This has been a quiet month overall with little news from the transportation industry and dearth of cases which impact trucking exposures.  I guess everyone is ready for the summer slowdown.  I heard everyone had a great time in San Diego at the IMUA annual meeting and I am sorry I missed it.  I extend my congratulations to Rich Soja, Michelle Blank and Alexander McGinley for receiving the well-deserved IMUA annual awards.

As we take the time to celebrate the Memorial Holiday please take a moment to remember the reason for the holiday as we thank those who have served our country well over the years.

This month we report:

UNIFIED CARRIER REGISTRATION – It’s coming.  As you may have heard the URS rule will apply to all interstate motor carriers (including private and for-hire passenger and property motor carriers), freight forwarders, brokers, intermodal equipment providers (IEPs), hazardous materials safety permit (HMSP) applicants/holders, and cargo tank manufacturing and repair facilities under regulation by the FMCSA, except Mexican-domiciled carriers conducting long-haul operations. The URS will require online registration and forgo use of the MC number, relying only on a DOT number. URS will also keep a record of insurance filings and BOC-3 requirements. It replaces multiple forms and the registration functions of several systems such as the Licensing and Insurance System and the Motor Carrier Management Information System (MCMIS).  All applicants will begin using URS for registrations and changes starting September 30 so insurers should start to pay attention to changes which they may need in their operational model.  Enforcement for existing operations will be effective December 31.

TOW COMPANIES – It has been reported that the Public Service Commission of West Virginia has recommended that a tow company refund $185,894.91 to a trucker after it determined that the wrecker overcharged and charged non-allowable charges.  It is an interesting issue to follow as the issue of outlandish tow bills continues to plague the industry.  As we find out more we will report further.

2016 POCKET GUIDE – The FMCSA announced the availability of its 2016 Pocket Guide to Large Truck and Bus Statistics. The pocket guide is an annual publication that contains extensive information on the overall state of the commercial motor vehicle (CMV) industry, safety enforcement activity, large truck and bus crashes, and further data.  You can download the guide here.

HOURS OF SERVICE – And the fight goes on. We have dueling transportation bills in the House and the Senate which would impact the hours of service restart rules.  The House bill defunds enforcement of the regulation that drivers take off between 1 am and 5 am on consecutive days.  Over in the Senate a funding bill was passed that sets 73 as the number of hours before a trucker must take a break.   We expect to report in the next month some movement toward resolution of the HOS rules between the two.

CASES

CARGO

The applicability of bill of lading provisions when there is a service agreement in place continues to be a subject of litigation.  This month the Middle District of Florida held that a forum selection clause in a bill of lading would govern a dispute between the shipper and the carrier even though not mentioned in the service agreement.  The Court held that while the service agreement governs the overall relationship of the parties, the bill of lading governs the contractual terms for the specific transport and enforced the forum selection clause.   (Ponte Vedre Gifts & Accessories v. APL Logistics, 2016 WL 2854207)

Imposter claims are on the rise and the applicability of coverage for those losses continues to be an issue.  The Southern District of New York addressed the issue of first party coverage under a first policy with fraudulent bill of lading coverage where a shipper was duped into releasing freight. The Court held, initially, that the theft by the imposter was a theft in transit and not subject to any applicable exclusion under the transit policy. The Court went further, addressing the additional coverage afforded under the fraudulent bill of lading coverage extension and concluded that the clause applied when the shipment was stolen there was a fraudulent bill of lading issued and that acceptance of that bill of lading by the insured triggered the loss. The Court also considered the meaning of the phrase “shipping contract”, a phrase commonly used in cargo policies.   The Court concluded that the term meant any document used in the ordinary course of shipping and would not include a master service agreement or delivery receipts.  While coverage was afforded under the main form it was not afforded under this extension of coverage.  It should be noted that the result would have been different if in fact there was a bill of lading issued.  (AGCS Marine Insurance Co. v. World Fuel Services, Inc., 2016 WL 2918428)

AUTO

An insured sought a defense and indemnity under a management liability policy for an action commenced against it by a driver.  The 7th Circuit held that the driver was a dispensable party to that suit and dismissed him to preserve federal court diversity. The Court concluded that the insured could not state a cause of action against the insurer as the policy contained an exclusion for contractual liability and the driver’s claims were all based on a contract with the motor carrier.  (Altom Transport, Inc. v. Westchester Fire Insurance Co., 2016 WL 2956834)

The last few months we have had a number of inquiries regarding liabilities stemming from the “Uber” type operations.  The Northern District in California considered a motion to dismiss filed by Uber for tort actions commenced against it seeking damages for alleged sexual assaults by drivers.  The Court denied the request to dismiss fraud claims, claims under respondeat superior and claims for punitive damages.  The Court ruled that there was a potential for Uber to be held liable as a common carrier and not a broker of carriage services.  Allegations of negligent hiring were also able to stand for tort claims against one driver.  (Doe v. Uber Technologies, Inc. 2016 WL 2348296)

An insurer was successful in defeating a claim under its auto liability, or exposure under the MCS-90 endorsement.  The Eastern District of Virginia held that when neither the tractor nor trailer was scheduled on the policy there would be no duty to defend or indemnify.  The Court held that the MCS-90 did not apply when the driver was not operating as for hire carrier at the time of the loss, was not transporting property and was not engaged in interstate or foreign commerce.  (OOIDA Risk Retention Group, Inc. v. Griffin 2016 US Dist LEXIS 57469)

An insurance agent was successful in defeating a claim by an insured that that the agent failed to procure a second level of excess coverage on all vehicles operated by the carrier.   The District Court in Colorado held that there was no evidence to support any failure by the agent, who properly advised the insured as to its coverage options when it sought that additional excess limit for certain operations only.  (Valley Equipment Leasing, Inc. v. McGriff, Seibels & Williams of Oregon, 2016 WL 1697861)

While this was an odd one!  The Eastern District of Louisiana held that it would not remand a personal injury action against a trucker and its insurer where it was apparent that the damages would exceed $75,000, the minimum limit for a diversity action.  It was odd because the plaintiff submitted an affidavit that the damages were not in excess of $75,000, yet both the defendant and the Court took the position that the damages were likely greater than what plaintiff insisted it suffered.  (Treqknia Bannister v Ace American Insurance Co., 2016 WL 2347861)

More and more brokers are getting sued for auto accidents and the question is where the coverage for that liability will rest.  The Eastern District of California considered whether a truck broker’s general liability policy provided coverage for allegations against the broker arising from a trucker’s accident.  The Court denied the insurer’s motion on the pleadings concluding that the issue and meaning of the applicability of the modified auto exclusion would need to be addressed in the suit and would not allow for judgment based only on the pleadings.  (Penn-Star Insurance Co. v. Trinity Logistics Group., 2016 WL 2625922)

Have a Safe and Happy Holiday.

 

Looking forward to meeting up with many of you at the IMUA annual meeting.  Please stop by and visit with Tiana and me and learn what’s new at CAB.

This month we report;

SAFE FOOD TRANSPORT REGULATIONS – The FDA has released the new regulations related to the safe transport of food product.  These new regulations will have a serious impact on the transport of certain food products and need to be considered by underwriters of food haulers.  I have been addressing this issue with many different groups over the last few weeks and have a recent article in the Spring Edition of Claims Litigation Management that you might want to check out if you are a member. We would like to know if this would be an interesting topic for our next quarterly session.  Let us know!

The FDA Food Safety Modernization Act establishes requirements for shippers, loaders, carriers by motor or rail vehicle and receivers involved in transporting human and animal food to use sanitary practices to ensure the safety of that food.

Specifically, the rule establishes requirements for:

Vehicles and transportation equipment: The design and maintenance of vehicles and transportation equipment to ensure that it does not cause the food it transports to become unsafe. For example, they must be suitable and adequately cleanable for their intended use and capable of maintaining temperatures necessary for the safe transport of food.

Transportation operations: The measures taken during transportation to ensure food safety, such as adequate temperature controls, preventing contamination of ready to eat food from touching raw food, protection of food from contamination by non-food items in the same load or previous load and protection of food from cross-contact.

Training: Training of carrier personnel in sanitary transportation practices and documentation of the training. This training is required when the carrier and shipper agree the carrier is responsible for sanitary conditions during transport.

Records: Maintenance of records of written procedures, agreements and training (required of carriers). The required retention time for these records depends upon the type of record and when the covered activity occurred but does not exceed 12 months.

You can review the FDA regulations at a glance here.

TRUCK SIZE AND WEIGHT LIMIT – The DOT released the results of its mandated Comprehensive Truck Size and Weight Limits Study. They concluded that they don’t have enough data to recommend a change in the requirements.  You can read the report here.

The study analyzed five technical areas:

Highway safety and truck crash rates, vehicle performance (stability and control), and inspection and violation patterns;

Shifts in goods movements among truck types and between modes;

Pavement service life;

Highway bridge performance;

Truck size and weight enforcement programs.

The results suggest that increasing size and weight will decrease costs and increase safety hazards but with results insufficient for full conclusions.

LARGE TRUCK FATALITIES – The FMCSA also released a report on large truck involved fatal crashes, showing a decrease in 2014 of 5% down to 3,744 total crashes. The decline in number of fatalities involving large trucks and buses declined 2% to 4,161, all with an increase in miles traveled.  The FMCSA reports the following trends:

In 2014, 3,978 large trucks and buses were involved in fatal crashes, a 5-percent decrease from 2013. From 2013 to 2014, large truck and bus fatalities per 100 million vehicle miles traveled by all motor vehicles decreased by 4 percent, from 0.143 to 0.138. There was a 33-percent decrease in the number of fatal crashes involving large trucks or buses between 2004 and 2009, followed by an increase of 20 percent between 2009 and 2013. From 2013 to 2014, the number of fatal crashes involving large trucks or buses decreased by 4.5 percent. The number of injury crashes involving large trucks or buses decreased steadily from 95,000 in 2004 to 60,000 in 2009 (a decline of 37 percent). This decline was followed by an increase of 55 percent from 2009 to 2014. On average, from 2004 to 2014, intercity buses accounted for 13 percent, and school buses and transit buses accounted for 41 percent and 33 percent, respectively, of all buses involved in fatal crashes. Over the past year (from 2013 to 2014): The number of large trucks involved in fatal crashes decreased by 5 percent, from 3,921 to 3,744, and the large truck involvement rate (large trucks involved in fatal crashes per 100 million miles traveled by large trucks) declined by 6 percent, from 1.43 to 1.34. The number of large trucks involved in injury crashes increased by 21 percent, from 73,000 to 88,000, and the large truck involvement rate in injury crashes increased by 21 percent. The number of large trucks involved in property damage only crashes increased by 31 percent, from 265,000 to 346,000, and the large truck involvement rate in property damage only crashes increased by 29 percent. The number of buses involved in fatal crashes decreased from 282 to 234, a decrease of 17 percent, and the bus involvement rate in fatal crashes decreased by 21 percent. Vehicle miles traveled (VMT) by large trucks increased by 1.5 percent, and bus VMT increased by 5.5 percent.

You can read the 120 page report at your leisure here

TRUCKING FAILURES – Avondale Partners reports that truck failures rose in the first quarter, due in part to reduced demand and stagnant freight rates.  1,025 carriers failed this quarter, which stalled 3,585 trucks. This was the highest number of failures since 2014.

ELECTRONIC IN-CAB CREDENTIALS? – 5 states are undertaking a pilot testing system that will allows drivers to use their cellphones, tablets and laptops to electronically present in-cab motor carrier credentials during road side inspections. The 2016 Motor Carrier Electronic Credential Pilot Program will allow drivers in Wisconsin, Michigan, Iowa, Illinois and Minnesota to produce IRPcards, trailer registration, for hire documents, IFTA licences, leases, COI and hazmat registration and non-hazmat bills of lading electronically . CDL, medical cards and regulation handbooks will still have to be produced in person.

BEYOND COMPLIANCE – The Federal Motor Carrier Safety Administration is proposing a new safety scoring category to reward trucking companies for safety programs which voluntarily exceed regulatory requirements and is requesting public comments on its proposal for a possible Beyond Compliance BASIC.  The FAST Act prescribes the eligibility for the Beyond Compliance program. As a result, this program is available to a motor carrier that:

1. installs advanced safety equipment;
2. uses enhanced driver fitness measures;
3. adopts fleet safety management tools, technologies, and programs; or
4. satisfies other standards determined appropriate by the Administrator

A copy of the notice can be viewed here.

CASES

AUTO

A trucking company’s pursuit of its insurance agent failed in the Eastern District of Kentucky. The Court held that the agent bore no responsibility when the trucker provided the agent with incorrect mileage which resulted in a higher premium which the trucker failed to pay. The Court also held that outside evidence that the agent was paid increased premium to advise the insured during the policy period the agent bore no liability for making sure that the trucker paid its premium.  (Hammond Transportation, Inc. v. Cottingham & Butler Ins. Services, 2016 WL 1255718)

While the fact that a driver had no liability insurance was evidence of negligent hiring, it was not the proximate cause of a truck accident and was therefore inadmissible.  The Court of Appeals in Maryland reversed a verdict against the truck driver and his employee, remanding the case back for a new trial.  (Perry v. Asphalt & Concrete Services, Inc. 2016 WL 1178073)

When is there a direct action against a truck insurer in Oklahoma?  The issue was addressed twice this month.  The Easter District of Oklahoma held that there was no direction against the insurer of one trucker who was not registered as an Oklahoma carrier. The fact that it was registered under UCR did not create a basis for a direct action under the Oklahoma statute which permits those actions.  (Mason v Dunn, 2016 WL 1178058) In another case the Court remanded an action in which the insurer was joined as a defendant. The Court held that the insurer was not fraudulently joined where the motor carrier was licensed in Oklahoma and therefore a direct action was permitted under Oklahoma law.  (Miller v. Jackson, 2016 WL 1464558)

The District Court in Kansas dismissed a claim of negligent hiring and attorney’s fees against a trucker.  The Court also held that plaintiff failed to provide a legal or factual basis for violations of Federal Motor Carrier Act and the Safety regulations.  The Court held that there was no private right of action under the MCA or FMCSA.  (Drake v Old Dominion Freight Lines, 2016 WL  1328941)

A plaintiff sought sanctions against a trucker who permitted the loss of driver records when the plaintiff was attempting to show that the driver was suffering from dementia and should not have been driving. The Middle District of Pennsylvania held that while the evidence was unavailable the remedy was simply to preclude the motor carrier from relying on the destroyed records or other evidence to show their contents to support defeating plaintiff’s claims.  (Botey v. Green, 2016 WL 1337665)

There would be no punitive damage or attorney’s fees claim against a trucking company when the plaintiff hit the defendant in the rear. The plaintiff claimed that the trucker negligently entered the roadway with a flat tire which ultimately caused the loss. The Court in Middle District of Georgia also held that the trucker’s motion to exclude plaintiff’s expert, Jeffrey Kidd, was denied. (Vannes v. Smith, 2016 WL 1260703)

The Court of Appeals in Texas upheld a jury verdict against a trucker owner for improper maintenance of the vehicle. The Court held that the fact that there may have been some unnamed other company involved in the maintenance did not preclude the finding against the trucking company.  The Court also held that defendant waived any venue arguments by waiting 18 months to seek a hearing on the issue and agreeing to a scheduling order.  (CMH Set & Finish, Inc. v. Taylor, 2016 WL 1254063)

Be careful of delaying the discovery process. The Western District in Pennsylvania held that a trucker’s failure to pursue proper discovery responses in a timely manner, waiting until discovery ended, precluded any right to get more discovery or depositions.  (Courtney v Ivanov, 2016 WL 1367755)

We don’t often see insurers trying to collect back payments made under the MCS-90. The District Court in Kansas held that an insurer’s claim was not subject to dismissal under the abstention doctrine when there was a related state case pending. The state case sought to obtain recovery for a large judgment against the motor carrier which was denied for breach of policy conditions while the federal action sought recovery for payments already made under the endorsement.  (Star Insurance Co. v. TLC Trucking, 2016 WL 1435250)

An insurer facing a claim for unfair claims and settlement practices jumped the gun in removing an action to Federal Court once the plaintiff settled with all of the state law defendants, creating diversity jurisdiction.  The Court held that when the removal was filed before the settlement with the state defendants was finalized the insurer could not assert diversity jurisdiction.  (Newsome v. Frederick & May Lumber Co, 2016 WL 1337299)

The former employer of an injured truck driver was not entitled to recover for losses suffered by the loss of the driver. The Court of Appeals in Ohio held that there was no evidence that the defendant had specific intent or inferred intent to harm the employer necessary elements for a claim for economic damages based upon defendant’s intentional conduct, (Wheeler Consulting v. Lavalley, 2016 WL 1180327.

CARGO

State law claims for indemnity under contract by a broker against a motor carrier were not preempted under the Carmack Amendment says the Northern District of Illinois. The Court did conclude that the broker had no claim under the Carmack Amendment as it was a broker and not a shipper and also that the breach of the cargo claim regulations did not provide for a private right of action.  (Traffic Tech v. Arts Transportation, 2016 WL 1270496)

If the bill of lading has one limitation and the contract another which one applies?  The District Court in Jersey held that there was a question of fact on which document trumped the other, deciding that a jury needed to decide if liability was limited to $15,000 or $1 million. (Indemnity Insurance Co v. UPS Ground Freight, 2016 WL 1261266)

You can plead alternatively against a broker in the Eastern District of Illinois. The Court held that as brokers are not liable under the Carmack Amendment they are not entitled to preemption for breach of duties that they might have under state law. Alternatively the claim against the broker as a carrier can also continue to be asserted.  (Sompo Japan Insurance Co. v. B&H Freight, 2016 WL 1392339)