted an “insured contract” under the Great West Policy requiring it to provide primary coverage, as any liability that DFT2 assumed under the interchange agreement would be its own liability, not another entity’s liability. Finding that both Great West and Nationwide provided excess coverage for the incident, the court next determined that Great West’s coverage was not “super excess” coverage beyond Nationwide’s, rather that both insurers provided joint excess coverage. In splitting costs, the court looked to a portion of the Great West Policy which provided that Great West’s share of coverage “is the proportion that the Limit of Insurance of our Coverage Form bears to the total of the limits of all the Coverage Forms, policies and self-insurance covering on the same basis.” The Nationwide Policy stated exactly the same thing. Because Great West’s limit was $1 million and Nationwide’s was $2 million, the court determined the two insurers had to split costs and liability proportionately to these respective limits.

Rice v. Doe, 2024 W: 255510, App. Case No. 2021-000894 (S.C. Jan. 24, 2024).  In this appeal involving South Carolina’s “witness affidavit” requirement to file a Uninsured Motorist claim in a John Doe/ “phantom driver” situation, the Supreme Court of South Carolina held the witness affidavit is not a “condition precedent” to filing suit, and the record can later be supplemented with the affidavit following the initiation of litigation, provided the affidavit is “provided promptly upon request.”  S.C. Code 38-77-170 provides “there is no right of action or recovery under the uninsured motorist provision, unless … (2) the injury or damage was caused by physical contact with the unknown vehicle, or the accident must have been witnessed by someone other than the owner or operator of the insured vehicle ….” In cases in which there was no “physical contact with the unknown vehicle” subsection 38-77-170(2) requires a “witness must sign an affidavit attesting to the truth of the facts of the accident . . . . .”  When the tort plaintiff initially filed suit, the witness affidavit was not attached to the Complaint and it appears had not otherwise been produced to the putative UM insurer or its counsel.  The day after the putative UM insurer filed its responsive pleading, which included a motion to dismiss for failure to comply with the requirements of 38-77-170, the tort plaintiff’s counsel produced the affidavit.  In addressing the question, the South Carolina Supreme Court focused upon the express language of the statute, noting “[t]here is no requirement in this language or otherwise that the witness affidavit be filed at the same time the action is filed.”  With the foregoing said, the court cautioned future litigants from gamesmanship with respect to the affidavit, indicating “[c]ertainly, a John Doe defendant or the relevant insurer is entitled to have the affidavit produced promptly upon request. Our courts will not countenance the use of delay in producing the affidavit as an element of strategy. If a defendant or an insurer requests the affidavit in discovery or otherwise, and if the plaintiff does not provide the affidavit promptly, the defendant or insurer may seek relief through Rule 37(a) of the Rules of Civil Procedure (motion to compel) or, if necessary, even Rule 56(c) (motion for summary judgment).” The decision also included some clarification on what constitutes a “final order” under South Carolina’s system of “rotating judges.” 

WORKERS COMPENSATION

No cases of note to report this month.

CAB Bits & Pieces January 2024

Hello and Happy New Year Everyone! 

Hopefully you all had the opportunity to relax, enjoy family and friends, and recharge as we closed out 2023. I know the CAB team is ready to take on 2024 with you!  

The end of one year and the beginning of another gives us the chance to keep moving forward and to continue supporting our client base. Please keep the ideas coming for platform enhancements and data requests. On that note, see the upcoming webinars for recent enhancements and additions to the system. Remember, we can also help streamline your processes with automation through our integration and API capabilities. 

Best wishes for a great 2024!

Chad Krueger and Pam Jones

CAB Live Training Sessions

Tuesday, January 9th | 12p EST – CAB Program New Offerings and Enhancements

Join us for a recap of various updates we’ve made to the system over the last year like Express Reports, Salesforce integrations, and API capabilities. Plus, hear the advancements we’ve made on the MC Advantage platform. We will also cover CAB’s response to FMCSA’s MFA, multi-factor authentication.

Tuesday, January 16th | 12p EST – New Heat Map

We recently released a new heat map on the CAB Report’s Radius of Operations. This webinar will cover details of this new mapping feature.

To register for the webinars, sign into your CAB account. Then click live training at the top of the page to access the webinar registration.

Explore all of our previously recorded live webinar sessions in our webinar library.

Follow us on the CAB LinkedIn page and Facebook.

FMCSA Adding Multi-Factor Authentication

FMCSA is implementing more stringent security protocol by adding multi-factor authentication. We saw the change in late December ahead of the originally released January 1 effective date.

The FMCSA shared that users will no longer have access to SMS, System Measurement System, with their FMCSA Portal user ID & password or US DOT number & PIN.

Users will need to set up a Login.gov account. Set-up steps can be found on the Agency website at FMCSA website, along with additional details.  

CAB has developed a streamlined solution to continue supporting motor carrier analytics that integrates directly with login.gov.

The CAB team is here to help! Reach out to us here and we will help you through this transition.

CAB’s Tips & Tricks

SALES Lead Generation Tool

Our SALES tool allows users to search the U.S. (and Canadian motor carriers operating in U.S.) universe of motor carriers including or excluding specific filters to support your growth initiatives.

There are sometimes little nuances missed when utilizing different systems. It appears that is the one of those cases is within the SALES tool.

Users have the option to use the keyboard’s up and down keys can get a search dialed in tighter than the quantity sliders can. While any of the sliders are “active” by clicking on it, use keystrokes to get to the desired number if the sliders aren’t getting the count you want.

screenshot of SALES tool interface

Not a SALES user today? Reach out to learn more. You can also view our previous demo on this tool.

THIS MONTH WE REPORT

CVSA Urges Launch of Beyond Compliance Safety Program. The Commercial Vehicle Safety Alliance is asking the Federal Motor Carrier Safety Administration to move forward on Beyond Compliance. The passage of the Fixing America’s Surface Transportation (FAST) Act in late 2015 outlined the Beyond Compliance program and required FMCSA to establish the program within 18 months. Read more… 

CARB extends reporting deadline for Clean Truck Check emissions program. The California Air Resources Board is extending the Clean Truck Check reporting deadline to Jan. 31 to allow vehicle owners additional time to complete their initial fleet reporting and pay the $30 2023 compliance fee. Read more… 

California and Washington Meal and Rest Break Rules: Petitions for Waiver of Preemption Determinations. FMCSA requests comments on petitions requesting waivers of the Agency’s decisions preempting the State of California’s Meal and Rest Break and decision preempting the State of Washington’s MRB rules for certain drivers of property-carrying CMVs. Read more… 

Trucking bankruptcies expected to continue in the foreseeable future. The Yellow bankruptcy is widely known, but it isn’t the only carrier that has closed its doors recently, and it won’t be the last. Industry bankruptcy experts say financial distress at the hands of multiple factors has caused an uptick in bankruptcy cases among trucking and logistics companies of all sizes. Read more… 

Fines for FMCSA regs violations increased. The Department of Transportation on Thursday published a final rule announcing increased fines for its agencies, including the Federal Motor Carrier Safety Administration. The new fines were calculated according to the YOY difference in the Consumer Price Index for All Urban Consumers—that percentage change is 1.03241. Read more… 

Truck parking issue ‘circling the lot’ in DC as some states pick up the reins. A lack of adequate, safe truck parking hangs over the trucking industry like a dark, rain-soaked cloud that just won’t give way to sunny skies. “The trucking industry must continue to send this message to the nation: There simply are not enough parking spaces for big rigs,” Dave Heller, SVP for the Truckload Carriers Association. Read more… 

Into the Surge in High-Stakes Verdicts: A Deep Dive Into Nuclear Verdicts. In recent years, the insurance industry has been grappling with a growing concern: the surge in what is now termed “nuclear verdicts.”  These verdicts are particularly high jury awards that exceed a “reasonable amount” that judges would normally award based on precedent. Read more… 

January 2024 CAB Case Summaries
These case summaries are prepared by Robert “Rocky” C. Rogers, a Partner at Moseley Marcinack Law Group LLP.

AUTO

Landry v. Nat’l Union Fire Ins. Co. of Pittsburgh, et al, 2023 WL 8615799, C.A. No. 22-593 (La.App. 5 Cir., Dec. 13, 2023). In this personal injury action, a trucking company (CEVA) and its driver (Rodney) appealed a verdict awarding the plaintiff $10 million in exemplary damages against Rodney and vicariously imposing the damages award on CEVA. The Louisiana Court of Appeal reversed, reducing the award of exemplary damages to $1.5 million and reversing the imposition of vicarious liability for the exemplary damages to CEVA. The jury reached its decision in the trial, finding that Rodney was at fault for colliding with the plaintiff, that he was intoxicated while operating the commercial vehicle, that he acted with wanton or reckless disregard for the rights and safety of others, and that CEVA contributed to or could have prevented Rodney from driving while impaired. The jury awarded $2,468,784.65 in compensatory damages and $10 million in exemplary damages. CEVA and Rodney moved for a judgment notwithstanding the judgment as to the exemplary damages award, but the trial court found that it was appropriate and did not shock the conscience. On appeal, the appellate court found that CEVA had thoroughly vetted Rodney prior to his hiring in accordance with applicable FMCSRs, that Rodney did not have any drug or alcohol related incidents during his time driving for CEVA, that Rodney did not disclose the use of certain drugs to CEVA, and that Rodney had escalating personal problems in the immediate weeks leading up to the accident.  Rodney did fail a field sobriety test following the accident and tested positive for Xanax, Paxil, and cocaine. However, CEVA argued that it could not be vicariously liable for the exemplary damages award, that the plaintiff’s counsel’s remarks to the jury were inflammatory, and that the jury’s finding that CEVA contributed to or might have prevented Rodney from driving while intoxicated was without evidentiary support. The appellate court found that Rodney acted with wanton and reckless disregard based upon his impairment while driving the commercial vehicle. It also found that the plaintiff’s counsel’s remarks were not inflammatory as to Rodney. However, it found that the trial court’s jury instructions regarding vicarious liability for exemplary damages were erroneous and that the plaintiff’s counsel’s remarks to the jury, which appealed to elicited prejudice against trucking companies like CEVA, were prejudicial to CEVA. The court further found that there was no evidence that CEVA contributed to or could have prevented Rodney from driving while impaired, as it did not have any knowledge of his immediate drug usage and, thus, the imposition of vicarious liability for the exemplary damages award against CEVA was not warranted. Finally, the court reduced the exemplary damages award against Rodney from $10 million to $1.5 million after considering the reprehensibility of the conduct, the ratio of the exemplary damages to the actual or potential damages, the potential penalties for comparable misconduct, and the wealth of the defendant.

Scott v. Waste Connections US, Inc., 2023 WL 8628333, C.A. No. 3:23-cv-00142 (W.D.N.C. Dec. 13, 2023). In this personal injury action arising from an accident involving a train and a garbage truck, the court addressed a motion to compel filed by the plaintiff seeking production of four years’ worth of the defendant motor carrier’s accident registers.  The motor carrier argued the registers were subject to statutory privilege under 49 C.F.R. § 504(f).  In addressing the dispute, the court found 49 C.F.R. § 390.15 requires motor carriers to maintain an accident register for 3 years following an accident. The court then examined the language of 49 U.S.C. § 504(f), which provides that “[n]o part of a report of an accident occurring in operations of a motor carrier, motor carrier of migrant workers, or motor private carrier . . . and no part of a report of an investigation of the accident . . . may be admitted into evidence or used in a civil action for damages related to a matter mentioned in the report or investigation.” In reading this statutory provision in conjunction with court rulings across the country, the court determined that the defendants did not have to produce the accident register, as the statute disallowed not only the admission of the accident register but also any “use” of the register in a civil action. The court also declined to compel production of any documents used by the defendants to support their affirmative defenses, finding that such production would invade defense counsel’s mental impressions and work product protection.

Blackburn v. Right Way Auto Transp., Inc., et al, 2023 WL 9051263, C.A. No. 1:23-cv-250 (E.D. Tex. Dec. 29, 2023). In this personal injury action arising from a motor vehicle collision between a tractor-trailer, a cargo van, and several passenger vehicles, the Texas District Court denied the Plaintiff’s motion to remand the case back to state court, finding that one of the defendants was improperly joined solely to defeat federal court diversity jurisdiction. The plaintiff alleged that she and her minor child were passengers in a Honda CR-V which was struck by a Right Way tractor-trailer driver. The CR-V then moved to an inside lane and struck a Ford F-150. The plaintiff filed suit against Right Way, the Right Way driver, and the CR-V driver. The plaintiff and the CR-V driver were both citizens of Louisiana while the Right Way driver and Right Way were citizens of a different state. Right Way removed the case from Texas state court to Texas federal court, but the plaintiff moved to remand the case back to state court on the ground that the parties were not completely diverse. Right Way opposed the remand, arguing the CR-V driver could not be deemed liable for the accident. The court found that the only allegation against the CR-V driver was that he “moved” to the inside lane and struck the Ford F-150 after first being struck by the tractor-trailer. The court also considered the dashcam video from the tractor-trailer and found that it was only the impact from the tractor-trailer that caused the CR-V to collide with the F-150. Thus, the court found the undisputed evidence supported the conclusion that the CR-V driver was not negligent, dismissed him from the suit, and denied the plaintiff’s motion to remand the case back to state court.

BROKER

Tischauser v. Donnelly Transp., Inc., 2023 U.S. Dist. LEXIS 215815, Nos. 20-C-1291; 20-C-1917; 21-C-220; 21-C-965; 23-C-538; 23-C-539; 23-C-556 (E.D. Wis. Dec. 5, 2023). In this action arising out of a motor vehicle accident, Defendants moved to dismiss claims of (1) negligent selection/hiring, training or supervision; (2) agency/vicarious liability; (3) joint enterprise/venture; and (4) loss of consortium on the grounds that these claims are preempted by the Federal Aviation Administration Authorization Act (FAAAA). In its opinion, the Wisconsin Eastern District Court applied the recent Seventh Circuit case, Ye v. GlobalTranz Enterprises, Inc., 74 F.4th 453 (7th Cir. 2023), which held that the FAAAA, specifically 49 U.S.C. § 14501(c), preempted a claim against a freight broker to recover for negligent hiring of a motor vehicle carrier whose employee was driving a truck involved in an accident that resulted in the death of the plaintiff’s husband. In Ye, the Seventh Circuit found that state tort law governing negligence actions against brokers is preempted by the FAAAA because those laws significantly impact the price and cost, as well as the regulation, of interstate trucking and interstate transportation. The court stressed that the party seeking to establish preemption must show both that a state enacted or attempted to enforce a law and that the state law relates to broker rates, routes, or services either by expressly referring to them, or by having a significant economic effect on them. Ye only involved negligent hiring and vicarious liability claims under Illinois’ common law brought against a broker. In contrast, the instant case involved various Wisconsin common law tort law claims against a broker including negligent hiring and vicarious liability claims as well as tort claims for joint enterprise/venture. Nonetheless, the Court found that, like the negligent hiring claim in Ye, each claim here would have a significant economic effect on broker services. Therefore, the claims were held to be preempted by the FAAAA and the district court granted Defendant’s Motion to Dismiss.

Allen v. Foxway Transp., Inc., 2023 WL 8478015, No. 4:21-cv-00156 (M.D. Pa. Dec. 7, 2023). The District Court granted and denied, in part, competing motions for summary judgment in this action instituted by the Estate of two deceased children against a motor carrier, a broker, and a shipper following a motor vehicle accident. The accident involved the mother of the two children hitting a deer, resulting in the disabling of their vehicle in front of the path of a tractor trailer driven by an employee of Foxway, the carrier. Gateway, a broker, had retained Foxway to deliver a shipment for Tempel Steel, the shipper. Tragically, the two children were killed, and the plaintiff, the administrator of the children’s estate, sought to hold Foxway, Gateway, and Tempel Steel liable. In alleging liability against Gateway as the broker, the plaintiff brought causes of action for vicarious liability for the actions of Foxway; claims for negligent hiring, supervision, retention, selection, and entrustment; joint venture liability; and claims under Pennsylvania’s wrongful death and survival statutes. The plaintiff moved for summary judgment asking the court to find that there was no question that Gateway should be held liable under the vicarious liability and negligent hiring claims, and Gateway moved for summary judgment seeking dismissal of all claims against it. The court held that the threshold matter was whether Foxway’s driver was liable for the accident. In response to the court’s directive to file supplemental briefing on that issue, the plaintiffs cited to an undisclosed expert’s opinion, which opined that the Foxway driver reported fog at the time of the accident and that he was operating the Foxway vehicle on cruise control at an “unsafe speed” of 64.5 mph. The court declined to consider the opinion, finding that the plaintiff had failed to timely disclose the expert after repeated warnings for untimely disclosures of other experts. However, the court also found that the record was insufficient to determine whether the conditions present at the time of the accident were severe enough to require the Foxway driver to reduce his speed. Next, turning to the vicarious liability claim, the court considered the plaintiff’s argument that Gateway functioned as the de facto motor carrier and statutory employer of the Foxway driver. The court rejected this argument, finding that Gateway did not promise to personally perform the transport and that it only held itself out to the shipper as a broker. The evidence showed that Gateway did not handle the routing, the packing of the product, or any other portion of the delivery process. The evidence also showed that the shipper, Tempel, knew that Gateway was not delivering the load. Thus, the court denied the plaintiff’s motion for summary judgment as to vicarious liability and granted it as to Gateway. Similarly, the court dismissed the plaintiff’s negligent hiring and selection causes of action since the court found no employee-employer relationship between Gateway and the Foxway driver. The court withheld its ruling on the negligent entrustment cause of action pending the parties’ briefings on their competing experts. Finally, the court dismissed the joint venture claim on the ground that the plaintiff failed to offer any material facts to show that Gateway entered into a joint venture with Foxway and Tempel Steel concerning the Foxway driver and the subject shipment involved in the accident.

Nilles v. DS1 Logistics, Inc., et al, 2023 WL 8718070, No. 2:22-cv-54 (N.D. Ind. Dec. 18, 2023). In this action instituted by the estate of a deceased motorcyclist who was involved in a collision with a tractor trailer, the Indiana District Court dismissed the broker, C.H. Robinson Worldwide (CHRW), from the suit. The motorcyclist was killed following a collision with a tractor-trailer operated by a driver for DS1, the motor carrier. Amazon contracted with CHRW to ship freight, and CHRW subsequently brokered the freight to DS1. The plaintiff alleged that CHRW, by virtue of its contract with Amazon, was vicariously liable for the alleged negligence of DS1 and DS1’s driver and alleged certain claims based in negligence against CHRW. CHRW moved to dismiss, arguing that the plaintiff failed to show that it was liable for the acts and omissions of an independent contractor. The plaintiff argued that she was invoking an exception to the rule where the principal is charged by law or contract with performing a specific nondelegable duty to third party motorists based on CHRW’s contract with Amazon. The plaintiff cited to one provision in the contract in which CHRW agreed to “remain responsible for the full performance of the Services” rendered and another portion in which CHRW agreed to perform “Services” in a professional, competent, and workmanlike manner to comply with all federal, state, and local laws, rules, and regulations. Thus, the plaintiff argued that, because CHRW was contractually charged with performing specific duties, it had a nondelegable duty with respect to liability for DS1 and its driver. The court disagreed, finding that the contractual provisions were silent as to safety, third party motorists, or personal injury accidents. Moreover, none of the provisions provided that CHRW was responsible for the acts and omissions of its independent contractors. Therefore, the court found that the plaintiff had not alleged a viable cause of action for vicarious liability against CHRW and dismissed CHRW from the suit.

CARGO

United Granite & Quartz, Inc. v. Emuro Transp., LLC, 2023 U.S. Dist. LEXIS 228662, C.A. No. 23-01673 (D.N.J. Dec. 22, 2023).  In this case, a tractor trailer flipped over onto its side and destroyed a load of marble slabs. Plaintiff asserted eight causes of action, including liability under the Carmack Amendment against Total Quality Logistics, LLC (“TQL”), alleging that TQL held itself out as a “carrier.” After removal to federal court, the New Jersey District Court highlighted that the Carmack Amendment differentiates between motor carriers and brokers, and only imposes liability on carriers. To determine whether a party acted as a carrier or broker, courts look to whether the party has legally bound itself to transport goods by accepting responsibility for ensuring the delivery of the goods regardless of whether it conducted the physical transportation. Despite initially maintaining that TQL was a motor carrier, Plaintiff later conceded to TQL being identified as a broker, therefore abandoning its Carmack Amendment claim. After abandoning this claim, the district court found that there was no federal jurisdiction and remanded the case to state court for further proceedings.

Jeanty v. Antillean Marine Shipping, Corp., 2023 U.S. Dist. LEXIS 218594, No. 22-cv-23721 (S.D. Fla. Dec. 8, 2023).  This matter arises from a failed shipment of goods from Florida to Haiti.  The plaintiff hired defendant, an ocean carrier, to transport a Mack truck from Florida to Haiti.  Defendant took possession of the truck in Florida, but it was never delivered to Haiti.  The plaintiff initially filed a six-count complaint alleging state law causes of action in Florida state court.  Thereafter, defendant removed the action to federal court contending that COGSA applied to the shipment, COGSA preempted all state law causes of action, and accordingly COGSA provided federal question jurisdiction for the dispute.  Initially the plaintiff did not contest the removal because he was under the impression the truck was lost in transit.  However, in discovery it was determined the truck was sold by defendant prior to it ever being loaded onto the ship; defendant contended the necessary title paperwork was not provided for it to be shipped and it sold the truck after it remained on the lot for approximately a year.  It was undisputed that no bill of lading was issued for the shipment of the truck because it was never formally processed for export shipment due to the title and/or payment issues.  Rather, only a dock receipt/warehouse receipt was provided by defendant when the truck was delivered to it in Florida.  Upon discovering that the truck was never shipped, the plaintiff filed a motion to remand arguing COGSA did not apply and therefore did not provide federal question jurisdiction to support federal subject matter jurisdiction over the dispute.  In response, defendant argued the standard terms and conditions contained in its form bill of lading, including a Clause Paramount extending COGSA to the entirety of the shipment, applied to the shipment, even though no bill of lading was issued in this instance.  It pointed to language in the dock receipt/warehouse receipt indicating that the shipment was “subject to the terms and conditions contained in the Carrier’s regular form Bill of Lading and Tariff.”  Working from the operative pleading the court found it was alleged there was a contract for the shipment of the truck from Florida to Haiti.  As for application of COGSA, the court stressed it normally only applies “tackle to tackle” but can be extended by agreement of the parties to the shipping contract.  The court then found that by accepting the dock receipt/warehouse receipt, which incorporated the defendant’s standard form bill of lading containing a Clause Paramount extending COGSA beyond “tackle to tackle” and to the entirety of the shipment, COGSA ultimately applied to the dispute and granted the federal court jurisdiction over the matter.  The court cited prior rulings holding that the ocean carrier’s standard form bill of lading would apply to shipments, even where a bill of lading was never issued, finding such a rule was “well-settled” within the Eleventh Circuit Court of Appeals.

Godoy v. Total Quality Logistics, LLC, 2023 Ohio App. LEXIS 4419, 2023-Ohio-4585 (Ct. App. Dec. 18, 2023). In this instance, a trucking company (“Carrier”) contracted with a shipping broker (“Broker”) to transport cargo. Per the broker-carrier agreement, Carrier assumed full responsibility and liability for the cargo until the trailer is unloaded. Broker brokered a load of ice cream to be transported by the Carrier, but the load was ultimately rejected in full by the consignee because the temperature in the trailer was too high. The appellate court agreed with the lower court that Broker was entitled to summary judgment on its breach of contract claim and an award of damages because per the terms of the broker-carrier agreement, Carrier was entirely and solely responsible for the ice cream until the Carrier successfully delivered it to the store, which it did not.  The broker-carrier agreement further required Carrier to indemnify Broker for any loss or damage claims arising from shipments subject to the broker-carrier agreement.  The Court also found that Broker was entitled to summary judgment on Carrier’s breach of contract claim for nonpayment because it found Broker, under the terms of the broker-carrier agreement, properly offset the amount that it was entitled to under the indemnification provision with amounts that it owed Carrier for prior transportation services.

Certain Interested Underwriters at Lloyd’s v. Total Quality Logistics, LLC, 2023 Ohio App. LEXIS 4287, 2023-Ohio-4470 (Ct. App. Dec. 11, 2023).  In this action arising from a stolen shipment of electronics, the appellate court affirmed the lower court’s grant of summary judgment to the freight broker involved in the shipment.  Outlook contracted with TQL for TQL to broker shipments of Outlook’s goods for transportation by motor carrier from Florida to New Jersey.  The written Outlook-TQL Agreement specifically provided, amongst other things: (1) TQL is a transportation broker only, said role being limited to arranging the transportation of freight by an independent third-party motor carrier; (2) in the event of cargo loss or damage, Outlook must file a claim for the loss with TQL within 9 months of the date of delivery or scheduled delivery date in the case of non-delivery; and (3) motor carriers under contract with TQL are required to maintain $100,000 in cargo loss and damage liability insurance per shipment, that Outlook would not tender any load to TQL having a value of greater than $100,000 without first affording TQL or the motor carrier the opportunity to procure higher cargo loss and liability damage coverage, and failure to provide advance, written notice of excess value will result in loads not being insured beyond $100,000.  In connection with this particular shipment, TQL contracted with “Safe Connection”, a motor carrier to perform the transportation, but the goods were stolen in transit.  Outlook and its insurer, Lloyds, made demand upon TQL for the value of the stolen goods, which TQL rejected.  Outlook/Lloyds thereafter filed suit against TQL for breach of contract, alleging TQL failed to:  (1) arrange for transportation and delivery of the shipment “by a motor carrier authorized to perform the transportation at issue,” (2) contract “with a motor carrier maintaining cargo loss and damage liability insurance,” (3) “adequately arrange for delivery” of the electronics shipment to New Jersey as designated by Outlook, and (4) “pay the Claim amount” to Outlook.  In addressing these claims, the appellate court first held the Outlook-TQL Agreement contained no requirement that TQL select an “authorized motor carrier.”  Rather, that portion of the Outlook-TQL Agreement was held to merely place Outlook on notice that TQL was merely acting as a broker.  The court refused to graft the definition of broker under 49 C.F.R. § 371.2(a), defining “broker” as “one who hires authorized motor carriers”, into the Outlook-TQL Agreement.  The court next held that the Outlook-TQL Agreement placed no requirement upon TQL to ensure motor carriers with whom it contracted had cargo loss and damage insurance.  Rather, the court found those provisions of the Outlook-TQL Agreement instead focused on Outlook’s, not TQL’s, obligations.  The court found nowhere in that portion of the Outlook-TQL Agreement did TQL take on responsibility for procuring or ensuring the procurement of cargo insurance.  The court, citing reasoning by the lower court, found Outlook/Lloyds did not attempt to argue they were a third-party beneficiary to the contracts between TQL and the independent contractor motor carriers, which presumably required the motor carriers to obtain and maintain $100,000 in cargo loss and damage coverage.  Last, the court found there was nothing in the Outlook-TQL Agreement requiring TQL to pay a claim.  Rather, it merely provided that if TQL elected to pay a claim, it would be assigned all Outlook’s rights to pursue any other party in connection with the paid amounts.  Thus, the court affirmed the lower court’s grant of summary judgment in favor of TQL. 

Coverage

BITCO Gen. Ins. Corp. v. Smith, 2023 WL 8884984, No. 23-1043 (8th Cir. Dec. 26, 2023). In this appeal of a summary judgment finding that the insurer had no duty to defend or indemnify a trucking company or a dump truck driver, the Eighth Circuit Court of Appeals affirmed the lower court’s ruling. The ruling involved the question of whether BITCO, the insurer, was obligated to provide coverage for damages arising from an accident involving a truck driven by a contractor of the insured, KAT. Ultimately, the court upheld the lower court’s ruling that the insurer had no such obligation on the basis that the insured did not hire its contractor’s dump truck driver for purposes of the policy. KAT contracted with CWC, a separate company, to help haul rock to a job site. CWC then contacted a former driver to assist with hauling the rock. The former driver was then involved in an accident while hauling a load of rocks. The insurer filed a declaratory judgment, arguing it had no duty to defend or indemnify CWC or the former driver under KAT’s policy. CWC and the former driver counterclaimed, arguing the insurer was obligated to provide a defense and indemnity under the omnibus clause of the policy. The omnibus clause provided that an insured was “anyone else . . . using with KAT’s permission a covered ‘auto’ KAT owns, hires, or borrows” and provided coverage for “anyone liable for the conduct of an insured.” CWC and the driver argued that the undefined terms “permission” and “hire” were ambiguous, meaning Missouri law required a finding in favor of coverage. The district court disagreed, finding that the term “hire” required KAT to exercise control over the driver’s dump truck and that there was no evidence to support such a finding. In reviewing the ruling, the Eighth Circuit looked to Missouri law, which forbid it from reading any one policy term in isolation from another to create an ambiguity. Here, the court found that the term “hire” was not ambiguous when read in conjunction with the term “permission.” Thus, the term “hire,” as written in the omnibus clause and as read in conjunction with the term “permission,” necessitated some element of control, and, because KAT did not drive or operate the truck, dictate the truck’s route, speed, or any other aspect of its operation, KAT did not control the CWC truck. Because CWC, not KAT, exercised exclusive control over the dump truck, the insurer was not obligated to provide a defense or indemnity.

WORKERS COMPENSATION

Ayala v. Fundamental Labor Strategies, Inc., 2024 WL 13572, No. 1037 C.D. 2022 (Pa. Commw. Ct. Jan. 2, 2024). In this appeal from the Pennsylvania Workers’ Compensation Appeal Board’s review of a workers’ compensation judge’s ruling, the Commonwealth Court of Pennsylvania affirmed the Board’s holding that the claimant was an independent contractor and, therefore, not entitled to workers’ compensation benefits. The claimant, a commercial truck driver, worked for Fundamental Labor Strategies (“FLS”) from 2019 to 2020. The claimant filed a petition seeking workers compensation benefits, alleging he was injured during the course and scope of his employment when he was unloading a window. He then filed a petition for sanctions against FLS, alleging it had failed to file documents accepting or rejecting liability for his work injury. FLS later filed an answer denying it had an employment relationship with the claimant. The claimant testified that FLS was not a motor carrier, that it sent him different driving assignments, and initially said he was permitted to accept or reject assignments from FLS before later stating he did not feel he could decline an assignment. He testified he drove trucks owned by clients and received instructions from a separate entity that was a motor carrier. The claimant admitted he signed an independent contractor agreement and that he was responsible for paying his own taxes. The president of FLS testified that FLS was a broker offering dedicated driver services which private motor carriers used to haul their own goods. The FLS president also testified that FLS offered flex driver brokerage service, matching motor carriers with short term needs for drivers with drivers who wanted to work short-term gigs. The president testified that the claimant was a flex driver receiving flex assignments. Flex drivers like the claimant had to provide proof that they were insured, had the ability to accept or reject loads, and had no repercussions for rejecting assignments. Reviewing the totality of the record, the Workers’ Compensation Judge found that the claimant was an independent contractor and, thus, not entitled to workers’ compensation benefits from FLS. The claimant appealed, arguing that FLS exercised control over his work. The appeal board affirmed the workers’ compensation judge’s ruling, finding that the evidence supported the conclusion that the claimant was an independent contractor because he signed an occupational accident insurance form, did not drive FLS trucks, was not required to wear an FLS uniform, and controlled his own routes and start and end times. The Commonwealth Court agreed, affirming the rulings of the judge and appeal board.

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