Hello, and welcome to the unofficial start of summer!

Hopefully everyone had a restful and reflective few days over the Memorial Day weekend. Memorial Day gives us the opportunity to recognize our military personnel that gave their lives in service to our country for our freedoms. Let’s always keep our veterans and active military personnel top of mind.

Other interesting happenings: Pam recently attended FMCSA’s Our Roads Our Safety^® Week during the open house at the USDOT office in Washington DC. If you have any seat belt naysayers in your life, share the video from CAB’s LinkedIn post on her “seat belt convincer” experience.

Chad Krueger and Pam Jones

Events

CVSA, Commercial Vehicle Safety Alliance’s Operation Safe Driver Week is right around the corner focusing on reckless, careless, or dangerous driving. July 7 – 13 law enforcement in Canada, Mexico, and the U.S. will be on a more heightened awareness for both passenger vehicle drivers and CMV drivers engaging in unsafe behaviors.

CAB Live Training Sessions

Due to travel and PTO schedules we have only one session this month.

Tuesday, June 18^th | 12p EST

BASICs Calculator | Chad Krueger 

Expand your transportation safety expertise and help your clients & prospects understand the behaviors driving their BASICs and ISS values.

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

As you may already be familiar with, FMCSA implemented multi-factor authentication, MFA. MFA is a crucial feature we all experience if we do any kind of online business activity. Think of your banking, investment, utilities, travel, and all other kinds of online service transactions. CAB has added a link within our platform to replace the fleet’s ability to connect their driver data to our system. See the images below for login examples. 

THIS MONTH WE REPORT

Commercial P/C Premiums Increase 7.7% in Q1 2024 The Council of Insurance Agents and Brokers reported that commercial property/casualty premiums rose by 7.7% on average in the first quarter of 2024. This marks the 26th consecutive quarter of increases. Read more…

Fleets’ earnings in the first quarter reveals market keeps getting weaker The first quarter of 2024 showed a continuing decline in the freight market with soft rates, low volume, and challenging weather impacting carriers. While some carriers like XPO exceeded expectations, others like Knight-Swift and Heartland Express faced significant losses. Read more…

Cyberattacks Over Work Email Most Used; Ransomware Hits Victims Hard A survey by Arctic Wolf reveals that business email compromise is now the leading method of cyberattack, with 70% of senior IT and cybersecurity decision-makers reporting attempts. Ransomware remains a primary concern, with 45% experiencing attacks in the past year. Read more…

Broker group takes on trucking’s crime epidemic, double brokers The Transportation Intermediaries Association (TIA) is leading an industry-wide fight against freight fraud, highlighting a 600% increase in freight fraud incidents. Their new 40-page “Framework to Combat Fraud” outlines five types of theft and preventive measures. Read more…

Marijuana rules and regs changing? What truckers need to know President Biden’s administration is pushing to reschedule marijuana to a Schedule III controlled substance. This move would acknowledge marijuana’s medical value and reduce its abuse potential. However, changes in marijuana policy for the trucking industry are not imminent. Read more…

Trailer orders indicate a ‘year of transition,’ forecast affected by overcapacity April trailer orders remained steady at 13,700 units, up 20% year-over-year, per ACT Research. Despite this, low trucking profitability and overcapacity challenge growth. ACT anticipates improved fleet profitability later this year, though investments might shift to new power units ahead of EPA’s 2027 regulations. Read more…

Surge of cargo theft is ‘hitting us like lightning,’ experts say Cargo theft rose by over 46% in Q1 2024, with incidents totaling 925 and an average stolen shipment value of $281,757. Fraud and forgery are common methods, impacting various commodities. Read more…

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

AUTO

Reeves v. Hertz et al., 2024 La. App. LEXIS 882, C.A. No. 23-494 (La. Ct. App. May 22, 2024).  In this appeal arising from a chain-reaction accident, the Louisiana appellate court affirmed the trial court’s grant of summary judgment to two sets of motor carrier defendants. The trial court had found neither could have been the cause-in-fact of the plaintiff’s accident. On December 6, 2015, plaintiff Robert Reeves (“Reeves”) was traveling westbound on Interstate 10 in St. Martin Parish on the Atchafalaya Basin bridge. Reeves was driving a tractor trailer. Also traveling westbound on Interstate 10 were the following relevant vehicles: (1) a Ford Expedition driven by Jesus Torres pulling a trailer (“the Torres vehicle”); (2) a tractor trailer driven by Cullen Toole and owned by CTG Leasing (collectively “CTG”); (3) a tractor trailer driven by Owens, owned by Swift Transportation Company of Arizona, L. L. C., and insured by Red Rock Risk Retention Group, Inc. (collectively “Swift”); (4) a tractor trailer driven by Jorge Gonzalez-Puron; (5) a tractor trailer driven by Ronald Huff and owned by Royal Trucking Company; (6) a tractor trailer driven by Jason Bingham and owned by Ashley Distribution Services, Limited; and (7) a tractor trailer driven by Christopher Hertz, owned by Vela Transportation, and insured by Acuity Mutual Insurance Company (collectively “Hertz”). From these vehicles two separate but related motor vehicle accidents occurred. The initial collision (the “CTG collision”), occurred between CTG and the Torres vehicle. CTG was in the right lane of travel behind the Torres vehicle but noticed that the rear wheel of the Torres vehicle had begun wobbling. CTG moved into the left lane, even though tractor trailers are prohibited from using the left lane while moving across the Atchafalaya Basin. Then the rear wheel fell off the Torres vehicle. The loss of the wheel caused the Torres vehicle to lose control, collide with the right bridge railing, swerve into the left lane, and jackknife. This caused a collision between CTG and the Torres vehicle. The Torres vehicle came to rest blocking both westbound lanes of travel. At the time of the first CTG collision Swift, after traveling in the left lane, had returned to the right lane of travel eight to twelve seconds prior to the second collision. Upon seeing the first collision, Swift applied the brakes and came to a complete stop without impacting CTG, the Torres vehicle, or a Volvo that also came to a complete stop behind the CTG collision. Swift was being followed by five tractor trailers driven by Gonzales-Puron, Huff, Bingham, Reeves, and Hertz, respectively. Upon seeing the vehicles in front of them attempt to stop, each driver unsuccessfully attempted to stop. What followed was a series of collisions involving each of the other five tractor trailers, resulting in the Gonzales-Puron vehicle, immediately behind Swift, to be propelled into the rear of the Swift vehicle (the “Swift collision”). 

Reeves filed his petitions for damages and various supplementations, alleging personal injuries, and naming the drivers, employers, and insurers of the four other tractor trailers involved in the second set of collisions, along with the parties involved in the initial collision between Swift and the Torres vehicle. After noting that Swift could effectively “shift the burden” to Reeves to show factual support sufficient to establish the existing of a genuine issue of material fact, the court found that Swift had effectively shifted the burden and Reeves failed to come forward with the necessary factual support for his claim against Swift. The appellate court agreed with the trial court that any chain of events between the initial CTG collision involving CTG and the Torres vehicle and the second collisions, Swift collision, was broken when Swift was able to come to a complete stop in the right lane of travel without impacting any vehicles involved in the initial collision. Reeves’ alleged injuries were the result of a separate, six-vehicle collision. This second collision did not involve either vehicle from the initial collision between CTG and the Torres vehicle. The court found that the evidence established Swift had re-established his vehicle in the right lane of travel for eight to twelve seconds before the second set of collisions, and that the Swift vehicle had come to a complete stop without impacting any other vehicle involved in the initial collision. The court rejected that that the mere statutory violations of Swift speeding and temporarily being in the left lane—where tractor trailers were prohibited—had no bearing on either accident. As such, the court found Reeves could not carry his burden to establish any action by Swift was a cause-in-fact of his injuries. 

With respect to CTG, the court similarly upheld the trial court’s grant of summary judgment on lines very similar to those with respect to Swift. It found any chain of events from the CTG collision and the Swift collision was broken when Swift was able to come to a complete stop in the right lane of travel without impacting any vehicles involved in the initial collision. Reeves’ alleged injuries were the result of the separate, six-vehicle collision. This second six-vehicle collision did not involve either vehicle from the initial collision between CTG and the Torres vehicle. Similarly, Reeves’ reliance on statutory violations by CTG for traveling in the left lane and speeding was deemed insufficient due to the lack of causal relation on the collision and resulting alleged injuries to Reeves, given that the chain of events between the initial collision and the second collision was broken when Swift came to a complete stop without striking any vehicles involved in the initial collision. Accordingly, the appellate court determined Reeves could not carry his burden of proof at trial that CTG’s actions were a cause-in-fact or legal cause of Reeves’ alleged injuries. As such, it affirmed summary judgment in favor of CTG.

Team Indus. Servs. v. Most, 2024 Tex. App. LEXIS 3389, C.A. No. 1-22-00313 (Tex. Ct. App. May 16, 2024). In this appeal, the Court of Appeals of Texas vacated a jury award against a trucking company after the trial. The court made various other rulings not in keeping with the trial court. The appellate court, in sum, held the trial court erred under the Restatement (Second) of Conflict of Laws in applying Texas law instead of Kansas law to hold appellant responsible for 100 percent of the damages, despite the jury’s findings that appellant was ninety percent liable, because Kansas held a more compelling interest than Texas in holding all parties responsible. The appellate court also held appellant was entitled to a forum non conveniens dismissal, as it was unable to subpoena Kansas state regulators to testify about the results of any investigation into the accident. Furthermore, dismissal would not result in unreasonable duplication of litigation, given that it had already been established that the trial court erred in applying Texas law to certain of appellee’s claims. Accordingly, the $222 million verdict in favor of appellee was vacated and the case dismissed on forum non conveniens grounds. 

Gruver v. Montesa Express, Inc. et al., 2024 U.S. Dist. LEXIS 79508, C.A. No. 1:21-cv-1210 (C.D. Ill. May 1, 2024). In this personal injury action arising from a motor vehicle accident, the trial court granted summary judgment on all counts in favor of the owner of a chassis that had been leased to a chassis pool cooperative at the time of the accident. TCW, who moved for summary judgment, is an “asset leasing company and equipment owner” which owned the chassis, or the base frame, attached to the tractor involved in the accident. The chassis (identified as “TCWZ 417132”) was leased as a part of a Master Lease Agreement between TCW and North American Chassis Pool Cooperative (“NACPC”).  The equipment was then placed by NACPC into the Chicago-Ohio Valley Consolidated Chassis Pool LLC (“COCP”) to be used by various motor carriers. Pinoy Trucking signed a Uniform Intermodal Interchange Agreement (“UIIA”) with the chassis pool. Through this agreement, Pinoy Trucking gained access to the chassis and used it to transport a shipping container on the day of the accident. Pinoy Trucking employed Anthony Dunn, who was assigned as the driver of the tractor, which pulled the chassis and container on the day of the accident. Following the accident, the plaintiff filed suit against TCW alleging negligent hiring, entrustment, and maintenance. As for the negligent entrustment claim, under applicable law, the plaintiff was required to show “TCW ‘gave another express or implied permission to use or possess a dangerous article or instrumentality which [defendant] knew, or should have known, would likely be used in a manner involving an unreasonable risk of harm to others.’” The court found that in this instance, the chassis at issue was leased as a part of an agreement to lease over one thousand pieces of equipment to NACPC, which then placed the equipment into a chassis pool.  It found “[t]here are no facts submitted by Plaintiffs that demonstrate TCW was involved with any day-to-day operations concerning the chassis, or that it had any knowledge of who was using it on the day of the accident. The undisputed facts fail to establish that Dunn was an employee, agent, or otherwise in service to TCW. The Court agrees with TCW that no reasonable jury could find it liable for negligent entrustment under these circumstances because there is not enough evidence to support a finding of implied permission.” The court similarly rejected plaintiffs’ argument that TCW had a duty to ensure the motor carriers that were part of the chassis pool had adequate safety records, noting that TCW had no direct contact with any motor carrier prior to the accident and resulting lawsuit. In the court’s view, adopting plaintiff’s version of negligent entrustment would be akin to imposing strict liability. Similarly, the court rejected the plaintiffs’ attempts to allege a common law duty upon TCW to all motorists, as the equipment lessor. The court explained there was no evidence that the chassis itself presented any danger to motorists absent independent, actionable negligence of the driver/motor carrier. It further noted that TCW lacked the ability to control or direct the conduct of Pinoy Trucking and Dunn. As such, there was no basis for a common law duty against TCW. The court also rejected plaintiffs’ attempts to hold TCW liable under the FMCSRs. It found TCW, in the capacity that it operated in this instance, was not a motor carrier subject to the FMCSRs. The court also rejected the plaintiffs’ attempts to hold TCW vicariously liable for the negligence of the other defendants, finding that such was precluded by application of the Graves Amendment. Finally, since the remaining loss of consortium claim against TCW was a derivative claim for which the court already held TCW was entitled to summary judgment, TCW was also entitled to summary judgment on this claim.   

Nevil v. Western Dairy Trans., L.L.C., 2024 U.S. Dist. LEXIS 92518, C.A. No. 4:24-cv-279 (E.D. Tex. May 23, 2024). A motor carrier’s attempts to remove a personal injury action based upon FAAAA preemption and/or federal question jurisdiction was rejected by the Texas federal court. Accordingly, the matter was remanded to state court for further proceedings. The court rejected that FAAAA was complete preemption sufficient to sustain federal jurisdiction and the FAAAA defense did not present a federal question sufficient to establish independent federal question jurisdiction. 

Ubaldo v. F&A Border Transp., LLC, 2024 U.S. Dist. LEXIS 79824, C.A. No. 24-CV-47 (W.D. Tex. May 1, 2024). A freight broker, motor carrier, and CMV driver’s attempts to remove a personal injury action to federal court premised upon FAAAA preemption and/or federal question jurisdiction were rejected and the case was remanded to state court for further proceedings. The court rejected that FAAAA was complete preemption sufficient to sustain federal jurisdiction and the FAAAA defense did not present a federal question sufficient to establish independent federal question jurisdiction. 

Dove v. Gainer, 2024 U.S. Dist. LEXIS 82016, C.A. No. 1:22-cv-00754 (N.D. Ala. May 6, 2024). In this personal injury action arising from a motor vehicle accident, claims of wantonness and negligent training and supervision were dismissed with prejudice. The accident that formed the basis of the suit occurred as a tractor-trailer operated by Gainer was merging onto I-20 when it collided with the plaintiffs’ vehicle. Gainer had been a commercial truck driver for six years at the time of the accident. He had never been cited for a moving violation. He did once damage the driver-side door of a commercial vehicle when the door contacted a fence as he was backing out of a property. Additionally, he had been reprimanded and counseled for driving beyond the hours allowed by the Federal Motor Carrier Safety Administration. However, he was within the hours-of-service limitations at the time of the accident. The court explained that under applicable state law, to hold a defendant liable for “wanton conduct” the plaintiff must establish a “high degree of culpability” and “inattention, thoughtlessness, heedlessness, or lack of due care”, alone, is insufficient.  Rather, “[w]antonness requires proof of ‘the conscious doing of some act or the omission of some duty while knowing of the existing conditions and being conscious that, from doing or omitting to do an act, injury will likely or probably result.’” Under the undisputed facts of this accident, the court held it failed to establish the requisite degree of reprehensibility to sustain a wantonness cause of action and dismissed the wantonness claim with prejudice. 

As for the negligent training and supervision claim, Alabama law required “plaintiff to show an employer knew or should have known its employee was incompetent.” Gainer being at fault for no more than one accident in the six years he had worked as a commercial truck driver was insufficient, in the court’s view. Similarly, the prior HOS violation, was immaterial since it was undisputed he was properly within the HOS at the time of the Accident. The HOS violation, standing alone, did not create a genuine issue of material fact as to Gainer’s competence as a driver.  As such, this claim was also dismissed with prejudice. 

Summerfield v. S.E. Freight Lines, Inc., 2024 Ark. App. 326, 2024 Ark. App. LEXIS 352, C.A. No. CV-23-12 (Ark. Ct. App. May 22, 2024). In this loading dock accident, the Court of Appeals of Arkansas affirmed summary judgment in favor of the motor carrier and its driver. The trial court dismissed with prejudice the plaintiffs’ negligence case against defendants and their negligent hiring, training, and supervision claims against the motor carrier as well as the plaintiffs’ request for punitive and compensatory damages. Plaintiff was employed as a forklift operator by R&R Packaging and was loading and unloading tractor trailers at one of R&R’s warehouses. Williams, the driver of the tractor-trailer on behalf of Southeastern, backed a Southeastern truck up to the R&R warehouse. There was conflicting testimony as to whether Williams set his air brakes, but Williams testified that it was his practice at the warehouse to chock his highway truck’s wheels once parked at the loading dock. However, neither OSHA nor R&R permitted highway trucks to be loaded or unloaded after air brakes were heard to be deployed. Instead, each required a highway truck’s wheels to be chocked—a wedge placed behind the wheels—before loading or unloading cargo. Plaintiff, who evidently was about to go onto break, placed a foot on the back-end of the trailer, keeping one foot on the dock before Williams exited his truck and chocked the wheels. Unaware that Plaintiff was trying to board the trailer before Williams had stopped and chocked the wheels, Williams repositioned Southeastern’s tractor. During this maneuver, plaintiff fell from the loading dock, sustaining injuries to his finger and arm. Plaintiff sued, alleging Southeastern was vicariously liable for Williams’s alleged negligence and claimed Southeastern was directly liable for negligent hiring, negligent training, and negligent supervision. The plaintiffs sought compensatory as well as punitive damages as a result of Williams’s and Southeastern’s willful and wanton conduct. Following discovery, Williams and Southeastern moved for summary judgment. The appellate court found the trial court correctly granted summary judgment to Williams and Southeastern because “as a pure matter of law,” Williams owed plaintiff no duty because plaintiff’s conduct was not reasonably foreseeable insofar as it was in violation of R&R’s own company policies and OSHA regulations. Further evidence presented showed R&R determined plaintiff was distracted and violated his employer’s policy. Because plaintiff’s conduct leading up to the incident was outside the accepted practice both of the industry in general and that of this employer, there is no way Williams could have reasonably foreseen it. Further, the plaintiffs introduced no evidence below showing that Williams could have foreseen plaintiff’s conduct. Thus, absent any duty owed to plaintiff, all negligence-based claims were due to be dismissed. 

Velilla v. Rushing, 2024 U.S. Dist. LEXIS 91263, C.A. No. 4:23-cv-03009 (S.D. Tex. May 21, 2024).  A lessor of a tractor involved a accident successfully moved under the Graves Amendment to be dismissed from a personal injury action alleging various causes of action against it. 

Perry v. Cummings, 2024 U.S. Dist. LEXIS 86340, 2024 WL 2171934, C.A. No. 1:22-cv-3860 (N.D. Ga. May 14, 2022). Various motor carrier and transportation defendants successfully moved for summary judgment on plaintiff’s negligent hiring, supervision, and entrustment claims. At the time of the accident, Cummings was operating a tractor-trailer for defendant Ryan Transport, LLC, who was assigned to transport the load by defendant Lenk Express, LLC. Ryan hired Cummings in June 2020, and Cummings was not involved in any accidents, nor did he receive any citations or points on his CDL license, prior to the accident in question that occurred in March 2021. Prior to his employment with Ryan, Cummings received two speeding tickets and a citation for following too closely between 2015 and 2017. Lenk Express moved for summary judgment as to the negligent supervision claim against it, whereas Ryan Transport moved for summary judgment as to the negligent hiring and supervision claims against it. The court agreed, finding “traffic citations that occurred more than three years before a driver was hired in no way implicate any potential negligent supervision of that driver. And second, ‘no reasonable jury could find that a truck driver was accident-prone based on two speeding tickets and a citation for following too closely over the course of a decade.’” As such, it granted summary judgment on these causes of action in favor of defendants. 

In re Mesilla Valley Transp., 2024 Tex. App. LEXIS 3147, 2024 WL 2034732 (Tex. Ct. App. May 8, 2024).  In this appeal of a discovery dispute on mandamus, the Court of Appeals of Texas curtailed a tort plaintiff’s discovery requests, and in so doing, reversed the trial court’s order. The personal injury suit arose out of a July 12, 2021, motor vehicle accident involving a MVT tractor-trailer operated by its driver, Stowbridge. In discovery in the personal injury action, the plaintiff sought information about lawsuits involving MVT for the past ten years and requested access to Stowbridge’s cell phone to retrieve data for four hours before and around the time of the collision. The trial court ordered MVT to produce information for all personal injury matters involving truck wrecks from July 12, 2017, to the present. The appeals court found both of these requests to be too broad. With respect to the prior accidents/lawsuits, it explained plaintiff “makes no effort to justify why lawsuit information involving MVT from July 12, 2017, to the present advances his claims against MVT.” Further, it found the trial court’s order as to prior personal injury matters failed to show how the scope of the ordered information to be produced “is refined in time, location, and scope as to be within the bounds of permissible discovery.” As for the cell phone records request, the court found while plaintiff may be entitled to discover Stowbridge’s cell phone data for some period of time, “the trial court’s order is not limited in temporal scope to be tailored to encompass only the time period in which Stowbridge’s cell phone use could have contributed to the collision.” It specifically noted that plaintiff’s mandamus response and motion to compel failed to establish why he needed Stowbridge’s cell phone data four hours before the collision to prosecute his lawsuit. Further, the appeals court found the trial court’s order failed to encompass the type of privacy protections necessary to ensure Stowbridge’s privacy interests were protected from unnecessary disclosure.

Quality Express, LLC v. Crane Transp., LLC, 2024 U.S. Dist. LEXIS 81186, C.A. No. 8:21-cv-02159 (D.S.C. May 3, 2024). In this action arising from a tractor-trailer on tractor-trailer accident, the trial court granted summary judgment to the company whose tractor trailer was parked on the side of the roadway.  he accident occurred at approximately 2:45 a.m. on Interstate 85. Plaintiff’s driver collided with the rear of the tractor-trailer owned by defendant but which was parked in the emergency lane of the interstate. Plaintiff filed a complaint, asserting causes of action for negligence/negligence per se, negligent entrustment, and negligent hiring, supervision and retention. On summary judgment, defendants contended that plaintiff had no evidence to deny summary judgment because plaintiff had not served any discovery requests, identified any expert witnesses, or taken a single deposition.  Defendants contended plaintiff had thus failed to come forward with evidence to refute their claims that plaintiff’s employee acted negligently in crossing over the fog line, and certainly had failed to come forward with evidence sufficient to support the direct negligence claims against the motor carrier. In response, plaintiff argued, lack of discovery notwithstanding, it was entitled to argue defendant’s employee was negligent in parking the tractor-trailer on the side of the interstate in a non-emergency situation, and moreover, it was entitled to cross-examine defendant’s theory of liability at trial. Ultimately, the trial court agreed with defendants.  It held, “[w]hile Plaintiff argues that Defendants acted negligently, it has presented no evidence to support any element in the causes of action listed in the Complaint. Although Plaintiff claims it is undisputed that Defendant Hart parked the tractor trailer on the shoulder of Interstate 85 without employing required precautions, there is no evidence in the form of affidavits, depositions, stipulations, admissions, or otherwise to support that claim. Similarly, none of Plaintiff’s claims against Defendants are supported by any identifiable evidence.”  As such, it granted summary judgment to defendants.

BROKER

Hamby v. Wilson, 2024 U.S. Dist. LEXIS 90897, C.A. No. 6:23-cv-249 (E.D. Tex. May 21, 2024). In this instance, the court agreed that claims of negligent broker and negligent selection of a motor carrier were preempted by FAAAA. After noting the three tests that have developed nationwide in addressing the scope of FAAAA preemption for personal injury/tort claims against brokers, the court found the third test—which holds that “§ 14501’s express preemption applies to state tort claims and that the safety exception does not save them from preemption” to be “the most persuasive because [it] most clearly honor[s] the statutory text.” As such, the court agreed with the broker and dismissed the negligent broker and negligence selection of motor carrier causes of action against the broker. 

CARGO

Minder LLC v. Real Int’l SCM Corp., 2024 U.S. Dist. LEXIS 84046, C.A. No. 2:23-cv-3292 (C.D. Cal. May 8, 2024). In this freight damage lawsuit, the court denied a defendant’s motion to dismiss premised upon insufficient allegations of carrier liability. The operative complaint alleged the moving defendant “was part of a series of subcontractors for the transport of the goods at issue.” In the court’s view, the motion to dismiss was “premised on the idea that only a defendant who actually physically transports the cargo at issue can be liable as a ‘carrier’ under the Carmack Amendment.” The court rejected this premise, instead finding “the term ‘carrier’ is not limited to entities that physically carried the goods. Instead, courts have focused on whether an entity ‘legally binds itself to transport’ and ‘accept[s] responsibility for ensuring delivery of the goods.’ In other words, a defendant can be liable as a carrier in some circumstances even if that defendant subcontracted out its assumed responsibility for transporting the goods at issue.” Under this standard, the court found the operative complaint alleged sufficient facts to preclude dismissal and refused to require specific factual allegations of the defendant’s precise role in the transportation at the pleading stage. 

Lotte Ins. Co. v. R.E. Smith Enters., 2024 U.S. Dist. LEXIS 83430, 4:23-cv-153 (E.D. Va. May 7, 2024).  In this suit alleging damage for a large shipment of lithium ion batteries, various defendants were granted dismissal at the pleadings stage. The facts established that in October of 2021, Samsung SDI Co., Ltd. (“Samsung”) shipped a container of 300 packages of large capacity cell lithium-ion batteries (the “Batteries”) from South Korea, Samsung’s country of incorporation. Traveling overseas on the vessel “Cosco Shipping Lotus,” the Batteries were ultimately destined for a buyer in Alberta, Canada, but first arrived on November 21, 2021, at Virginia International Gateway (“VIG”), a container terminal in Portsmouth, Virginia. Plaintiff alleges that in December of 2021, Lotte Global Logistics Co., Ltd. (“Lotte”) contracted with defendant Smith, a logistics business, to deliver the Batteries overland to the Canadian buyer. According to a series of emails exchanged between Lotte and Smith around December 3, 2021, Smith was to receive the Batteries from VIG, transload the Batteries from their ocean-going container, and then transport the Batteries to their Canadian buyer consistent with the applicable safety rules and regulations for shipping flammable lithium-ion batteries. Because the ultimate destination for the Batteries was outside of the United States, the foregoing procedures “needed to occur from a bonded warehouse.” Smith therefore selected the nearby “Trinity Logistics/DNK Warehouse” (“Warehouse”), located in Hampton, Virginia, and subcontracted with defendants Trinity Logistics LLC (“Trinity”) and DNK Warehousing & Trucking LLC (“DNK”) on behalf of Lotte for the “safe handling, transloading, storage, and redelivery of the Batteries.” Accordingly, between December 8th and 11th, the Batteries entered the Warehouse in “good order and condition, and were accepted as such.” plaintiff alleges that, at all “relevant times Trinity and DNK leased the Warehouse from its owner, G Street, another named Defendant. While temporarily stored in the Warehouse, the Batteries were allegedly under DNK’s and Trinity’s “exclusive custody and control,” and were scheduled to be transferred to a different container appropriate for ground transportation to Canada. However, around December 12, 2021, plaintiff alleges that the Batteries, while still “in DNK’s and Trinity’s exclusive custody and control,” suffered “physical and wetness damage” due to both the collapse of the Warehouse’s outer wall and the water discharged from a burst pipe. Ultimately, upon final inspection, the batteries were deemed a total loss. The commercial value of the Batteries, by Plaintiff’s calculation, was approximately $493,800, and the cost of transportation, inspection, and disposal was approximately $49,380, producing a total loss of approximately $543,180. Plaintiff filed its complaint, asserting seven counts against defendants Smith, DNK, Trinity, and G Street. 

Smith moved in response to the complaint, seeking dismissal of the bailment and negligence claims as preempted by the Carmack Amendment. While the operative complaint alleged alternatively that Smith was a carrier or broker, the court found Smith was entitled to dismissal because if it was a carrier the claims would be preempted by the Carmack Amendment, whereas if it was ultimately determined to be a broker with respect to the shipment, the claims would be preempted by FAAAA. With respect to the bailment claim, the court found that even if it was “contract-based” it would nevertheless be preempted by FAAAA. The court rejected that the bailment claim was a “routine breach of contract claim” and instead relied upon purported state-law based obligations, and as such, fell within FAAAA’s preemptive scope. 

 As for G Street, the court found the complaint failed to allege necessary factual support for a claim under Virginia law—namely that G Street had exclusive control over the batteries. It noted that the complaint specifically alleged that G Street leased the warehouse to DNK and Trinity and that DNK and Trinity exercised “exclusive custody and control” over the batteries. As such, the bailment claim failed. Similarly, the court found the negligence claim against G Street—as the owner of the Warehouse—failed under applicable Virginia law. 

Ronate C2C, Inc. v. Express Logistics, Inc., 2024 U.S. Dist. LEXIS 92013, 2024 WL 2338262, C.A. No. 23-cv-01917 (S.D. Cal. May 22, 2024).  In this cargo damage lawsuit, various defendants obtained dismissals in their favor at the pleading stage. The pleading alleged as follows:  Plaintiff is a distributor of chemical supplies, equipment, and related services; plaintiff and defendant Express Logistics entered into a brokerage agreement in which Express “promised to identify and locate reputable, but cost-effective, carriers for Plaintiff’s shipping needs;” plaintiff asked Express to arrange for shipping of a $14,000 Rectifier from San Diego, California, to plaintiff’s client located in Sparks, Nevada; on Express’s recommendation, plaintiff hired defendant Clear Lane to ship the goods, but Clear Lane subcontracted with defendant AAA to serve as plaintiff’s carrier without plaintiff’s knowledge or consent; thereafter, plaintiff discovered that the Rectifier was not delivered to their client; Express informed plaintiff the Rectifier was lost. As a result, plaintiff filed a claim for breach of contract against Express and a claim for negligence against Express, Clear Lane, and AAA in the Superior Court of California, County of San Diego. AAA removed the case to federal court and thereafter moved for dismissal, contending plaintiff’s negligence claim against it is preempted by the Carmack Amendment. Clear Lane joined AAA’s motion.  After citing established law, the court agreed with Clear Lane and AAA and held plaintiff’s negligence claim against each was completely preempted by the Carmack Amendment, and therefore each was entitled to dismissal in their favor, but with leave to plaintiff to amend. 

Cal. Auto. Ins. Co. v. Colonial Van Lines, Inc., 2024 U.S. Dist. LEXIS 91305, C.A. No. 5:23-cv-0562 (C.D. Cal. May 20, 2024). In this property damage and subrogation lawsuit, the federal trial court denied a motion to dismiss based upon Carmack preemption. The court acknowledged that the defendant’s arguments for dismissal “hinge on whether the Carmack Amendment applies to Plaintiff’s Complaint.”  While, in connection with its motion to dismiss, the defendant presented evidence that the move in question was interstate, the court held it was confined, at this stage, to the allegations of the complaint, which did not mention the interstate nature of the shipment. Rather, the complaint merely mentioned plaintiff contracted with defendant to transport his property “to an agreed upon location.” 

Max Zach Corp. v. Marker 17 Marine, 2024 U.S. Dist. LEXIS 88529, 2024 WL 2139614, C.A. No. 3:23-cv-01088 (D. Conn. May 14, 2024). In this lawsuit arising from the allegedly failed modification and interstate transport of a yacht, the trial court granted defendants’ dismissals with respect to certain causes of action alleged against each. According to the operative pleading, plaintiff contracted with defendant Marker 17 to modify its 2006 48’ Fountain yacht including retrofitting the yacht with new motors. Plaintiff alleges the contract price of $315,000 also required Marker 17 to be responsible for the delivery of the retrofitted yacht from Marker 17’s location in Wilmington, North Carolina to plaintiff’s location in Connecticut. Following the retrofitting, Marker 17 prepared the yacht for transport. Marker 17 selected Premium Carriers to perform the interstate transport. While in transit in New Jersey, the trailer containing the yacht overturned. Plaintiff alleges a total loss of $750,000. Following the accident, the yacht was transported to Superior Towing and Transport, which is allegedly charging storage fees of $150 per day, where it remains. Plaintiff alleged four causes of action: (1) negligence against Marker 17; (2) breach of contract against Marker 17; (3) conversion against Marker 17; and (4) Carmack Amendment cause of action against Premium Carriers. Marker 17 moved to dismiss the negligence and conversation claims against it. With respect to the negligence claim, the court first agreed with Marker 17 that under the applicable choice of law rules, Connecticut, not New Jersey law, applied and therefore plaintiff’s negligence claim was time-barred by the two-year statute of limitation. With respect to the conversion claim, the court agreed with Marker 17 that it was duplicative of the breach of contract claim already alleged against Marker 17. The court found that based upon the allegations of the complaint, it was clear that the conversion claim proceeded from and related to the alleged contract between Marker 17 and plaintiff, and accordingly, the breach of contract claim was the appropriate avenue for plaintiff to pursue recovery against Marker 17. 

COVERAGE

Diamond Transp. Logistics, Inc. v. Kroger, Co., 2024 U.S. App. LEXIS 11561, C.A. No. 23-3462 (6^th Cir. May 13, 2024). In this appeal, the Sixth Circuit affirmed the trial court’s ruling regarding the scope of an indemnification obligation between two parties to a transportation contract. Diamond and Kroger entered into a formal agreement, which provided, amongst other things the right of Kroger to withhold shipping payments from Diamond for claims it had against Diamond if certain conditions were met. The agreement also discussed indemnification. It stated:

[Diamond] does hereby expressly agree to indemnify, defend and hold harmless [Kroger], its affiliates and subsidiaries and their respective directors, officers, employees, agents, successors and assigns (“Indemnit[e]es”) from and against any and all suits, actions, liabilities, judgments, claims, demands, or costs or expenses of any kind (including attorney’s fees) resulting from (i) damage or injury (including death) to the property or person of anyone, whomsoever they may be, arising or resulting at any time or place from any operations hereafter performed either by [Diamond], its agents, employees or subcontractors in performing services for Kroger or (ii) the negligence, willful misconduct or violation of law by [Diamond], its agents, employees or subcontractors except to the extent that such liability is caused by the sole negligence or willful misconduct of Kroger.

In December 2015, one of Diamond’s subcontractors was involved in an accident with a minivan while hauling Kroger products through Missouri. The occupants of the minivan all were killed in connection with the accident. After the family of the decedents amended their complaint to add Kroger, alleging negligence and recklessness in selecting, hiring, and retaining Diamond; negligent/reckless selection as a shipper, Kroger tendered the lawsuit to Diamond and demanded defense and indemnification. Thereafter, Kroger and Diamond entered into an “indemnification agreement” whereby Diamond agreed to “indemnify and hold [Kroger] harmless from any claim or liability arising from” the December 2015 collision. Still, by June 2018, Diamond hadn’t reimbursed Kroger. Kroger reached out again, specifying its legal fees. But that demand, too, proved fruitless. Kroger then took matters into its own hands. Starting in July 2018, it withheld shipping payments from Diamond. Kroger ended up withholding nearly $1.8 million. Diamond quickly realized it wasn’t getting paid but didn’t know why. In a September letter to Diamond, Kroger explained: it thought Diamond was “obligated to defend and indemnify Kroger.” By failing to do so, Kroger said Diamond was breaching their agreements. Kroger stated that it would continue to withhold payment until things changed.

One month later, Diamond took action. Though its insurer refused to provide Kroger coverage, Diamond said it would “defend, hold harmless and indemnify Kroger” in the family’s suit per the parties’ transportation agreement. Diamond even retained local defense counsel for Kroger. But by then, according to Kroger, it was too late. Over the past year, Kroger’s counsel had interviewed several witnesses and handled extensive discovery requests. Further, within the next month, Kroger’s corporate designee would be deposed, and Kroger would mediate with the family. Diamond asked Kroger to delay mediation so it could get up to speed. But Kroger pressed on and settled with the decedents’ family for over $2 million.

By December 2019, Kroger still hadn’t paid Diamond the money it withheld. Diamond sued to try to recoup those funds. In response, Kroger filed claims of its own, including one for breach of the transportation agreement’s indemnity provision. Kroger sought the difference between what it withheld and what it ultimately settled the family’s claims for—roughly $600,000.

Both parties moved for summary judgment. Relevant here, as to Kroger’s claim for breach of the agreement’s indemnity provision, the district court ruled in Kroger’s favor and awarded it $612,429.45 plus interest. Diamond appealed.

On appeal, Diamond presented only one question: Was it required, under the parties’ transportation agreement, to indemnify Kroger for the family’s claim? According to the Court, no one disputed that the family’s claim triggered clause (i) of the indemnity provision, which indemnifies Kroger from damage or injury (including death) to a person while a Diamond subcontractor ships Kroger goods. Instead, the issue is whether the indemnity provision’s exception for “liability. . . caused by the sole negligence or willful misconduct of Kroger” relieves Diamond of its obligation. Applying Ohio law, the court found there was no evidence that Kroger’s liability was based upon Kroger’s “sole negligence” so as to trigger application of the exception to the indemnification obligation of Diamond under the contract. The Sixth Circuit held “Diamond’s negligence played at least a part in Kroger’s liability for the family’s claim. Claims of negligent selection, hiring, and retention take two to tango—negligent parties, that is. The claim’s elements tell the story. To succeed, a plaintiff must show, among other things, ‘the employer’s negligence in hiring or retaining the employee” and an “employee’s act or omission.’ Kroger’s liability, therefore, was ‘not viable without an underlying act of negligence by [Diamond].’Because Diamond must have also been negligent for Kroger to be liable, the ‘sole negligence’ exception does not relieve Diamond of indemnification.” As such, it held Kroger was entitled to indemnification in relation to the personal injury claims arising from the Accident and affirmed the trial court’s award in favor of Kroger. 

WORKERS COMPENSATION

No cases of note to report this month. 

Hello Everyone! 

May is quite the busy month! With Mother’s Day, Memorial Day, graduations, and school summer break kicking off as we usher in Q2.

It’s been a busy convention season so far. We’ve been able to see so many of you at various industry events recently and look forward to connecting with even more of you soon in person. We’ve been busy with client on-site trainings as well. Reach out to us if your team would benefit from some specific training for your team to ensure you are getting the most out of your CAB platform.

Remember, CVSA’s International Roadcheck ’24 is coming up on May 14 – 16. Remind your fleets and drivers of the event and the importance of staying on top of vehicle inspections and driver expectations. Check out last month’s Bits & Pieces for additional details should you need more information on this annual event and the link to FMCSA’s guide on tractor pressure systems.

This coming Memorial Day let’s take time to remember those heroes who fought for us.

Chad Krueger and Pam Jones

Events

• CVSA International Roadcheck ’24 | May 14 – 16 | Enforcement facility (fixed and portable) near you | Remind your fleets & drivers of this event and the importance of inspection and driver preparedness

• International Risk Management Institute, Inc., (IRMI) Transportation Risk Conference (TRC) | June 3 – 5 | Houston, TX

CAB Live Training Sessions

Tuesday, May 14^th | 12p EST

The Power of Precision: Utilizing CAB Data for Audience Targeting in Digital Marketing | Joe Cantu

Join us as we explore how CAB data can supercharge your digital marketing efforts across paid social, programmatic, and paid search channels. 

Whether the goal is to find customers, gain market share, or prevent churn, CAB data alongside an effective digital marketing strategy can improve lead quality, increase efficiency, and drive bottom-line growth. 

Tuesday, May 21^st | 12p EST

Intro to CAB: Flow & Navigation | Connor Harper 

An overview of the basic flow and navigation of the CAB website. 

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

THIS MONTH WE REPORT

FMCSA to make Congressionally-required changes to under-21 pilot program. The Federal Motor Carrier Safety Administration is seeking emergency approval from the White House Office of Management and Budget to amend the Safe Driver Apprenticeship Program. The spending bill included language that bars FMCSA from requiring the use of inward facing cameras or requiring a motor carrier to register an apprenticeship program with the Department of Labor as a condition for participation in the SDAP program. Read more… 

FMCSA forces broker transparency from Uber Freight after double brokering scam. The FMCSA, for perhaps just the second time in its history, forced a broker to reveal what a shipper paid them after a double brokering scam on Uber Freight’s network left a carrier unpaid and complaining to the regulator. Read more…  

What it takes to advocate for legal abuse reform. Addressing lawsuit abuse is a “top tier issue” for the American Trucking Association, said David Bauer, vice president of state and tax policy. Besides trying to rein in huge lawsuits and nuclear verdicts, Bauer noted that the goal of tort reform is to restore balance and fairness to the judicial process for the trucking industry, pointing out how the judicial environment has become “unbelievably skewed” against the industry. Read more… 

Convoy fallout: Stiffed carrier feels freight brokers’ bond amount should vary according to company size. Small fleet owner Surinder Gill was, in part, the subject of Overdrive Executive Editor Alex Lockie’s reporting on the collapse of the Convoy broker which told the tales of owner-operators and small fleet owners who, months following the abrupt shuttering of Convoy in October 2023, remained unpaid for in some cases thousands’ worth of work hauling. Read more… 

Renewable diesel a more effective tool to decarbonize trucking than BEV, report says. Research conducted by American Transportation Research Institute (ATRI) shows renewable diesel is not only a promising solution for lowering the trucking industry’s CO2 emissions, it’s also significantly cheaper than battery electric technology. Read more… 

Benchmark diesel price below $4 again as war-led rally fizzles. The benchmark diesel price used for most fuel surcharges is back below $4 a gallon. A decline of 2.3 cents a gallon from the prior week’s number put the Department of Energy/Energy Information Agency price at $3.992. It’s only the second time in the past 11 weeks that the price has been below $4. Read more… 

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

AUTO

JNM Express, LLC v. Lozano, 2024 WL 1685012, No. 21-0853 (Tex. Apr. 19, 2024).  In this appeal arising from a substantial jury verdict against a motor carrier, a freight broker, and their shared owners, the Supreme Court of Texas reversed the jury verdict against the broker, finding there were insufficient facts in the record to support the verdict, and further, reversed the verdict against the owners of the trucking company and brokerage, finding that the “injustice” prong to pierce the corporate veil was not satisfied.  At the time of the accident, Lauro Lozano was driving a truck owned by JNM Express, LLC, but leased to ANCA Transport, Inc, when he fell asleep and crashed into another 18-wheeler.  JNM and ANCA were both owned by Jorge Marin and the two companies shared equipment and drivers.  Jorge Marin and his wife owned a third company, Omega Freight Logistics, LLC, which is a freight broker.  The Marins jointly manage all three companies.  Following the accident, Lozano (the driver of the CMV) and his wife filed suit against JNM, ANCA, Omega, and the Marins, individually.  The lawsuit alleged Lozano had been driving in violation of federal hours-of-service regulations on the trip that led to the accident and that Lozano had alerted Jorge Marin to the hours-of-service issue, but Marin requested Lozano to falsify his driver logs to continue the trip.  They alleged the hours-of-service violations and lack of required rest was a cause of the accident.  As an initial issue, the Supreme Court of Texas addressed whether Lozano was an employee of any of the companies, as that could affect the comparative negligence standard under Texas’s labor code.  While noting that JNM and ANCA were clearly Lozano’s employer under the 49 C.F.R. 390.5 definition, the court posed whether that was the appropriate standard to apply, as opposed to the common law definition of employee, in the context of a suit by a driver against the motor carrier.  In rejecting that Omega would be the employer of Lozano under either the federal statutory or common law definition, the court held the mere reference to Omega as the employer in the accident report, standing alone, was insufficient proof of employment.  The court went on to hold there was no other factual support in the record to support an employment relationship, even under the broader 49 C.F.R. 390.5 definition, between Lozano and Omega.  Next, the court reversed the portion of the decision that held the Marin’s individually liable under an alter ego theory of piercing the corporate veil.  Under the Texas standard, “alter ego is … one of the bases for disregarding the corporate fiction.  Alter ego applies when there is such unity between corporation and individual that the separateness of the corporation has ceased and holding only the corporation liable would result in injustice.”  The court found the “injustice” prong was not met under the facts of the case.  It found “[t]he Lozanos point to nothing in the record showing that the Marins abused the corporate form such that failing to pierce the corporate veil would result in ‘injustice’ in the sense that our alter ego cases describe that concept. One relevant consideration in the tort context is whether the corporation was ‘reasonably capitalized in light of the nature and risk of its business.’ Yet the Lozanos produced evidence at trial to demonstrate that the companies did have the resources to protect their drivers.”  As such, it dismissed Omega and Ms. Marin and remanded the case for further proceedings to determine whether the damage award was excessive.

Butler v. Adorno, 2024 WL 1312477, C.A. No. 5:21-cv-182 (M.D. Ga. March 27, 2024).  In this personal injury action arising from a motor vehicle accident, a motor carrier prevailed in obtaining summary judgment on negligent hiring, retention, and training causes of action.  The defendant driver had two periods of employment with the motor carrier, initially between August 2018 and December 2018, and then again from April 2019 through the date of the accident.  The motor carrier employed a third-party company that ran background checks and verified past employment for potential driver hires.  The motor carrier also obtained a MVR going back seven years.  Initially, in 2018, the driver’s MVR revealed two incidents: (1) a 2015 ticket for speeding in a non-CMV; and (2) a 2017 citation for hauling a trailer with in inoperative slack adjuster.  The motor carrier reviewed these violations at the time, determined they were not disqualifying, and hired the driver.  The driver had been involved in a 2008 accident while working for another motor carrier, but the 2008 accident was not contained in the MVR, which only went back seven years. It likewise was not revealed by the third-party investigator’s inquiries to prior companies. The motor carrier further required all its drivers to have two years of driving experience and provided training, including a written test on the FMCSRs, training using the Smith System, and road testing.  When the driver came back to work in 2019, the motor carrier again ran his background check but did not require him to undergo additional training.  In addressing the negligent hiring and retention causes of action, the Court found they presented no issue of material fact.  It held there was no evidence the motor carrier knew the driver had been in another rear-end collision at the time he was hired.  Further, the court noted there was no evidence that the motor carrier failed to comply with the FMCSRs, and in fact, “went beyond them” by obtaining a seven-year MVR as opposed to a three-year MVR.  The motor carrier did request information from the driver’s former employers for the three years preceding the application, consistent with FMCSR requirements.  The Court further found that even had the motor carrier done a complete re-investigation at the time of the driver’s re-hire in 2019, there was no evidence to suggest the 2008 accident would have been discovered.  Accordingly, there was no evidence to sustain the negligent hiring and retention claims and those were dismissed.  With respect to the negligent training cause of action, the Court found there was no supporting evidence, having previously excluded plaintiffs’ expert opinions for “lack of reliable data and methodology.”  Additionally, it found there were no federal regulations or “other authority” mandating such training, the violation of which could support the cause of action.  Accordingly, the Court likewise dismissed the negligent training cause of action.  Finally, the Court dismissed the negligent maintenance cause of action, finding there was no evidence in the record establishing the tractor-trailer involved in the accident was defective in any way and/or that any such defect played a role in the accident.  However, the Court denied summary judgment to the driver on the negligence claim and denied summary judgment to the motor carrier on the vicarious liability claim premised upon the driver’s negligence. 

Cardenas v. Moody, 2024 WL 1257423, C.A. No. 23-cv-001048 (D. Colo. March 25, 2024).  In this personal injury action, a motor carrier obtained, via a motion to dismiss at the pleadings stage, dismissal of negligent hiring, training, and supervision causes of action.  The operative pleading included allegations that the motor carrier should have a training program that ensured drivers knew how to safely operate CMVs in accordance with FMCSRs and should exercise reasonable care in hiring, training, retention, and supervision of its drivers, which it was alleged the motor carrier failed to do in this instance.  However, in addressing the negligent hiring cause of action, the Court noted the pleading “lacks any factual allegations that [the motor carrier] knew or should have known when it hired [the driver] that his use of its truck would pose an unreasonable risk of harm to anyone. They allege no facts concerning [the driver’s] driving history or characteristics to support a reasonable inference that he was an incompetent driver when [the motor carrier] hired him. Nor do Plaintiffs allege that [the motor carrier] failed to conduct an appropriate inquiry into [the driver’s] background or follow up on any apparent issues in connection with his hiring or that a more searching inquiry would have revealed he had dangerous propensities.”  With respect to the negligent training claim, the Court found the pleading “lacks allegations that [the motor carrier] knew or should have known [the driver] presented some undue or unreasonable risk to third parties such as Plaintiffs. Nor do Plaintiffs make any factual allegations about the type of training [the driver] received, how it was deficient, or how it played a role in causing the accident.”  Last, with respect to the negligent supervision claim, the Court found “[t]he lack of factual allegations that [the motor carrier] knew or had reason to know that [the driver], because of his qualities, was likely to harm others in view of the work entrusted to him is fatal to this claim as well.”  Stated simply, the Court found the conclusory allegations of duties, paired with the fact the accident occurred, was insufficient to support these direct liability claims against the motor carrier. 

Heath v. J.S. Helwig & Son, LLC, 2024 WL 1361873, C.A. No. 3:21-cv-119 (M.D. Ga. March 29, 2024).  In this personal injury action, the motor carrier successfully had claims for negligent hiring, training, retention, supervision, and entrustment dismissed via summary judgment.  Helwig, the motor carrier, hired Black as a company driver in October 2019.  Helwig requires its drivers to be a minimum age; to have been driving on a Class-A CMV for at least one year in the past 3 years; and no driver can have more than three moving violations in a three-year period, no more than two moving violations in a 12-month period, and no Department of Transportation (“DOT”) reportable accidents within a period of one year.  Black underwent Helwig’s hiring procedure before receiving his offer of employment which included completing Helwig’s online application and signing disclosures for background checks from consumer reporting agencies, the Federal Motor Carrier Safety Administration, the DOT, and his criminal history. On his application, Black disclosed his previous employment as a truck driver with eight other trucking companies since 2008. He reported one termination ten years before, in 2009, for a failed alcohol test. The application instructed him to disclose moving or traffic violations within the DOT’s required previous three-year-period. Black reported he had no violations within that time period, but he did include one speeding ticket for travelling nine miles over the speed limit in March 2016. Black stated he had not been involved in any accidents within the past five years, had no criminal record, and no convictions for any alcohol, drug, or driving violations.  Helwig utilized third-party vendors to conduct independent investigations into Black’s background in accordance with the DOT’s three-year look-back period. The investigations included following up with Black’s previous employers for references and inquiring about any employment issues, pulling his Motor Vehicle Report, conducting criminal background checks, and obtaining a drug screening. The reports Helwig received reflected no issues with drugs or alcohol; indeed, Black’s previous employers stated Black had no issues with drugs or alcohol. Black’s drug test was negative in all respects. Black’s Motor Vehicle Report showed one violation and subsequent license suspension in 2014 for failing to pay a traffic ticket in 2013. His license was reinstated in 2015. No other violation was reflected on his record. Thus, his record reflected no moving violations in the applicable three years before his date of hire; the only moving violation reflected in his file was his self-reported speeding ticket in 2016. His record reflected no previous accidents.  Before hiring Black, Helwig required, as it does every prospective employee, to complete a road test, which exceeds the Department of Transportation’s requirements. Helwig also required its new hires, including Black, to complete over 10 training modules conducted by online training vendor Infiniti-I which Black had to pass or continue retaking until he passed before driving on the road. Black passed the road test and completed each training module.  Considering the foregoing evidence, the Court found plaintiff could not support each of the direct negligence claims against Helwig as required under Georgia law.  Accordingly, it granted summary judgment to Helwig on the negligent training, hiring, retention, supervision, and entrustment causes of action. 

BROKER

Morales v. OK Trans, Inc., 2024 WL 1349874, C.A. No. 2:19-cv-00094 (S.D. Tex. March 29, 2024).  In this personal injury action arising out of an accident involving a tractor-trailer, the Court granted Penske summary judgment finding it could not be held liable for the purported negligence of the operator of the tractor-trailer.  On or about December 26, 2018, in Bee County, Texas, Satnam Singh Lehal was driving a tractor-trailer owned and operated by OK Transport, Inc. (“OK Trans.”).  At some point, the tractor-trailer jackknifed, crossed into the oncoming lane, and collided with a pick-up truck driven by Lyndon Dean Meyer, who died on impact.  Penske previously moved for summary judgment on the basis that it acted only as a broker and not a motor carrier and therefore could not be held liable for the alleged injuries to the decedent.  The Court denied that motion, finding fact issues existed as to whether Penske operated in the capacity as a broker or motor carrier.  Penske subsequently moved for summary judgment, contending that even assuming arguendo it operated as a motor carrier, there was no basis for liability because it could not be the statutory employer of the driver of the tractor-trailer.  Insofar as the plaintiffs did not allege employment under 49 C.F.R. part 390.5, the sole issue before the court was whether the driver was Penske’s statutory employee under the “responsibility and control” test as developed under Texas law.  Under that test, the Court explained that an entity is a statutory employer if: (1) the entity is a motor carrier and not a broker; (2) it does not own the vehicle involved; (3) it is using the vehicle in interstate commerce; and (4) it does not employ the driver.  Only the “interstate commerce” element was at issue in the pending motion.  The Court found, consistent with various federal regulations, that a motor carrier (which Penske was assumed to be for the purpose of the motion) cannot use a vehicle in interstate commerce unless it has an arrangement with the owner or driver of the vehicle, which was absent under the facts of this case.  Penske contended it could not be the driver’s statutory employer because there was no written or oral lease, or any other arrangement between Penske and the driver or OK Trans.  Penske, instead, contended it contracted with Penske Transportation Management LLC (“PTM”) to broker the shipment to Liberty Lane; Liberty Lane contracted Liberty Commercial, LLC, to sub-broker the shipment to OK Trans; and OK Trans employed Lehal to drive the shipment.  Penske argues that five steps removed is four steps too many; absent a “direct arrangement,” it cannot be vicariously liable for the driver’s negligence.  In addressing this argument, the Court cited 49 U.S.C. § 14102(a) and found “[t]he intent of the amendments was to ensure that interstate motor carriers would be fully responsible for the operation of leased vehicles and the supervision of drivers, thus protecting the public from motor carriers who might otherwise attempt to shirk financial responsibility for accidents.”  The “responsibility and control” test under Texas law developed out of the regulations applicable to leases for interstate motor carriers.  The Court explained that courts applying § 14102 and the responsibility and control regulations regularly impose statutory-employer liability on motor carriers when the carrier has a direct arrangement with the owner or driver of the vehicle at issue. Conversely, the Court found no cases where a court imposed statutory-employer liability absent an arrangement between the motor carrier and the vehicle’s owner or driver.  Accordingly, while the Court agreed with plaintiff that the failure to adhere to the written lease regulations would not absolve a motor carrier from statutory-employer liability, here Penske had no arrangement with OK Trans or the driver at all—not that it had an arrangement but did not formalize it via a written or oral lease.  Thus, the Court reasoned “considering the text of § 14202, the responsibility and control regulations, and the relevant case law . . . an arrangement must exist between the motor carrier and the owner or driver of the vehicle at issue to trigger statutory-employer liability.”  The Court went on to find that under the facts, there existed no evidence to support such an arrangement between Penske and the driver or OK Trans.  As such, it granted summary judgment to Penske. 

CARGO

Shaw v. United Parcel Service Inc., 2024 WL 469336, C.A. No. 3:23-cv-01996 (N.D. Tex. Apr. 4, 2024).  In this case arising from an alleged refusal of UPS to pick up and make deliveries from plaintiff’s location, the Court denied the plaintiff’s motion for remand.  UPS removed the case based on federal question jurisdiction under 28 U.S.C. §§ 1337 and 1445 because Carmack preempted plaintiff’s claims and the amount in controversy exceeded $10,000.  Plaintiff’s original complaint alleged monetary relief for “no less than $70,000.”  In his motion to remand, plaintiff offered to stipulate to damages less than $10,000, but the court rejected this as a basis to remand the case, noting that the amount contained in the active pleading was the operative amount to consider.  The court further held the plaintiff’s claims fell within the purview of the Airline Deregulation Act, which provided a separate basis for federal question jurisdiction.  As such, it denied the plaintiff’s motion to remand. 

Flynt v. Coleman Worldwide Moving, LLC, 2024 WL 1337356, C.A. No. 4:23-cv-00327 (E.D. Tex. March 28, 2024).  In this action arising from a delayed interstate move, the court granted the plaintiffs’ motion to remand.  According to the plaintiffs’ Complaint, the defendants are moving service companies hired by plaintiffs for their move from Texas to Kansas.  Plaintiffs’ claims arise out of defendants’ alleged failure to arrive to move plaintiffs’ belongings as scheduled. On April 27, 2022, plaintiffs and defendants entered into an Estimate and Order for Service Agreement (“the Agreement”) that defendants would arrive at plaintiffs’ residence in Lewisville, Texas on July 18, 2022, and load plaintiffs’ belongings.  Defendants would then deliver plaintiffs’ belongings to plaintiffs’ new residence in Manhattan, Kansas between July 19, and July 27, 2022.  Plaintiffs allege that defendants never arrived on July 18, 2022, and that defendants “admitted to improperly calendaring” plaintiffs’ move.  Plaintiffs allege that because of defendants’ misrepresentations, plaintiffs were forced to make other arrangements leading to a delayed move out and additional fees to set up a rush move out with alternative company, being forced to move out without power and air conditioning in the summer heat of Texas. Further, the plaintiffs allege they had to rearrange various delivery and installation appointments at their new home, causing weeks of delays for some of their appointments and missed work.  On October 11, 2022, plaintiffs sent defendants a demand letter for $9,630.63 in damages.  When the demand was not met, plaintiffs filed suit on December 29, 2022, in Texas state court.  Plaintiffs thereafter filed an Amended Complaint in state court on April 5, 2024.  Defendants filed a Notice of Removal on April 14, 2024, and thereafter filed a Motion to Dismiss on April 18, 2024, on various grounds, including Carmack preemption.  In arguing for remand, plaintiffs contended: (1) defendants were not subject to Carmack preemption because they never “received” the goods in question and therefore did not act as a motor carrier; and (2) the Notice of Removal was untimely because defendants were aware prior to the Amended Complaint that plaintiffs were seeking more than $10,000.  In addressing the first argument, the Court agreed with plaintiffs.  It found it lacked subject matter jurisdiction under the Carmack Amendment because the Carmack Amendment did not apply to plaintiffs’ claims.  Specifically, the Court held the statute sets out three categories of carriers that may be potentially liable under the Carmack Amendment when a shipper suffers a loss: “(A) the receiving carrier, (B) the delivering carrier, or (C) another carrier over whose line or route the property is transported[.]”  Here, it found the defendants did not meet any of the three categories because (1) they did not “receive” plaintiffs’ property because they never “took possession” of the property; (2) did not serve as the “delivering carrier” because defendants “did not deliver [p]laintiff’s property” and did not “connect ‘any other carrier that delivers the property’”; and (3) the property did not travel over defendants’ “line or route.”  The Court likewise rejected the defendants’ argument that by “entering into the Agreement” they were providing “services related to ‘transportation’” and therefore fell within Carmack’s purview.  The Court rejected that the Agreement constituted a “service related to that movement.”  The Court went on to distinguish other case authorities cited by defendants on the basis that defendants never “retrieved” or “transported” plaintiffs’ items, and consequently “did not issue a bill of lading.”  Accordingly, the Court granted plaintiffs’ Motion to Remand.  However, they rejected the plaintiffs’ request for attorneys’ fees related to the Motion to Remand, accepting defendants’ argument that it was not until a March 30, 2023, email between the respective counsel that the plaintiffs first clearly identified they were seeking damages in excess of $10,000 dollars insofar as all pleadings prior to that did not contain a specific claimed amount.  As such, it found the Notice of Removal was timely.  Considering the various arguments on Carmack preemption, the Court also agreed the defendants’ removal was not “objectively unreasonable.”  As such, it denied plaintiffs’ requests for attorneys’ fees and costs. 

Scheuer v. Rado Express Logistics, Inc., 2024 WL 1328818, C.A. No. 23-cv-00531 (N.D. Ill. Mar. 28, 2024).  In this case arising from an “interstate move gone wrong,” the court partially granted defendants’ motion to dismiss.  Plaintiffs contacted Trinity Relocation Group, LLC (“Trinity”), a broker for shippers and interstate carriers, regarding a move from their Ohio residence to their Florida residence. The plaintiffs provided Trinity with detailed dates and times that the move would need to be completed by due to a pending sale of their Ohio residence and their anticipated arrival at their Florida residence.  Trinity provided plaintiffs with a binding estimate for   $13,381.41 for 1,496 cubic feet of property (the “Binding Estimate”).  In its capacity as a broker, Trinity researched carrier options and ultimately recommended Defendant Rado to plaintiffs as the interstate carrier that would perform the move.  After Rado had loaded most of the plaintiffs’ possessions onto the truck, the Rado movers approached plaintiffs to renegotiate Rado’s Interstate Bill of Lading Contract (“Rado Contract”), now that they had a “better feel” of the amount of property they were moving.  The re-negotiated Rado Contract charged Plaintiffs $34,132.30, nearly three times the Binding Estimate, based in part upon an updated volume of items amounting to 3,800 cubic feet. The Rado movers told plaintiffs that this price was “final” if they “wanted their belongings delivered.” In addition, the Rado movers told Mr. Scheuer that his belongings would not arrive to his Florida residence by September 1, 2022, as previously promised.  As a result, “out of fear” that their possessions would not arrive on time, plaintiffs agreed to a $5,700 “expedited delivery charge.”  Despite the expedited delivery charge, plaintiffs’ property did not arrive in Florida on September 1, 2022.  Instead, it arrived two days later and with no crew to unload it.  The unloading crew arrived the next day, September 4, 2022, demanding the full balance of the Rado Contract, including the expedited delivery charge, before any property would be unloaded. Left with little option, plaintiffs complied and paid the full balance demanded.  Adding insult to injury, while unpacking their belongings, plaintiffs discovered that various items had been damaged. Plaintiffs thereafter filed suit against Rado for violations of 49 C.F.R. § 375.401 et seq. (Count I), the Carmack Amendment, 49 U.S.C. 14706 (Count II), and the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”), 815 ILCS 505/1 et seq. (Count IV), and for fraudulent misrepresentation (Count III), and breach of contract (V).  Rado moved to dismiss all claims against it.  The court held that Count I under 49 C.F.R. § 375.401 was not preempted by Carmack Amendment, whose preemptive scope only extended to state common law causes of action but not “other federal claims.”  However, the Court did find Carmack preemption “clearly” applied to the plaintiffs’ breach of contract claim.  While a closer call in the Court’s view, it found Carmack likewise preempted the fraudulent misrepresentation and ICFA claims because they were not “sufficiently distinct from the contract of carriage.”  Accordingly, it allowed plaintiff’s claims under 49 C.F.R. 375.401 and the Carmack Amendment claim to survive the motion to dismiss. 

COVERAGE

Smallwood v. ACE Property & Casualty Ins. Co., 2024 WL 1742240, C.A. No. 3:23-cv-67 (E.D. Va. April 23, 2024).  This declaratory judgment insurance coverage action arose from an accident in which the plaintiff was injured when an individual was attempting to unload materials from a trailer.  Plaintiff was hired to oversee the transportation and delivery of materials to an Express Oil Change location that was under construction.  Plaintiff was acting in that capacity when he requested Alstop Trucking provide a flatbed tractor trailer and driver to assist him in picking up and transporting construction materials to the jobsite.  Due to limited space at the jobsite, each trailer had to be offloaded one side at a time.  In connection therewith, the “site supervisor” (non-Alstop employee) utilized a Bobcat skid steer to offload materials from the Alstop trailer.  While attempting to unload the materials from the Alstop trailer, the site supervisor caused the Bobcat to overturn and the materials fell off the Bobcat onto Plaintiff.  ACE insured Alstop under a Commercial Auto Liability Policy and the involved Alstop tractor trailer was insured under the ACE Policy.  Plaintiff made a claim for UM benefits under the ACE Policy.  The Court, in addressing potential UM coverage under the ACE Policy, found Plaintiff did not qualify as an “insured” under the ACE Policy because Plaintiff was not “using” or “occupying” the Alstop tractor or trailer at the time of the Accident.  Specifically, the Court found Plaintiff was not “using” the Alstop tractor trailer at the time of the Accident.  It noted Plaintiff was around 10 feet from the tractor trailer when the Bobcat tipped and was involved in transportation separate from—and nonessential to the use of—the tractor trailer.  Similarly, the Court found Plaintiff was not “occupying” the Alstop tractor trailer because he away from the tractor trailer and his actions in directing the Bobcat “were not ‘immediately related to the occupancy’ of the Alstop tractor trailer.”  As an additional or alternative ground, the Court held that the Bobcat was not an “uninsured motor vehicle” sufficient to trigger coverage under the ACE Policy’s UM endorsement.  For each of these reasons, the Court held the ACE Policy did not afford UM coverage under its clear terms, and accordingly dismissed the DJ action against ACE. 

Pious Trans, Inc. v. Certain Underwriters at Lloyd’s London, 2024 WL 1710171, Case No. 23A-PL-3044 (Ind. Ct. App. Apr. 22, 2024).  In this insurance coverage dispute, the Indiana Court of Appeals affirmed summary judgment in favor of the insurer under a physical damage insurance policy to the motor carrier.  In July of 2020, Pious Trans, Inc., which is owned and operated by Gagandeep Singh, hired Yadwinder Singh (“Singh”), who had been issued a New York Class A commercial driver’s license (“CDL”) approximately sixteen months previously. In December of 2020, Certain Underwriters at Lloyd’s, London (“Underwriters”), issued a physical-damage insurance policy to Pious (“the Policy”). In April of 2021, Pious added Singh and a tractor-trailer with a gross weight of over 26,001 pounds (“the Freightliner”) to their Policy coverage. In August of 2023, Singh was operating the Freightliner and was involved in a collision with another tractor-trailer. After Underwriters denied Pious’s claim arising from the collision, Pious, Gagandeep, and Singh (“Appellants”) sued the other driver for negligence and Underwriters and Pious’s insurance agent for breach of contract and bad-faith denial of their claim. Underwriters moved for summary judgment on the questions of coverage and bad faith, which motion the trial court granted.  The Underwriters Policy at issue included specific requirements for coverage, including that the vehicle be operated by a driver “who at inception of this Policy or at the date of hire, whichever is the later, provides documented evidence of an MVR not more than 60 days old or not older than the date of loss if the driver is involved in a claim showing that they: [….] 2. Have a minimum two (2) years (twenty-four (24) consecutive months) of Commercial Driver’s License experience, at the time of policy inception or date of hire, whichever is the later, driving similar equipment to that insured under this Policy.”  When Pious added the Freightliner as a scheduled vehicle and Singh as a scheduled driver, it incorrectly listed his hire date as April 1, 2021, instead of July 6, 2020.  Underwriters denied the claim arising from the August 3, 2021, accident, citing the lack of required 2 years CDL experience by Singh at the time the Policy issued.  The Court found that the Policy was not ambiguous in defining “commercial driver’s license” and that Singh’s Class E New York license was not equivalent to a CDL.  As such, Underwriters was entitled to deny coverage for the Accident and the appellate court affirmed the summary judgment ruling in favor of Underwriters. 

Harco Nat’l Ins. Co. v. Knowles, 2024 WL 979231, Case No. A23A1263, A23A1264 (Ga. Ct. App. March 7, 2024, review denied March 26, 2024).  In this insurance coverage declaratory judgment action, the Court agreed with the insurer that the loss was excluded from coverage under the automobile and CGL policies because it involved a work-related injury that fell within the exclusions within the respective policies.  The undisputed record shows that in the spring of 2018, Popwell began working for EKI as a “cut down man” in a commercial logging operation. His job was to operate a machine called a feller buncher to cut trees in a controlled manner so that they could be loaded onto trucks. He reported to work when and where directed by EKI, and he was paid every week based on the weight of the wood he cut. Walter Knowles was Popwell’s supervisor.  With respect to the details of the accident, Popwell testified that on May 3, 2018, he was working at a wooded job site along with Knowles and other personnel. Knowles determined the hours Popwell worked, which fluctuated depending on when they finished loading trailers with logs. According to Popwell’s deposition, around mid-day, he stopped work to eat lunch. He got in his personal vehicle to drive to a nearby store that sold fried chicken, and as he was leaving the logging area on a dirt road, he soon noticed that Knowles was operating a skidder and pushing a loaded truck that needed extra traction to navigate the unpaved road. Popwell put his vehicle in park (facing the skidder) to wait for the operation to finish; when Knowles got the loaded truck moving sufficiently, he turned the skidder around and headed in Popwell’s direction. As Popwell remained stationary in his vehicle, Knowles accidentally drove the skidder into and onto Popwell’s vehicle, causing multiple injuries to him.  Popwell initially received workers’ compensation payments from Forestry (EKI’s carrier) for a few weeks, but thereafter, a dispute arose regarding workers’ compensation coverage, and Popwell sued EKI and Walter Knowles. To get clarity as to its coverage obligations, Harco filed the present action seeking: a declaration that Popwell was acting within the scope of his employment at the time he was injured, that his injuries are compensable under the Workers’ Compensation Act (“the WCA”), and that Harco’s WCA exclusions in the policies issued to EKI preclude coverage.  The Court’s opinion focused upon Georgia-specific rules for injuries during a mid-shift lunch break.  It explained “[t]he Supreme Court of Georgia has clarified that even though eating lunch is not the actual work an employee is hired to do, an ordinary mid-day lunch break on the employer’s premises is still considered to be ‘in the course of’ employment for purposes of the WCA. This is because eating lunch at the workplace is an activity incidental to work and ‘reasonably necessary to sustain [an employee’s] comfort at work.’”  The Court noted the unrefuted testimony established that Popwell was sitting in his vehicle in the process of leaving the job site to go to lunch when he was hit by the skidder that was being operated in connection with the logging operations.  It further noted that Popwell had “not yet” left the logging area.  Putting all this together, the Court determined Popwell was “still in the logging area on his lunch break and was not otherwise engaged in a personal activity outside the scope of his employment.”  The collision was “a risk ‘reasonably incident’ to Popwell’s employment in the logging operation.”  As such, the injuries fell within the exclusions to coverage under the Harco policies. 

WORKERS COMPENSATION

Shock v. LAC Logistics, LLC, 2024 WL 1653528, C.A. No. 1:24-cv-83 (N.D. Ind. Apr. 16, 2024). In this action arising from an alleged on-the-job injury and alleged retaliatory discharge, the court granted plaintiff’s motion to remand, finding it lacked subject matter jurisdiction over the dispute. Plaintiff was employed by defendant as a CDL driver. Plaintiff claimed that in June 2023 he sustained an on-the-job injury for which he sought workers compensation benefits. Defendant denied the workers compensation claim. Thereafter, in August 2023, defendant directed plaintiff to drive a route from Ohio to North Carolina. Plaintiff alleges he refused, citing that he was over on his hours of service (“HOS”) and was required to rest. Plaintiff claims defendant advised him to run the route under the agricultural exemption to the HOS. Plaintiff claims the load did not fall within the agricultural exemption and again refused the load, following which the defendant fired him. Plaintiff filed a lawsuit in Indiana state court alleging two counts: (1) wrongful termination under the Indiana Workers Compensation Act; and (2) wrongful termination for refusing to engage in unlawful conduct. The defendant removed the action to federal court, citing the Motor Carrier Safety Act, 49 U.S.C. § 31101 et seq., as the sole basis of removal. The federal court sua sponte requested briefing on the issue of federal jurisdiction.  Plaintiff likewise moved to remand the case to state court. Defendant acknowledged “Plaintiff has relied exclusively on state law in bringing this action,” but nevertheless contended federal question jurisdiction exists because plaintiff’s refusal to accept the route was based on plaintiff’s belief that doing so would violate federal regulations.  Noting that the nature of plaintiff’s claims was solely for wrongful discharge under Indiana state law and that defendant’s “potential assertion that it complied with federal law is of no consequence” because defenses do not establish federal question jurisdiction, the court remanded the action to state court.