Hot enough for you?  We are all in hiding out on the Jersey Shore trying to get away from this brutal heat wave.  Hope you are finding a way to keep cool and enjoy the summer.  Things should be quiet as so many folks head out for vacation. The number of out of office responses to the Bits and Pieces in the summer is astounding.  I wonder if anyone is working these days.

This month we report:

UNIFIED REGISTRATION SYSTEM – For months we have been reporting on the anticipated arrival of the final stage of the new online registration system.    We can stop worrying, at least for a while.  The FMCSA is delaying implementation of the final stage of its new online registration system until early next year. The URS, has been delayed until Jan. 14, 2017, with a new full compliance date of April 14, 2017. To date, the agency has issued 62,000 USDOT numbers, removed 340,000 dormant USDOT numbers from agency databases, and screened 100 percent of operating authority applications for reincarnated carriers.

NATIONAL HIGHWAY TRAFFIC SAFETY REPORT – The NHTSA has reported that more than 35,000 people were killed in motor vehicle traffic-related incidents this past year, a 7.7 percent increase from 2014. NHTSA’s data reveals nine of 10 regions experienced an increase in traffic deaths in 2015. Region 6 – Louisiana, Mississippi, New Mexico, Oklahoma and Texas – had the only decrease (1 percent) in traffic deaths. Region 10 – Alaska, Idaho, Montana, Oregon and Washington – experienced the largest increase at 20 percent. The largest increases by “person type” came from pedestrians and bicyclists at 10 percent and 13 percent respectively. Among crash types the largest increase involved young drivers (15 to 20 years old). Passenger vehicle rollovers went up 5 percent, and crashes involving large trucks were up 4 percent. Vehicle miles traveled in 2015 went up 3.5 percent, an increase of 107.2 billion miles.

MOTOR CARRIER BANKRUPTCIES – Once again we remind you that looking at a motor carrier’s financial reports is critical to understanding its operations and insuring strong risk selection. Avondale Partners reports that in the second quarter, 120 trucking companies ceased operations, with an average fleet size of 17 tractor-trailers.  This is a 70% increase from 2015.  The failures are asserted to be based upon rising fuel prices and weak demand.

TOW COMPANIES – In our continuing effort to keep you advised of issues regarding tow companies, the Connecticut Supreme Court recently held that the state may regulate the fees that towing companies charge for nonconsensual towing and recovery services. The Court held that tow companies can be regulated for services provided both before and after tow, which would include storage fees.  Good for motor carriers and insurers alike.

FMCSA LEADER – T.F. “Scott” Darling has finally been given the title of administrator of the FMCSA having held the spot temporarily for the last two years.  His nomination had been pending since August 5, 2015.

FAST ACT CHANGES – The FMCSA has moved forward to comply with some of its many mandates from the FAST Act. According to FMCSA, the regulations were non-discretionary and did not require the rulemaking process.  The new rules are:

1. Section 5206: Applications for exemptions

Section 5206(a)(3) of the FAST Act resulted in a change to Section 381.300(b) — allowing exemptions for up to 5 years that may be renewed for subsequent periods of up to 5 years.

Section 5206(a)(3) also permits an applicant whose application for exemption has been denied to resubmit the application addressing the reason for denial. As a result, FMCSA added a new Section 381.317 describing this process.

Section 5206(b)(1) made permanent the following three existing exemptions from the 30-minute rest break requirements in Section 395.3(a(3)(ii):

• ready-mixed concrete delivery vehicle,
• transportation of bees, and
• transportation of livestock while the livestock.

2. Section 5507 – Electronic logging device requirements

Section 5507 of the FAST Act provides an exception for motor carriers transporting a motor home or recreation vehicle trailer in a driveaway-towaway operation, as defined in 49 CFR 390.5. Under this provision, a motor carrier could comply with the hours-of-service (HOS) requirements by using either a paper record of duty status form or an electronic logging device.

3. Section 5518 – Covered farm vehicles

FMCSA revised Section 390.39(b)(1) to clarify a mandate that addressed exemptions found in state laws for covered farm vehicles. Exemptions include commercial driver’s licensing (CDL), DOT drug and alcohol testing, medical qualifications, HOS, and vehicle inspections. Such exemptions may not be taken into consideration during federal grants management.

4. Section 5519 – Operators of hi-rail vehicles

For the commercial motor vehicle (CMV) driver of a hi-rail vehicle who is subject to the HOS regulations in 49 CFR Part 395, section 5519 of the FAST Act provides that the maximum on-duty time under Section 395.3 shall not include certain time in transportation to or from a duty assignment.

5. Section 5521 – Ready mix concrete delivery vehicles

Section 5521 of the FAST Act exempts drivers of ready-mixed concrete delivery vehicles from keeping records of duty status if certain criteria are met.

6. Section 5522 – Transportation of construction materials and equipment

The FAST Act amends the definitions for the transportation of construction materials and equipment appearing in the Motor Carrier Safety Improvement Act of 1999, including increasing the distance to a 75 air-mile radius of the normal work reporting location of the driver. The Act also allows a state to establish a different air-mile radius limitation if such limitation is between 50 and 75 air-miles and applies only to movements that take place entirely within the state.

7. Section 5524 –Welding trucks used in the pipeline industry

The FAST Act defines a welding truck used in the pipeline industry as a pick-up style truck, owned by a welder, equipped with a welding rig that is used in the construction or maintenance of pipelines, and that has a gross vehicle weight and combination weight rating and weight of 15,000 pounds or less.

The operator of such a vehicle and the operator’s employer are exempted from any requirement relating to registration as a motor carrier, driver qualifications, driving a CMV, parts and accessories and inspection, repair, and maintenance of CMVs, and HOS of drivers. To reflect this section of the FAST Act, FMCSA added the specific exemptions in each of the parts affected.

8. Section 7208 – Hazardous materials endorsement exemption

The Act allows a state, at its discretion, to waive the requirement for a holder of a Class A CDL to obtain a hazardous materials endorsement to transport 1,000 gallons or less of diesel fuel. A state may waive the requirement if the license holder is 1) acting within the scope of the license holder’s employment as an employee of a custom harvester operation, agrichemical business, farm retail outlet and supplier, or livestock feeder; and 2) is operating a service vehicle that is transporting diesel in a quantity of 3,785 liters (1,000 gallons) or less and that is clearly marked with a “flammable” or a combustible” placard, as appropriate. FMCSA adds a new paragraph (i) to Section 383.3 to reflect this exemption.

If a state exercises this discretion, a driver may still be required to obtain a hazardous materials endorsement if he or she travels to a state that has not opted to waive the requirement.

CSA CHANGES – The FMCSA proposes to develop and implement a demonstration program to decide if preventability determinations on certain types of crashes are effective. The program will have an impact on the motor carriers’ CSA Crash Indicator BASIC.  The pilot program would consider a crash as not preventable if the commercial motor vehicle (CMV) was struck by a motorist who was convicted of one of the following four offenses or a related offense:

• Driving under the influence;
• Driving the wrong direction;
• Striking the CMV in the rear; or
• Striking the CMV while it was legally parked.

In addition, the agency indicated that animal strikes and suicide through a CMV would also be included in the list of possible scenarios to have a crash removed from the SMS. Based on on FMCSA approved decision maker, the review would result in one of three dispositions: not preventable, preventable, or undecided. In the case of undecided, the documentation submitted was inconclusive, and the safety event remains in the SMS data.

CASES:

AUTO:

The trip specific analysis in determining the application of the MCS-90 to a particular accident was accepted by the Supreme Court in Connecticut.  The Court determined that when the accident occurred during a purely intrastate transport recovery would not be had under the endorsement.  Plaintiff’s argument that the transport of truck parts which would ultimately be put in a truck to be used in interstate transport was insufficient to establish interstate transport.  (Martinez v. Empire Fire & Marine Insurance Company, 2016 WL 3615693)

The Court of Appeals in Texas upheld a jury verdict against a driver and his employee which included both actual and exemplary damages. The Court found that the evidence was legally and factually sufficient to support a finding of gross negligence.   While the Court held that the point where the history of log-book violations rises to the level of clear and convincing evidence to support a grossly negligent entrustment finding is very high. They concluded that there was evidence that the driver had a substantial history of driving in excess of the federal driving limits, (2) that the motor carrier knew that history and, therefore, knew that the driver was at risk of driving while fatigued, (3) that the motor carrier was “able to anticipate that an injury would result as a natural and probable consequence of the entrustment,” and (4) that, despite that knowledge, it made the conscious decision to violate its own work place rules. (Rayner v. Dillon, 2016 WL 3797893)

An odd issue was addressed by the Western District in Pennsylvania this month.  There was a coverage issue involving various insurers and defense and indemnity obligations for the trucking company involved in the accident.  One insurer, who elected not to be part of a mediation process, refused to consent to dismissal of the case when it was settled by the other parties at mediation, instead seeking costs.  The Court held that it would dismiss the action and not allow the remaining insurer to seek fees and cost concluding that there was lack of support for a conclusion that the insurer was improperly kept in the case.  (Maxim Crane Works v. Smith Transportation Services, 2016 U.S. Dist. LEXIS 95598)

The District Court in North Carolina agreed that a claim for negligent hiring, supervision and retention would not stand against a motor carrier who had conceded vicarious liability for the acts of the driver.  (Turner v. USA Logistics, 2016 U.S. Dist LEXIS 86106)

CARGO:

The District of New Jersey dismissed, without prejudice, plaintiff’s complaint for compensatory and punitive damages arising from the delay in delivery of Christmas trees which were damaged by the time of delivery.  The Court concluded that all causes of action were completely preempted but allowed plaintiff an opportunity to amend.  (Rising Up Garden Center v. Online Freight Services, Inc., 2016 WL 3546582)

The District in Florida denied a request for a new trial or judgment NOV awarded against the defendant.  The Court held that the evidence supported the conclusion that the broker acted as a carrier allowing the jury verdict to stand.  The defendant’s argument that plaintiff had not established a prima facie case as to the condition of bags of coffee also failed.  The Court held that the coffee was transported in thick burlap bags of consistent weight, color, smell, and marks, concluding that the coffee was distinguishable and recognizable at the point of loading, and therefore qualified as unsealed.  That together with other circumstantial the evidence established good order at origin. (National Union Fire Insurance Co. v. All American Freight, 2016 WL 3787638)

The Western District in North Carolina denied defendant’s motion to transfer venue in a Carmack complaint. The Court held that the Carmack Amendment only allows, but does not mandate, that actions be brought against the carrier alleged to have caused the loss or damage, in the judicial district in which such loss or damage is alleged to have occurred.  Plaintiff’s choice of venue was allowed. (Landstar Ranger v.  Global Experience Specialist, 2016 WL 3636941)

The validity of the arbitration provision in the UPS terms and conditions was considered by the Eastern District of California.  The Court considered the procedural and substantive unconscionability of the program.   The Court held that because it was offered on a “take it or leave it” basis, the agreement was procedurally unconscionable but offset by the lack of surprise. While parts of the terms were substantively provisions regarding claims subject to arbitration, discovery, fees, costs, and remedies were not.  The Court concluded that it was a valid arbitration clause.  (Moule v. UPS, 2016 WL 3648961)

The Middle District of Florida upheld the preemptive effect of the Carmack Amendment.  The Court dismissed plaintiff’s claim for breach of contract and emotional distress, stemming from a loss to goods during transit and storage. Even assuming the parties executed a separate contract for storage, the motor carrier maintained possession of the belongings from the time they left Plaintiff’s Florida residence until they were delivered to her Connecticut residence the shipment was governed exclusively by the Carmack Amendment.   (Lloyd v. All My Sons Moving, 2016 WL 3883195)

The District Court in Massachusetts denied a preliminary injunction but allowed for a trustee process attachment of a potential claim against a motor carrier.  Under Massachusetts law if there is a reasonable likelihood that the plaintiff will recover judgment, including interest and costs, in an amount equal to or greater than the amount of the trustee process over and above any liability insurance shown by the defendant to be available to satisfy the judgment the Court can attach the funds before the claim is litigated. (Jofran Sales v Watkins & Shepard Trucking,   2016 WL 3676140)

Broker Freight Payments.The issue of whether a motor carrier can pursue a shipper for freight charges when the contract with the broker precludes such an action was addressed by the Court in the Eastern District of Michigan.  The Court held that the motor carrier could have waived that right under the contract and that the shipper could be a third party beneficiary of that contract. While questions of fact remained in this case as to the validity of the contract, the legal issues to be considered if the contract overrides the bill of lading are significant for all.  (Drive Logistics, Ltd. V. PBP Logistics, 2016 US DIst Lexis 94392) Read More

We hope you enjoyed this quarter’s seminar on Food Safety.  We are considering requests for the next quarter so please let us know what you would like addressed next time.  Things are slow as we head into the summer session so the news report will be short. We wish you all a safe and happy 4th of July holiday.

SEAT BELTS – The FMCSA announced that passengers riding in large commercial trucks will be required to use seat belts whenever the vehicles are operated on public roads in interstate commerce. Effective August 8, 2016, the final rule revises Federal Motor Carrier Safety Regulations and holds motor carriers and drivers responsible for ensuring that passengers riding in large commercial trucks are using seat belts. In 2014, 37 passengers traveling unrestrained in the cab of a large truck were killed in roadway crashes, according to the most recent data from the National Highway Traffic Safety Administration (NHTSA).  Of this number, approximately one-third were ejected from the truck cab. You can view the rule here.

SAFETY REGULATION VIOLATIONS – The FMCSA has released an interim final rule changing motor carrier penalties for violations of federal regulations.  The adjustments result in most penalties increasing based upon a cost of living analysis, in some cases more than 100% .  The rule provides for some of the more serious penalties to be assessed on a daily basis if a carrier fails to take corrective action or obey out-of-service or suspension orders.  The largest increase was for each day a carrier conducts operations after a suspension or revocation, which more than doubled to $22,587 from $11,000. The penalty for operating in violation of an out-of-service order jumped 41%, to $22,587 from $16,000, according to the rule. By contrast, the agency decreased the penalty for a driver operating a commercial vehicle during the period the driver was placed out of service to $1,782 from $3,100. The penalty for serious violations of hazardous materials regulations remained the most costly, increasing to $179,933 from $175,000.

FMCSA STUDY ON DELAY – As mandated by the FAST Act, the FMCSA has begun an audit on loading and unloading delays.  The FMCSA has indicated that delays at shipping and receiving facilities during cargo loading and unloading may result in travel delays and lost wages for drivers. Truckers who experience these delays may then drive faster to make deliveries within hours-of-service limits or operate beyond these limits and improperly log their driving time, thus increasing the risk of crashes and fatalities. The objective of the audit will be to (1) assess available data on motor carrier loading and unloading delays and (2) provide information on measuring the potential effects of loading and unloading delays.

NATIONAL TRANSPORTATION ATLAS DATABASE – BTS has released the 2016 edition of the National Transportation Atlas Database (NTAD). The NTAD is a compilation of datasets representing the nation’s transportation infrastructure, including more than 500,000 miles of roadway, over 600,000 bridges, and in excess of 19,000 airports. This year’s NTAD consists of over 60 individual data layers, most of which have been updated within the last year. The NTAD also includes several new features: the U.S. portion of the North American Rail Network, truck parking, and road and airport noise layers. The 2016 NTAD marks the end of the traditional annual update inspection. The enhanced online NTAD datasets allow for customizable downloads and APIs. They are available as GeoJSON and GeoServices (REST) services and are also available for download as shapefiles, kml and csv files.

CASES

AUTO

The Court of Appeals in Georgia reversed a lower court decision, concluding that an insurer was not obligated under the MCS-90 to pay a judgment for injuries suffered during an accident involving intra-state transport of non-hazardous material.  The Court concluded the Georgia legislature and the Georgia Department of Public Safety did not intend to extend the federal financial responsibility regime imposed by FMSCR to purely intrastate commerce involving nonhazardous commodities. As the endorsement, by its terms did not apply the insurer was not obligated to respond. (Grange Indemnity Insurance Co. v. Burns 2016 WL 3453201)

The liability of an employer for the negligent hiring of a truck driver was considered by the Southern District in Texas.  The Court held that prior driving convictions that lacked a nexus to accident would not support a negligent entrustment or hiring claim against the motor carrier. The Court held further that a motor carrier cannot be held liable for gross negligence when it actively believes that the circumstances pose no risk to another.  The Court addressed the steps necessary to properly vet a driver.  (Phillips v. Super Services Holdings, LLC., 2015 WL 3017138)

The Western District in North Carolina overturned a jury verdict awarding a trucking company $1.00 for loss of a tractor –trailer and cargo when the company was involved in an accident with another carrier and liability was found in favor of the plaintiff.  The Court ordered judgment for the damages, as well as costs.   (Pracht v. Saga Freight Logistics, 2016 U.S. Dist Lexis 69158)

The District Court in Kansas denied an insurer’s request to dismiss a direct action asserted under a Kansas statute allowing direct action against trucker insurers.  Although generally there was no basis for personal injury against the insurer the Court held that the traditional notions of fair play and substantial justice warranted compelling the insurer to litigate in the state.  (Brown v.  Javier Carmona Ceballos, 2016 WL 3015046)

Selecting a forum is often a critical piece of litigation assessment. The Supreme Court of Texas held that a trucking company’s suit for recovery of property damages was first in line preceding the suit filed for the personal injuries of other parties in the accident.  The Court held that the actions of the trucking company in allegedly paying some expenses of the injured party did not preclude them from being first to file their own suit for damages.  This allowed the trucking company to select the venue for the overall litigation.  (In Re J.B. Hunt, 2016 WL 3159215)

Whether the parking of a tractor trailer on the side of the road, 20 inches into the travel lane, was the proximate cause of a fatal accident was determined by the Court in Illinois to be a question of fact.  While admittedly it was a factor in the accident, the actions of the opposing driver could reasonably be considered the proximate cause.  The Court also considered whether to accept the expert testimony of Donald Hess who was proffered by plaintiff as an expert in the standards governing truck drivers.  (Ashley v. Schneider National Carriers, Inc., 2016 WL 3125056)

Interesting case brought by a trucker against the State of Texas contending that it is improper for the state of Texas to require an insurance filing separate from the FMCSA required filing.  The motor carrier had his state authority revoked when his insurer failed to file a state insurance filing.  The Court denied the State’s motion to dismiss which was based upon a claim of sovereign immunity but bounced the case to Western District in Texas.  We will report on any further developments we hear on this interesting issue.  (Rushfeldt v. State of Texas, 2016 WL 3094102)

CARGO

A contractual limitation of liability entered into by a company which was related to the plaintiff was held applicable to the plaintiff in the Eastern District in Michigan.  The Court held that there was adequate evidence that the parties understood that the limitation was applicable to all related companies and that opportunity to declare a value and notice was present.  (Kelly Aerospace Thermal Systems v. ABF Freight Systems, 2016 WL3197561)

In the District of New Jersey the Court refused to enforce a limitation of liability, concluding the liability of the carrier was not limited by the value declared on the bill of lading but was instead governed by a contract.  The Court held that where the contract and the bill of lading were inconsistent the contractual provision which indicated that the contract overrode the bill of lading would govern.  (Indemnity Insurance Co. of North America v. UPS Ground, 2016 WL 3190554)

The Eastern District of Wisconsin held that there was a question of fact as to the applicability of a limitation of liability when the shipper drafted a bill of lading which included an NMFC limitation of liability, denying plaintiff’s motion to dismiss.  The Court held that the rules are not necessarily applicable when the shipper drafts the bill of lading as there is no need to protect the shipper from itself.  (Allianz Global Risks US Insurance Co. v. Kutzler Express, 2016 U.S. Dist. Lexis 67257)

A bill of lading which stated that the parties agreed to submit to jurisdiction in a certain venue was permissive and not mandatory.   The Court held that the suit against the household goods carrier for overcharge and damages was not going to be transferred to the bill of lading venue. The District Court in Nevada held that the plaintiff could continue the action in his own state.  (Viswanathan v. Moving USA, Inc. 2016 WL 3267297)

That’s all for now. Have a great July.