You are getting this month’s Bits and Pieces a bit early. I am in the mountains in Vermont this week and want this out and done so that I can enjoy the time off. Vacation is better than work. But alas, work goes on and we must continue to pay attention to all that come up in the industry.
News this month:
CVSA ROADSCHECK – The Commercial Vehicle Safety Alliance has reported that that out-of-service rates for commercial motor vehicles did not change much from last year. This year there were more mobile roadside inspections, with a focus on North American Standard (NAS) Level I inspection, safety belt enforcement, and motor coach inspections, with more than 65,327 truck and bus inspections. The vehicle compliance rate was 80 percent and driver compliance was 95.6 percent. NAS Level I inspections compliance rate was 76.7 percent for vehicles and 96.3 percent for drivers. Hazardous materials inspections showed a vehicle compliance rate of 83.7 percent, and driver compliance rate of 97.5 percent. There were 26,605 CVSA decals issued to vehicles that passed the inspection.
HOURS OF SERVICE RULES – The Federal Motor Carrier Safety Administration has released its first draft of a new Hours of Service rule, one month earlier than required by the settlement of the lawsuit brought against the current rules. The DOT will complete its review and send the proposed rule making to the OMB. The OMB has 90 days to review the proposal before it is scheduled to be published November 4 for the public comment period, which will end Jan. 4, 2011.
ANTI INDEMNITY STATUTES -Louisiana has signed into law a statute which prohibits indemnification clause in motor carrier and construction contracts. A second statute was put into place which will revoke hazmat and tank endorsements after a second offense for reckless operations.
CANADIAN MOTOR CARRIERS – Effective August 2, 2010, the FMCSA has issued rulemaking that Canadian motor carriers are no longer required to be insured with U.S. based insurers. Carriers only need to utilize insurance carriers licensed to issue policies in the province or territory where the motor carrier is based.
FOOD SAFETY – The FDA is seeking comments on proposed sanitary transportation practices. A copy of the request for comments can be viewed here and I recommend you take a look and provide this information to your claims department. It provides a chart on all of the FDA regulations addressing the transportation of food products. The statute defining adulterated products includes products transported in violation of any regulation so these new rules could become a big issue for claims handlers.
TRUCKING ECONOMIC INDICATOR – The Ceridian-UCLA Pulse of Commerce Index (PCI) by UCLA Anderson School of Management dropped 1.9 percent in June after a large 3.1 percent gain in May, although various factors, including the Memorial Day holiday, makes the drop less of a concern. The PCI is based on an analysis of real-time diesel fuel consumption data from over the road trucking tracked by Ceridian, which provides of electronic and stored value card payment services and human resources solutions. By analyzing Comdata payment card data for the location and volume of diesel fuel purchased by truck operators, the PCI is designed to provide a detailed picture of the movement of goods and materials across the United States. The complete June report and additional commentary is available at www.ceridianindex.com.
INCREASED FREIGHT DEMAND – A recent study reports that trucks will still carry 74 percent of freight over our nation’s highways. On average, 10,500 trucks each day travel the interstate roads. By 2035, this will increase to 22,700 commercial trucks for these portions of the Interstate, with the most heavily used segments seeing upwards of 50,000 trucks a day. The study was performed by the American Association of State Highway and Transportation Officials (AASHTO) and was released in their report titled Unlocking Freight, which is an analysis of America’s freight system. A full copy of the report can be viewed here.
CURRENT CASES
AUTO
How can a trucking company be liable for negligent hiring of a driver when the driver is not found to have negligently caused the accident? The Supreme Court of Alabama reversed a judgment which attempted to reach that result, acknowledging that the verdict was inconsistent and that even a claim for negligent hiring requires a finding of negligence on the part of the driver. (Jones Express v Jackson, 2010 WL 2629052)
Although the likelihood of success is establishing a claim against an insurer’s agent is minimal, the court in the Southern District of Alabama held that the joinder of those parties was not done to defeat diversity. The court remanded back to state court the action against an insurer for failing to provide cargo coverage for unattached vehicles. (S&S Trucking, LLC v. Canal Insurance Co., 2010 WL 2560043)
There was an interesting set of facts in an action in Georgia. The brother-in-law of a truck driver died of natural causes while traveling with the driver. The estate sued the driver, the trucking company and the insurer seeking recovery on the basis that that driver failed to get treatment for the passenger which was a proximate cause of his death. The court affirmed judgment in favor of the defendants holding that in the absence of expert evidence that the driver’s delay was a proximate cause of the death the defendants could not be liable for the loss. (Cowart v Widener, 2010 WL 2718046)
The Court of Appeals in Michigan held that the insurers of a tow vehicle, and the tractor which it was towing were required to contribute to PIP payments made by another carrier despite the fact that the vehicles were parked at the time of the accident. The court held that when the use of those vehicles was a direct contributor to the cause of the loss they would be required by statute to contribute to benefits paid out to an injured party. (Home Owners v. Citizens Insurance Co., 2010 WL 2757012)
Many states have “savings statutes” which permit actions to be dismissed and refiled within a certain time frame, even if the statute of limitations has run. The District Court in Kansas held that the savings statute would apply even when the first action was brought in a different state. The determination of whether the first suit was timely would be determined under the other state’s rules. The court also permitted a direct action against the motor carrier’s insurer as the insurer had filed the policy with the Kansas PUC on behalf of the motor carrier. (Cooper v. Old Dominion Freight Lines, 2010 WL 2609385)
Is hired car coverage broad enough to encompass a trucking company and its driver who are hired, by the day, to move numerous truck loads of asphalt by dump truck to a job site? The Eastern District of Pennsylvania held that the hired car coverage was not ambiguous and that there was no evidence that the shipper had control over the driver or the truck. The court also held the borrowed servant doctrine to be inapplicable. (Selective Way Insurance Co. v. Travelers Property & Casualty Co. of America, 2010 WL 2720751)
The Eastern District of California dismissed an insurer’s complaint for declaratory relief. The court held that a complaint which does not specifically identify a real and substantial dispute between the insurer and the insured would not stand. Allegations of alternative hypothetical scenarios which might give rise to non-coverage were insufficient to permit the action to proceed. (Canal Ins. Co. v. Dara Transport, Inc., 2010 WL 2650692)
In the March Bits we reported on a decision in Oregon involving a suit against a trucking company which caused a traffic jam which resulted in a subsequent decision. The court reconsidered its prior opinion, and clarified its holding. The court held that evidence that the driver who struck the plaintiff was intoxicated at the time was relevant to a determination on whether the trucking company’s conduct was a cause of the death and also relevant for determining fault between the two defendants. (Lasley v. Combined Transport, 2010 WL 2508854)
CARGO CASES
Normally we see motor carriers trying to latch on to limitations contained in various classifications to which they are not members. This month the District of Massachusetts refused to permit a shipper to rely on an NMFC reference which would have limited liability to $30 a pound when the motor carrier was not a member. The motor carrier’s limitation of liability of $100, which was contained on the back of the freight bill was held to apply. (Lloyd’s Syndicates v. Horizon Air Services, Inc., 2010 WL 2545608 )
As we all know, motor carriers routinely drop loaded trailers at customs facilities near the Mexican border, expecting the facility to have the goods released through customers, delivered in Mexico and have the trailer returned to the motor carrier. In Texas a motor carrier brought an action against the customs facility for return of trailers. The court held that the action against the facility was a breach of bailment contract, entitling the trucking company to attorney’s fees and not allowing the customs facility to assert comparative negligence as a defense. (Reveille Trucking Inc. v. Loera Customs Brokerage, 2010 WL 2638494)
We already have the first decision addressing the recent Supreme Court ruling last month in Regal-Beloit (see last month’s Bits and Pieces). The District Court in Connecticut acknowledged that the Carmack Amendment will only apply only to international shipments which originate in the U.S. In this case the court held that the defendant’s failure to submit documentary evidence to support the preemptive effect of Carmack was fatal when the plaintiff moved to remand the case to state court. The court also held that COGSA does not apply to a tort claim arising from inland transportation, similarly rejecting jurisdiction under that statutory scheme. (KITO Group v. RF International, 2010 WL 2712138)
We do not get many cases addressing transportation policies. This month the Northern District of Texas considered what items a shipper was entitled to recover under its marine policy when its cargo was damaged in transit. Initially the court held that the laws of insurance construction, construing all ambiguities against the insurer, do not apply when the insured was an active participant in drafting the contract and that a Texas court would apply the sophisticated insured rule. The court rejected the insured’s claim that it was entitled to all expediting costs because they were not necessary to repair the machine. The second issue addressed was whether the insured was entitled to its overhead costs when it repaired the equipment- the court held the policy ambiguous on that point. Since there was a possibility that the sophisticated insured rule would apply the court did not rule against the insurer. The court also refused to allow unfair claims practices claims against the insurer to proceed. (Vought Aircraft Industries v. Falvey Cargo Underwriting, Ltd., 2010 WL 2573214)
The ability of a participant in an international move to rely upon Himalaya clauses in a bill of lading was addressed in the Southern District of Texas. Initially the fact that the bill of lading has not yet been issued was not fatal, as it would have moved under a standard bill of lading, which was held to apply. The court held that a stevedore was not permitted to benefit the forum selection clause or the limitation of liability because it did not damage the cargo while performing operations required under the bill of lading. Rather the accident occurred after it completed its operations and had moved onto other pieces of cargo. (Raytheon Company v. M/V Seaboard, 2010 WL 2598282)
In an interesting case in the Eastern District of Virginia the court held that a broker has no obligation to file a claim with a motor carrier within nine months when the broker’s claim was for indemnity. Since the broker’s causes of action would not arise until it was determined to be responsible for the loss, the nine month claim rule would not apply. The court also held that contribution and indemnity claims by a broker against a carrier are not precluded by Carmack when the broker stands in the shoes of the shipper. (Dominion Resources Services v. 5K Logistics, 2010 WL 2721355)
The complexity of transportation involving multiple parties was all too apparent in an action in the Southern District of Florida where there were a number of brokers involved in a shipment and everyone wanted to get out of the suit. The first broker was permitted dismissal of tort claims against it as they are not permitted under Florida’s economic loss rule when the parties have a transportation contract. However as the broker’s contract with the shipper failed to spell out the obligations of the broker, the court held it had a latent ambiguity and therefore can not be considered on summary judgment. The next two downstream brokers were also not permitted summary judgment when the court held that it was unclear whether those brokers held themselves out as carriers or were negligent in their brokerage operations. (Underwriters at Lloyds v. Fed Ex Truckload Brokerage, 2010 WL 2681224)
