Here we are again. Another fall season is upon us.  Just amazing how time flies.  It never seems like there is enough time to get everything done and it seems like I am always writing one of these articles.  Hope things are going well for you. This month we report:

NAFTA – The Inspector General for the U.S. Department of Transportation has released a report on the status of the FMCSA cross-border operations. While recognizing the inroads which have been made by the FMCSA, the report indicates that there remain inconsistencies in reporting traffic convictions of Mexican drivers, and there are still questions about Mexican drivers holding multiple licenses in order to avoid the impact of an offense which would otherwise disqualify them from operating in the U.S.  A full copy of the report can be viewed here.

In other NAFTA news, the BTS reports that inter-country trade was down 31.5%. Surface transportation, or freight movements by truck, rail and pipeline, accounts for about 88 percent of U.S. trade with Canada and Mexico. The value of imported trucked goods from Canada was 34.8 percent lower, with the value of exported goods dropping 28.8 percent. In trade with Mexico the value of the imported goods dropped 18 percent and exported goods dropped 14.3 percent.
BROKER FAILURES – At least one credit monitoring service has reported that broker failures have jumped 74% in the past year. 66 brokers have filed bankruptcy in the past year. This same company reports that 682 companies appear to have simply ceased operations, as they no longer answer phones or otherwise communicate.  Shipper delays in making timely freight payments is considered a big factor in the demise of many small brokers which operate on a shoe string.

COMPREHENSIVE SAFETY ANALYSIS 2010 – The FMCSA has launched a new web site which provides information about its newest program, the Comprehensive Safety Analysis 2010, or CSA 2010.  The CSA 2010 is a new compliance and inspection program created to improve large truck and bus safety and reduce crashes, injuries and fatalities.  The FMCSA has indicated that it will look to identify high-risk carrier and driver behaviors to determine steps to correct these high risk behaviors. The web site is here.

HIGHWAY FUNDING – The current spending bill is about to expire.  Although there was a push to extend the existing bill for 18 months, it looks like the extension will only be for 3 months.  The House passed its version of the extension, The Surface Transportation Extension Act of 2009 (H.R. 3617). The Senate is expected to move today, as funding expires on October 1st.

DRIVER TURNOVER – The economic downturn has positively impacted at least one problem in the trucking industry.  Driver turnover at truck load carriers has dropped to its lowest level in 14 years, reports the ATA.  The rate dropped to 52% at large fleets with revenues in excess of $30 million and down to 42% at smaller carriers.

The 10th Circuit Court of Appeals reversed their long standing position on an important MCS-90 issue.  The court held that an insurer’s obligation under the endorsement is not triggered unless there is no other insurance which will meet the minimum requirements.  In this case as the auto policy had paid the minimum $750,000, the general liability insurer with the filing was not required to tender any additional monies.  (Carolina Casualty Insurance Co. v. Yeates, 2009 WL 809387)

The Fifth Circuit also addressed an MCS-90 case this month.  The court confirmed that it would continue to take the position that losses which occurred in Mexico were not covered by the endorsement. (Canal Indemnity Co. v. Galindo, 2009 WL 2921862)

In two decisions on the same case, the Eastern District of Michigan held a bond filed by an insurer who was appealing an adverse decision on an MCS-90 was insufficient where the insurer was the guarantor of the bond. In that case the insurer was also required to show proof of financial stability to back up the bond.  (Hawthorne v, Lincoln General Insurance Co., 2009 WL 2922298. In a second decision on the same case, the plaintiff, after recovering fully on the MCS-90 actually attempted to draw back the premium which the motor carrier has paid for insurance!  The plaintiff argued that if the insurer had taken the position that the policy was rescinded it was not entitled to the premium.  The court, thankfully, rejected that argument. (Hawthorne v, Lincoln General Insurance Co. 2009 WL 2885095)

Apparently while most other drivers have the right to assume that other drivers will follow the rules of the road, the same is not true for passenger carriers, at least in Iowa. The Court of Appeals held that a common carrier has a heightened obligation to foresee danger from other drivers.  (Haltom v. Des Moines Area Regional Transit Authority, 2009 WL 2960400)

An attorney’s efforts to obtain confidential information from the FMCSA on various motor carriers failed.  The District of Columbia held that Freedom of Information requests did not allow for the release of the information which a motor carrier is required to file when seeking self-insured status as it could substantially impact the business operations of the carrier.  (Kahn v. FMCSA, 2009 WL 2632718)

There is a general assumption that a rear end collision is always the fault of the striking vehicle, especially when it is a truck.  This month, however, the Court of Appeals in Wisconsin upheld a defense verdict in favor of the trucker.  The court held that the actions of the motor carrier were reasonable and this was simply an accident without fault- now how often do you see that?  Sometimes things just work right.  (Oppor v. General Cas. Co. of Wisconsin, 2009 WL 2602336)

The District of New Jersey addressed cargo claims requirements this month.  The court held that strict compliance with the regulations would not be required.  As long as there was substantial compliance there would be no requirement for “magic words” asserting liability.  If a reasonable person assumes a claim was filed and sufficient information is given to determine the loss and the amount, the intent of the regulation would be met.  (Foam Fair Industries v. J.K. Hackl Transportation Services, 2009 WL 2778446)

Many shippers are stymied by the terms and conditions of an ocean bill of lading. This month a plaintiff’s effort to avoid a forum selection clause failed in the Northern District of California.  The court held that the forum selection clause would be applicable, compelling the plaintiff to litigate the case in Germany.  The Court held that Carmack did not apply even when the alleged event occurred in the United States, holding that the claim was exclusively a maritime claim and did not involve any other transit.  (Meritz Fire & Marine Ins. Co. v. Hapag-Lloyd, 2009 WL 2916799)

The Eastern District of California held that a default judgment for specific damages can be entered against one carrier in the stream of commerce, even where litigation is pending against the delivering carrier.  While joint and several liability may generally preclude such a finding, if the damages are undisputed, such as in a cargo loss, the judgment may be entered early.  (Travelers Property & Casualty Co. v. Saffron Express, 2009 WL 2868731)

The Southern District of New York has issued its latest decision in the string of Sompo decisions.  This time the defendants sought summary judgment on the basis that a prima facie case had not been established under Carmack.  The court held that delivery to the carrier in good order can be established by a clean bill of lading, or where the goods are pre-packed, by showing “characteristics of the damage”, i.e   where the nature of the damage indicates that it had occurred in transit.  This is a uniquely COGSA standard not usually applied in a Carmack case, which could create some serious issues for domestic carriers. Since the train had derailed, the court held there was enough evidence to sustain judgment against the carrier.  The court also held that even where some of the cargo did not show apparent damage but the manufacturer totaled the shipment it would be sufficient to establish damage to the whole shipment where the overall damage was more than trivial.  (Sompo Japan v. Norfolk Southern Railway, 2009 WL 2905458)

The District in Arizona upheld the limitation of liability of a delivering carrier in a claim by the originating carrier, who had accepted a declared value of one million dollars.  While the originating carrier was liable for the full value of the shipment, the connecting carrier had properly limited its liability and could not have known about the upstream carrier’s agreement on declared value.  The failure of the upstream carrier to declare a value to the downstream carrier bound the upstream carrier to the default limitation.  (Pacific Indemnity Co. v. Pickens Kane, 2009 WL 2905717)

In an action in the Court of Appeals in Tennessee the court also considered what was necessary for a broker to recover for short shipments which were transported under seal.  The broker argued that simply executing the bill of lading, where the shipments were not preloaded was sufficient to establish delivery to the carrier in good order and condition.  While the court held that would be enough in that situation, the fact that the bills of lading were incomplete and illegible precluded judgment for the carrier.  (Mark VII Transportation v. Responsive Trucking, 2009 WL 2986108)

Double brokered loads continue to be a problem, this time for the original broker in the Court of Appeals in Indiana.  The first broker attempted to recover cargo from Landstar, a second broker.  The court held that as Landstar held itself out as a broker it has no liability for the cargo.  The first broker argued that the fact that Landstar had cargo coverage should be admitted to establish that they were a carrier.  The court held the testimony to reflect that it was contingent cargo coverage which only came into play if the actual motor carrier has no coverage. (Cardinal Contracting, LLC v. Landstar Logistics, Inc., 2009 WL 2985600)