Since you are all, hopefully, spending time digesting the annual report which also went out this week we are going to keep the “Bits and Pieces” extra short. There is not much news to report as the first part of the month was spent recapping last year and the second half of the month was consumed with the inauguration. President Obama is now in charge and Ray H. LaHood is now the sixteenth U.S. Secretary of Transportation. Change is on the way.
We also remind you that our annual seminar is now open for registration. The seminar is generally oversubscribed and we recommend that you register as soon as possible. You can get to the registration and program information by clicking here.
HOURS OF SERVICE – As one of his last actions before leaving the office at the FMCSA, John Hill rejected the appeal filed opposing the final hours of service rules. Mr. Hill indicated that the FMCSA data has not revealed any increase in accidents since the implementation of the rules in 2003. Don’t think that this is the end of the story. It is expected to be brought before the new governing body at the FMCSA. CARRIER BANKRUPTCIES – According to one analyst, only 375 carriers failed in the fourth quarter of 2008. There were 1,905 in the first half of 2008 and 785 in the third quarter. The reduction in the number of carriers ceasing operations is believed to have been assisted by the drop in fuel prices. The drop in fuel costs, which is one of the largest components of a carrier’s operation, helped stave off bankruptcies for some carriers operating on the edge.
ELECTRONIC ON-BOARD RECORDERS – It appears that it is back to the drawing board for rule making on electronic on board recorders. The outgoing FMCSA was unable to get proposed rulemaking into place before end of the Bush Administration. With the order out to stop any proposed Bush Administration regulations which were in the works, this one may take a while.
In conjunction with the directive that all regulations be placed on hold, the Obama Administration has held up any of the final rules which were put into place. As we previously reported, three new regulations were published at the end of last year, including the regulations for intermodal chassis, driver medical certifications and new entrant safety assurance. The final rules, which had not gone into effect, will be delayed for 60 days and another open comment period for 30 days will be provided.
DRUG TESTING TASK FORCE – A task force created by Congress has recommended the creation of a central data base for drug and alcohol test results. The panel was established under the current highway bill to study commercial licensing. This should be an issue for the Obama administration.
CURRENT CASES:
The Eastern District of Kentucky considered the application of primary/excess provisions in two polices. One insurer provided coverage for the scheduled vehicle involved in the accident, although its insured did not own the vehicle, while the second insurer covered all owned vehicles for the actual owner. The court held that both insurers provided primary coverage and both were obligated to defend the personal injury action. (Zurich American Ins. Co. v. Westfield Ins. Co., 2009 WL 78369)
Permissive users and the issue of when use is incidental to business operations was the subject of a summary judgment in the Western District of Pennsylvania. The court determined that the insurer did not provide coverage where the driver of the vehicle took it from his employer, a tow operator, without permission and was not performing any employment operations at the time. (State Auto Mut. Ins. Co. v. McCutcheon, 2009 WL 36446)
The Maryland Court of Appeals was asked to decide whether the Maryland Port Authority and its terminal operator were responsible for the negligence of a trucking company and its driver when the driver killed a longshoreman. The court held that they did not exert enough control over the act of connecting containers to trucks to make them responsible. (Appiah v. Hall, 2008 WL 5413167)
In an interesting turn of events a carrier actually sought to increase the damages sought by a plaintiff. Defendant has removed the case to federal court under the Carmack Amendment and the plaintiff sought to remand the case to state court, alleging that its damages were less than $10,000. Defendant argued that the plaintiff’s pre-suit demand of $15,000 was enough to establish the jurisdictional limit for suit in federal court. (DWC Co., Inc. v. CSX Transp., Inc., 2009 WL 150671)
In an interesting case a shipper of automotive parts sought damages when it could not certify a shipment with its quality assurance, even though there was no evidence that all of the parts suffered physical damage. The court held that the Carmack Amendment did not preclude recovery for damages because the goods could not be certified for use. The court held that this could be a reasonably foreseeable consequential damage. That raises an interesting question for coverage under a cargo policy if this is a consequential damage. (Zurich North America (CANADA) v. Triple Crown Services Co., 2009 WL 127754)
Efforts by a motor carrier to enforce its tariff limitation were ineffective in the 9th Circuit this month. The court held that as neither the tariff, the bill of lading nor the carrier’s pricing agreement offered a choice of rates the limitation would be invalid. (Shielding Intern., Inc. v. Oak Harbor Freight Lines, Inc., 2008 WL 5401446)
A driver sought to recover from a logistics services provider when she was injured by an improperly loaded pallet. All parties were aware that the pallet was improperly loaded prior to commencing transport. The court considered whether the logistic provider, who was also a licensed motor carrier, would be required to met the standards of the federal motor carrier safety regulations for loading, and concluded it would not. The court also held that the driver could not pursue the logistics provider for being part of an improper loading which the driver was fully aware of that the shipment was improperly loaded. (Camp v. TNT Logistics Corp., 2009 WL 80242)
Plaintiff’s efforts to argue that a shipper was somehow liable under the Carmack Amendment for cargo damage to equipment which it purchased were thankfully unsuccessful in the Southern District of Texas. The court also held that a broker had no direct liability under the Carmack Amendment. D.M. Best Co., Inc. v. Summit Worldwide, LLC, 2009 WL 103595)
The 11th Circuit considered the application of a limitation of liability to a large cell phone loss. In this case the motor carrier had a contract with the transportation broker which limited its liability to $200,000. The court held the shipper bound by the limitation entered into between the carrier and the intermediary. (Werner Enterprises, Inc. v. Westwind Maritime Intern., Inc. 2009 WL 57764) In the Eastern District of New York the court refused reconsideration of its decision in which it determined that a shipper was not bound by the limitations in a carrier’s contract with an upstream party. (Trans-Pro Logistic, Inc. v. Coby Electronics Corp.. 2009 WL 36824)
In Florida the issue was raised as to whether IUM coverage was in place with the insurer had not physically received the rejection until after the loss. The court held that the rejection would be valid as long as it was actually executed prior to the loss. The driver’s efforts to avoid its employer’s rejection of the additional coverage were unsuccessful. (Word v. Illinois Union Ins. Co., 2009 WL 152866)
A driver is not automatically deemed negligent simply because he was operating a tractor on a prohibited roadway. In Kentucky, that will simply be considered a factor to be weighed when determining the comparative fault of the parities. (Brantley v. Asher, 2009 WL 126865)
Cargo falling off a trailer and striking a motorcycle following behind will not be considered a hit and run accident for UM coverage. In Wisconsin a motor carrier transporting sand lost some portion of the shipment, which struck and injured the plaintiff. The plaintiff was denied UM coverage as cargo was not considered part of the operating vehicle. (Progressive Northern Ins. Co. v. Phillips, 2009 WL 88871)
Preemption under Carmack, even for fraud claims in the 9th Circuit. Nothing more to say that has not already been said. (Gendler v. All Pro Van Lines, 2009 WL117970)
Short and to the point. Have a great month.
