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.

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.