I hope you are all full and content after eating a big holiday turkey. The holiday season is now fully upon us all and everything seems to slow down considerably – perhaps it is the after effects of tryptophan? I hope you enjoy the season and take time out for friends and family.
After weeks of deliberating the many wonderful suggestions for the new CAB online analysis system, the time has come to pick a name to etch this new product’s place in CAB’s lineup of services. With the much touted public launch of the FMCSA’s CSA2010 coming shortly, understanding the impact of our new system, and how to use it effectively is more critical than ever. We’ve already received numerous reports of how the new Carrier Search page has allowed our users to identify ‘Chameleon Carriers’, unreported vehicles, shell companies, carrier fraud and so much more than you can get from a simple review of the DOT / Docket number. We received so many great suggestions for names that it was hard for our judges to pick out the top five finalists. We graciously acknowledge everyone who took the time to contribute to help us name the new system and we now turn to you to vote on your favorite. The nominees are (drum roll please!):
CAVIAR (the Carrier and Vehicle Inspection Analysis Research System)
START (Sophisticated Trucking Analysis & Research Tool)
TRAC (Trucking Research and Analysis Center)
SIMON (Simultaneous Information Merged by One Number)
TASER (Trucking Analysis & Safety Enhanced Research System)
While our judges picked the finalists we now turn to our loyal subscribers for the final vote! Please enter your vote by December 3, 2010 so that we can pick the winner!
***WEBSITE UPDATE***
On a different note, we’ve just recently added in new features to the Carrier Search page and the Submission Report™ which will make your job even easier. With the initial launch of our new system, Premium Subscribers were able to search for motor carriers by phone number – one of the most powerful means of identifying affiliated entities such as carriers and brokers, entities with multiple shell companies and chameleon operations. Now, rather than having to search, every phone number that is registered to another entity will be highlighted in bold and marked with an asterisk and an alert identifying how many additional entities share that number. At a glance you will know whether there is any further digging to be done on the phone number and simply clicking on the phone number will list all the entities that share that number. In addition, we’ve added an alert to the Submission Report™ to let you know that some other regulated entity is using that same phone. We are working on building a similar feature for registered addresses as well. Thanks to Wayne Ricci of Lancer Insurance Company for suggesting this enhancement – keep ’em coming!
In other news, we report:
CSA 2010 – CSA 2010 leads all of the news in the transportation industry these days. This month the FMCSA announced that it heard the concerns of many trucking companies and was making some changes to the system. The FMCSA has recalibrated the Cargo-Related BASIC by adjusting the cargo securement violation severity weightings and will modify what can be seen by the public. They will now show only the SMS Cargo-Related BASIC violations. The percentiles and intervention status will not be available. We remind our premium subscribers that we monitor all cargo related inspections and that underwriter should continue to pay careful attention to the results of those inspections. In addition, the FMCSA will also no longer use the term “deficient” when identifying a motor carrier’s score that is above the FMCSA threshold for intervention and will simply use the term “alert”. News reports are indicating that some trucking groups are planning to file suit shortly to prevent release of certain other CSA 2010 data to the general public. That should happen shortly and we will keep you advised of its impact on the new system.
HOURS OF SERVICE – The FMCSA has advised that it expects to release the new hours-of-service rule by the end of this month. FMCSA submitted the Notice of Proposed Rulemaking to the OMB July 26 and had expected the office to finish its review Oct. 26. The agency had scheduled the NPRM for a Nov. 4 publication date and planned to allow public comment until Jan. 4, which will obviously now be delayed. As of release of this report, the new rule has not been released. It will give us something to talk about next month. The FMCSA also advised that rules on driver health will also have to wait till next year.
INSURANCE FRAUD – In New Jersey this month two individuals, Jose A. Uribe, 44, and Jose D. Uribe, 43, operating as Inter-America Insurance Agency of Union City, NJ were charged with insurance fraud. They were heavily involved in commercial truck fleet insurance and were stealing premium and not providing coverage. They provided fake insurance cards and paid minor damage claims to keep the scam going.
UNIFORM CARRIER REGISTRATION – The fees for UCR registration will remain at 2010 levels next year. Fees will again range from $76 for the smallest interstate operator to $73,346 for operators with 1,001 or more power units. The 41 states participating in UCR have already mailed billings, activated the program’s online registration system — www.ucr.in.gov — and enforcement for non-payment begins nationwide on February 1, 2011. Reports indicate that revenue under the UCR is almost $30 million less than expected.
ANTI -INDEMNIFICATION LAWS – Pennsylvania has joined the trend to invalidate indemnification clauses in motor carrier transportation contracts. Effective Dec. 20, 2010, a shipper can not transfer liability for improper loading to the motor carrier. The new law invalidates indemnity provisions in contracts for the transportation, loading, unloading or incidental services of property by motor carriers for transportation. This will be for new contracts.
POLITICAL CHANGE – Rep. James Oberstar, D-MN, chairman of the House Transportation and Infrastructure Committee, lost his battle for his seat in the House of Representatives in the November election. He has been the leader of the House Transportation and Infrastructure Committee for many years. This committee is one of the largest in the House. With the new appointments; there will be a shift in the breakdown of Democrats and Republicans serving on the committee – with more Republicans than Democrats serving on the committee. The leadership will be announced, presumably, when the new house is seated in January.
CURRENT CASES:
CARGO
For once preemption was not the answer for a motor carrier. The Eastern District of New York held that neither the Carmack preemption nor overall interstate transportation preemption would preclude a claim against a mover for alleged deception in providing low-end estimates for household goods moves. The court denied the defendant’s motion to dismiss and allowed the case to proceed on the merits. (Frey v. Bekins Van Lines, 2010 WL 4358373)
In a different context, the Eastern District of Wisconsin held that a defendant in a personal injury action could allege an affirmative defense that the action for damages was preempted by the Carmack Amendment. While the court understood the plaintiff’s argument that Carmack did not apply to personal injury claims the court felt it premature to not allow the defendants more time to fully litigate the issue. (McGinn v. J.B. Hunt Transport, 2010 WL 4363419)
Finally, an ordinary preemption case. The Middle District of Pennsylvania held that a plaintiff’s claim for goods stolen from a rail car before delivery fell within the auspices of the Carmack Amendment. The court also would not simply treat the breach of contract action as a Carmack claim, instead dismissing the causes of action and allowing them to be pled the cause of action correctly. (CSX Transportation v. R.M Delevan, Inc., 2010 WL 4386500)
The Southern District in Texas denied a plaintiff’s attempt to remand a case which was removed on Carmack grounds. Although the plaintiff alleged only state law claims, the substance of the complaint made it clear that the action was subject to Carmack. The court further gave the plaintiff the opportunity to properly plead a Carmack claim and dismissed the state law claims. (Hauck v. Bekins Van Lines, 2010 WL 4705264)
Motor carriers who agree to store goods for their customers often fail to recognize that limitations of liability which are applicable in transit do not apply when goods are held for storage. The District Court in Massachusetts denied summary judgment to a carrier who sought in invoke the limitation of liability on its bill of lading holding that it was not a warehouse receipt and did not apply to storage. The court also held that there was a question of fact as to whether the defendant was liable for the loss and that the issue of reasonable care could be addressed without expert testimony. (Allianz Global Risks U.S. Ins. Co. v. J.A. Miara Transp., Inc. 2010 WL 4449583)
Although only related to a claim for recovery of a trailer, the theories of this case are interesting both for physical damage and cargo insurers. The Court of Appeals in Texas held that a trailer owner was entitled to recover fully from the forwarding company which was holding the trailer at the border on cause of action for breach of bailment. Although both parties were found by the jury to be negligent the court held that the negligence of the trailer owner was not relevant in a breach of bailment action, awarding the owner the full value of the trailer and attorney’s fees. (FFE Transportation Services, inc. v. Martinez, 2010 WL 4243480)
A consignee in the Central District of California learned that it needs to protect itself when freight charges are not paid directly to the motor carrier. The court held that a consignee was obligated to a motor carrier for freight charges which the consignee has paid to the broker but which were not paid by the broker to the motor carrier as the bills of lading all indicated that the shipments were collect. Also, as the bill of lading did not indicate the rate of interest the motor carrier was entitled to 10% interest – not a bad rate of return in this economy. (LLP Logistics v K&R Transportation Logistics, Inc., 2010 WL 4116903)
AUTO
Despite the plaintiff’s best efforts, the 5th Circuit ruled that the MCS-90 endorsement has not application to an accident which arose when the driver was not transporting cargo. The truck driver was returning home from work and backing into his driveway and there was no trailer attached at the time. (Canal Insurance Company v. Coleman, 2010 WL 4276074)
In another MCS-90 case, the District Court in Idaho held that the MCS-90 endorsement was not a factor in a dispute over allocation between two insurers. In the case at question both insurers had an MCS-90 endorsement, but only one actually covered the loss. The limits of that policy were less than the $750,000 required by the endorsement. The court held that it was illegal for the primary insurer to issue a policy for less than the required limit. (Canal Ins. Co. v. Shelter Ins. Co., 2010 WL 4447566)
When does a driver rise to the level of an employee for the purpose of the trucker exclusion in an auto policy? The Court of Appeals in Michigan held that the economic realities test and not the worker’s compensation definition should be used to determine when a driver is an employee. In this case the court held that the driver, who was ordinarily an independent contractor, was an employee under that test. (Progressive Michigan Ins. Co. v. Citizens Insurance Co. of America, 2010 WL 4483690)
The Supreme Court in Arkansas considered the factors necessary to determine whether a truck driver was an employee or an independent contractor when the driver worked for a company which provided services to the motor carrier. The court held that the driver was not a statutory employee of the motor carrier and that under the relevant state factors the driver would be an independent contractor. The motor carrier was held not liable for an accident which occurred when the driver was not hauling goods for the carrier. (Kistner v. Cupples, 2010 Ark. 416, 2010 WL 4353433)
A truck driver’s estate sued the decedent’s motor carrier employer alleging that failure to maintain the equipment, which led to the fatal accident, was a violation of the Federal Motor Carrier Act. The estate alleged that violation of the safety regulations created a private right of action which was not barred by the doctrine of the exclusivity of worker’s compensation. The Minnesota Appellate Court granted judgment in favor of the motor carrier, holding that the statute conferred no private remedy. (Tierney v. Arrowhead Concrete Works, Inc., 2010 WL 4721573)
The Sixth Circuit Court of Appeals held that the irrebuttable presumption that there was an employment relationship between a driver and a motor carrier when the motor carrier’s placards were on a truck would not apply when addressing coverage issues between two insurers. The Court went on to hold that a prospective driver who was given permission to drive a placarded company vehicle to orientation was not in the business of the motor carrier so as to trigger the exclusion under the non-trucking use policy. (Carolina Casualty Insurance Company v. Panther II Transportation, Inc., 2010 WL 4553497)
MISCELLANEOUS
Statements made by a defense counsel retained by the insurer that she was providing a full defense to an individual not named in the policy created sufficient grounds for a reasonable jury to consider whether the insurer was estopped to deny coverage to the party when a judgment was rendered against the party. The Northern District of Texas ruled that the lack of full disclosure of the conflict could support that finding. The issue of severability of interests underlies this action, in which a reservation was sent to the party, but only in his capacity as the principle of the insured and not for his personal liability, raising the issue that he believed his individual liability was insured without reservation. (Canal Indemnity Company v. Palmview Fast Freight Transportation, 2010 WL 4520908)
