We hope that you had an excellent Thanksgiving break and are ready to hit the home stretch for 2015. We would like to take this time to express our thanks for your continued support. We truly enjoy working with you all, both professionally and personally.

It has been a quiet month other than the issues raised by the Highway Bill. Even our case section is small this month as even the Courts are slow with releases on topical cases. Everyone seems to be in a food coma. This month we report:

CSA AND THE HIGHWAY BILL – Of course we have to start with the latest news concerning the public release of CSA scores, a topic high on the agenda of many as companies plan for 2016 underwriting protocols. Congress passed a short term extension for highway funding until December 4th as it continues to work out differences in the highway bill. This is the 30th extension and claimed by Congress to be the last one. As you are aware the current House and Senate versions include provisions which will remove the CSA BASIC score from public record. It will not, however, remove the data, including the inspections reports. There will be no impact on our production of this data or our proprietary analytics. As always CAB will continue to provide you with a detailed analysis of the inspections reports and related BASIC type scoring.

HOURS OF SERVICE – The hours-of-service restart rules for truck drivers will continue to remain suspended as the mandated restart study has not yet been completed. The study was required following enactment of a law which suspended FMCSA’s rule requiring truck drivers to take off two consecutive periods of 1 a.m. to 5 a.m. during a 34-hour restart.

DRIVER MEDICATION REPORT – The FMCSA has sought public comment on a proposal to create a voluntary driver medication form designed to help medical examiners determine if prescription drugs being taken by a driver could interfere with the driver’s ability to operate a commercial vehicle. The agency said the form would include a listing of all medications and dosages prescribed, what medical conditions are being treated with the medications, and a statement by the driver’s physician that the driver is fit to drive when using the medications.

REGULATIONS – A final federal rule that would prohibit carriers, shippers and brokers from coercing truck drivers to violate safety regulations cleared review by the White House Office of Management and Budget (OMB). A final electronic logging device rule cleared OMB on Nov. 16. The coercion ruling is published in the November 30, 2015 Federal Register the other should be published momentarily. In additional the OMB is expected to conclude its review of a proposed speed-limiter rule for heavy trucks and the rule issued in December.

TRUCK FATALITIES – A recent federal study has revealed that fatalities among pedestrians and bicyclists in large-truck crashes increased at a faster rate than overall truck-related crash fatalities from 2009 to 2013. In 2013, the year with the most recent crash data available, 338 pedestrians and 78 bicyclists were killed in crashes involving large trucks, 30% and 39% increases over 2009. In 2009, there were 259 truck-involved pedestrian deaths and 56 among people on bicycles. The study released the following charts:

Source: FMCSA

ATRI CSA STUDY – The American Transportation Research Institute has released a report which contends that when they eliminated non-preventable accidents from a sample of 15 motor carriers’ CSA safety measurement scores there was a significant positive change in a majority of the carriers’ Crash BASIC percentile scores. Non-preventable crashes included animal collisions, other vehicles hitting legally parked trucks, other vehicles running a stoplight or sign and hitting trucks, crashes in which the operators of the other vehicles were driving under the influence and so-called “truck-assisted suicides.” The study was only based upon 17 carriers, with eighty-six percent of the carriers operating more than 1,000 power units.

DOUBLE TRAILERS – The Senate voted to remove a federal mandate from the Transportation and Housing and Urban Development appropriations bill that would have forced states to allow large trucks to pull double 33-foot trailers. Currently, 38 states do not allow these longer trucks to operate within their jurisdictions.

CONGESTION – The Tom Moreland Interchange in Atlanta has been voted the top trucking bottleneck in the American Transportation Research Institute’s 2015 Congestion Impact Analysis of Freight-Significant Highway Locations. The survey assesses the level of truck-oriented congestion at 250 locations on the national highway system. The top 10 locations on the ATRI list this year are:
1. Atlanta, I-285 at I-85 (north)
2. Chicago, I-290 at I-90/I-94
3. Fort Lee, New Jersey, I-95 at SR 4
4. Louisville, Kentucky, I-65 at I-64/I-71
5. Houston, I-610 at U.S. 290
6. Houston, I-10 at I-45
7. Cincinnati, I-71 at I-75
8. Houston, I-45 at U.S. 59
9. Los Angeles, SR 60 at SR 57
10. Houston, I-10 at U.S. 59.

CASES:

CARGO:

We saw an important decision this month from the 6th Circuit. The Court overturned a lower court decision which had held a motor carrier liable to indemnify a broker for a cargo loss in excess of a possible limitation of liability. The Court held that the Carmack Amendment did not give the broker a cause of action against the motor carrier under the Carmack Amendment and that the broker had no standing to sue on its own behalf. As the broker was also the assignee of the cargo owner the Court remanded the case to determine if the carrier had properly limited its liability under the bill of lading. (Exel v. Southern Refrigerated Transport, 2015 WL 6743551)

A motor carrier’s efforts to have a complaint dismissed against it failed in the District Court in Ohio. The Court held that the plaintiff sufficiently pled a cause of action against the motor carrier under the Carmack Amendment. The allegation in the complaint that the execution of a bill of lading by the motor carrier evidenced delivery in good order and condition was sufficient to allow the action to continue. The Court also held that the plaintiff was not required to specifically plead every element of a claim in the complaint. (Mitsui Sumitomo Insurance Co. v. Daily Express, 2015 WL 656546)

The District Court in New Jersey denied a plaintiff’s efforts to seek reconsideration of an earlier decision enforcing a limitation of liability. The Court held that the plaintiff failed to assert any additional law or evidence to support a conclusion that a motor carrier was required to provide for multiple options when allowing for subsets on limitations of liability (Choi v ABF Freight Systems, 2015 WL 6523473)

The District Court in Oregon denied a broker a request for reconsideration of last month’s decision denying summary judgment to the broker on its claim for payment of a cargo claim. (see last month’s bits) The Court held that the failure to raise jurisdictional issues in the original motion precluded them from being considered in support of plaintiff’s request for reconsideration. (Complete Distribution Services v. All States Transport, 2015 WL 6739125)

Although recovery was sought under the Carmack Amendment, the District Court in Puerto Rico concluded that it had diversity jurisdiction when the plaintiff, suing in subrogation, was also permitted to add in the insured’s deductible. That addition brought it over the jurisdictional limit. (Starrr Indemnity & Liability Co. v. Rios, 2015 WL 7104413)
A plaintiff was successful in obtaining a default judgment for a full cargo loss against a motor carrier in the District Court in New Jersey. An affidavit which included support for the value of the freight was enough to support the claim for damages. (Moroccannoil v. JMG Freight Group, 2015 WL 6673839)

AUTO:

Punitive damages are difficult against a motor carrier and the driver when there is no evidence to support a claim for them. The Southern District of Indiana dismissed the causes of action against the motor carrier as there was no evidence that the motor carrier was aware of any driver violation of hours of service. The punitive claim was also dismissed against the driver as there was no evidence that this was anything other than an accident. (Vogler v. James R. Poshard & Son, Inc. 2015 WL 6158790)

Hope everyone is well as we head into the Labor Day holiday.  It has been a pretty nice summer here on the Jersey shore.  We hope you had an opportunity to take some time off.

We are gratified by the great reaction to Analysis Central™, our newest feature, which gives you instant access to reports and analysis giving you a deeper and more insightful review of a motor carrier and its operations. For those of you who missed our live webinar introducing Analysis Central™ it can be viewed here, or accessed along with many other recorded webinars in the “About CAB – Webinars” section of our subscriber website (you need to be logged into our subscriber site to view a webinar).

August is a quiet time with little happening in the industry.  We did find some news to report:

CARGO THEFT – Freightwatch has reported that the number of incidents of cargo theft in the United States is down slightly.  The last quarter saw 178 incidents of cargo theft. The average loss was $189,307.   Food and drinks continue to be the most-stolen product type, accounting for 16 percent of total thefts. Home and garden supplies and electronics followed, with 14 and 13 percent of the thefts.  Texas took the lead, followed by New Jersey, California, Florida and Georgia as the high crime areas.   Most thefts continue to occur in unsecured parking lots, followed by thefts from warehouses and distribution centers and secured lots Full truckload thefts were the most common.  Identity theft is now on the radar, accounting for 5% of the thefts.

PARKING – The DOT released a survey on the lack of safe parking for trucks.  The DOT’s findings in the “Jason’s Law Truck Parking Survey Results and Comparative Analysis” confirm that there are shortages in almost every state.   Almost half of the state departments of transportation surveyed reported that truckers were forced to park on freeway interchange ramps and shoulders of highways, which represents a safety issue both for the drivers and the freight. A complete copy of the report can be viewed here.

TRAFFIC REPORTS – New estimates released by the FHWA show that U.S. driving topped 1.54 trillion miles in the first half of 2015, beating the previous record – 1.5 trillion, set in June 2007. This is more than double the amount driven during the same period in 1981, continuing a trend of America’s driving mileage doubling nearly every generation. The new data shows that 275.13 billion miles were driven last June, the most ever in June of any year and the highest VMT for the first half of any year.

TRAFFIC DEATHS – Following the increase in mileages traveled the National Safety Council reports that traffic deaths were up 14 percent nationally in the first six months of this year and injuries were up by a third.  Unfortunately the percentage of fatalities was greater than the increase in mileage driven.

FTR TRUCKING CONDITIONS – FTR’s Trucking Conditions Index (TCI) measure for June was back on the upswing, up 56 percent to 7.66, a new high for 2015.  According to Jonathan Starks, FTR’s director of transportation analysis, FTR expects regulatory conditions and a continued economic recovery to fuel an accelerating index during 2016. FTR concludes that the reports supports that freight growth has slowed but is on track for the sixth straight year of annual gains, reduced fuel costs are helping everyone in the transportation industry and finally that if fuel prices increase as capacity is tightening freight rates should increase.

CDL OVERSIGHT – The GOA has reviewed the FMCSA policy for overseeing states’ compliance with the agency’s CDL regulations, including requirements for FMCSA field office personnel to conduct periodic reviews. The GAO said the 2013 FMCSA policy had several weaknesses and recommended that the FMCSA should clarify agency policy by revising policy documentation, issuing additional guidance, training, or other mechanisms on (1) what oversight of states will be conducted by FMCSA in terms of the frequency and type of required and recommend reviews, (2) how compliance determinations should be made and documented, and (3) what information and documentation must be recorded and available to FMCSA management on oversight activities and compliance determinations. They also recommended that the FMCSA improve or obtain a mechanism for tracking oversight activities in order that FMCSA management has a clear and accurate understanding of oversight activities and that they are being conducted in accordance FMCSA oversight policy.

CURRENT CASES

AUTO

Continuing in our efforts to report on various experts who were permitted, or not permitted to testify in trucking cases, this month the Southern District of Mississippi considered the testimony of Chris Bloomberg and Emmett Gamel, experts proffered by the plaintiff.  The Court held that Gamel could not testify on whether the tractor and trailer had sufficient braking capabilities to allow stopping within a reasonable distance but that he could testify as to what a driver could see in a pre-trip inspection. As to Bloomberg he was not permitted to testify as to various facts which were relevant to the reconstruction of the accident.  (Cameron v. Werner Enterprises, 2015 WL 4459068)

We do not see many cases on contingent auto policies, although we suspect that they will start to move up the judicial chain as more plaintiffs look at brokers as a source of recovery.  The Appellate Court in Illinois held that there was no coverage under a contingent auto policy issued to a broker when the insurer crafted the policy to provide no coverage when there was other valid and collectible insurance.  As the motor carrier’s policy also provided coverage to the broker the contingent coverage was inapplicable.  The broker’s argument that the contingent was intended to be excess over the carrier’s policy was not accepted by the Court.  (Bartkowiak v. Underwriters at Lloyd’s Lindon, 2015 IL App 133549)

One insurer was successful in invoking the policy condition of notice and cooperation when it was not given notice of a suit until 2 years after it was commenced.  The Northern District in Mississippi held that the insurer was prejudiced and then went on to also conclude that the defendant was not a “insured” under the policy  because it was not liable for actions of any other insured and that the MCS-90 could not be triggered because there was no judgment against an insured.  (Stephens v. Progressive Gulf Insurance Company, 2015 WL 4742581)

The failure to designate a primary expert during the discovery process was fatal for a motor carrier when it tried to designate an expert after the plaintiff proffered an expert on a critical issue.  When the issue to be addressed was a principal issue in the case the carrier was held to have waived the right to designate the expert by not doing so during initial the time for initial designations.  (Pulido v Cemak Trucking, 2015 Cap App Lexis 5733)

What to do when a corporate entity dissolves? One carrier determined that it would cease participation in the suit it was defending.  The District Court in California has imposed sanctions on the dissolved corporation and has now ordered that it appear to explain why a default should not be entered. It is unclear what the plaintiff will do with a judgment against a dissolved corporation. (Prussin v Bekins Van Lines, 2015 U.S. Dist Lexis 102793)

How often to underwriters simply reference a schedule on file with the carrier to indicate the vehicles covered?  Be aware that in Kentucky incorporation by reference to other documents is not permitted when it will result in a denial of coverage.  The Court of Appeals in Kentucky held that an excess carrier, who intended only to write excess over certain vehicles, was prohibited from relying on extrinsic evidence in the schedule and was determined to cover all vehicles covered by the primary policy. This decision was reached despite the evidence that coverage was sought only for certain vehicles.  (General Star Indemnity Co v. Withrow, 2015 W 4880292)

The Northern District of Alabama denied an insurer’s motion to dismiss a complaint on the grounds that there was no direct action permitted against an insurer in the absence of a judgment. The Court held that as the insured had crossed claimed for coverage it would realign the parties and allow the case to proceed with the insured becoming the plaintiff.  (Fowler v. Canal Insurance Co. 2015 WL 4656474)

When the driver drives away and fails to verify that someone was still unloading freight is the auto or g/l policy triggered for that liability?  The 7th Circuit concluded that the auto liability policy for the trucker provided the coverage as it arose out of the use of the auto and was not caused by the unloading of the vehicle. The use of the forklift prior to the accident was not the correct focal point for determining coverage as it bore no connection to the accident.  (National American Insurance Co. v. Harleysville Lake States Insurance Company, 2015 WL 4548120)

It just cannot be good when an opinion starts with “This case provides a warning for insurance companies who refuse to defend their insureds”.  The 7th Circuit held that an insurer was obligated to provide a defense to the defendants, even though the insurer believed that an exclusion which precluded coverage when the insured was acting on behalf of another trucking company was applicable.  The Court dissected the complaint, finding that the alternative pleading was enough to possibly assert a cause of action which would be covered by the policy.  As the insurer failed to defend it was unable to assert defenses to the indemnity claim and the exclusion was held inapplicable for that reason. (National American Insurance CO v. Artisan and Truckers Cas. Co., 2015 WL 4645245)

Broker liability continues. The First District Court in Florida held that the broker was vicariously liable for the actions of the driver when there was evidence of a right on the part of the broker to control the operations of the motor carrier.  Separately the motor carrier was obligated to fully indemnify the broker, with the Court concluding that a requirement that there be a million dollars in auto coverage was not a limitation on the indemnity obligation  (McHale v. WD. Trucking, 2015 Il App (1st) 132625)

CARGO

A motor carrier who sued a shipper in state court for unpaid freight charges was not permitted to remove the action to federal court when the defendant asserted a claim under the Carmack Amendment. The Northern District in Oklahoma concluded that the removal was permitted only for an original action.  (Southeastern Freight Lines, Inc. v.  CDCLaure, 2015 WL 4623756) In other removal news the District Court in Texas held that a motor carrier was not entitled to remove a case when it was brought in as a third party defendant even though the third party action sought recovery under the Carmack Amendment.  The Court held that the third party cause of action was not separate from the primary action and therefore was not removable.  (Air Liquide Mexico v. Hansa Meyer Global Transport, 2015 U.S. Dist LEXIS 103525)

In a related decision to the above case, the same Court held that a cargo claimant could not assert a Carmack claim against a party who only provided supplies for the transport.  The Court also held that plaintiff was not bared from pursuing a claim when it had already received payment for the loss from its insurer, that allegations in the complaint of notice of possible consequential damages was enough to allow the case to proceed on the claim for those damages, that there could be more than one delivering carrier for purposes of liability under Carmack and that there was a question of fact as to whether the plaintiff was on notice of a limitation.  (Air Liquide Mexico v. Hansa Meyer Global Transport, 2015 U.S.  Dist 100650)

The failure to protect corporate status can result in personal liability to the owner. The Northern District of Illinois held that the principle of an LLC bore personal liability for a cargo loss when it failed to maintain its corporate status.  (Custom Companies, Inc. v. Azera, 2015 WL 4467020)

Identity theft in cargo losses is becoming more and more prevalent  This month the Northern District of Illinois held that a motor carrier was not entitled to summary judgment when it denied that it was the carrier who picked up the shipment, claiming that its identity was stolen. The court held that it was a question of facts to whether there was identity theft.  In addition, the Court held that another party was not entitled to the benefit of an airway bill of lading when the airway bill ended at the airport and a second bill of lading was issued for the domestic move.  (LIP Insurance Co v. ZP Transport, 2015 WL 4725004)

Speaking of through bills of lading, when is a bill of lading a through bill of lading?  The District Court in South Carolina held that when the destination is noted on the bill of lading, the shipment is pre-paid through final delivery and there is no other bill of lading the ocean bill of lading will be a through bill of lading even if on carriage is not noted on the bill of lading.  The action against the motor carrier was dismissed as the ocean bill of lading precluded the cause of action against the downstream carrier.  (G&P Trucking Co., Inc. v. Zurich American Insurance Co., 2015 U.S. Dist. LEXIS 109951)

A broker was entitled to full indemnity from a motor carrier for payment made to its customer for a cargo loss. The motor carrier’s argument that the Carmack Amendment did not apply to a non-negligent theft was not accepted by the District Court in South Carolina. (Annett Holding, Inc., d b a TMC Logistics v. A I Trucking Service, LLC, 2015 US Dist Lexis 111416)

The District Court in New Jersey concluded that it had no jurisdiction over a claim seeking damages to a home during a household goods move.  The Court held when there was no cargo claim the case would be sent back to state court.  (Brudnak v. AA Moving & Storage, 2015 U.S. Dist. LEXIS 107397)

The Northern District of Illinois held that simply incorporating a tariff into a bill of lading is not enough to establish that the shipper accepted the limitation of liability.  The Court held that there must be actual notice and agreement to the limitation. (Hisenese USA Corp v. Central Transport, LLC, 2015 WL 102852)

Happy Labor Day.