Are you tired of hearing from me this last month? Hopefully you have made it through the long resumé and have gleaned a few nuggets of information which will help your business operations. I will keep this short this month as I have reported most of the information in that resumé.
We are happy to see all of the support we are getting for the new CSA 2010 information on the Submission Report™ . For anyone that has any questions on its impact on the underwriting process and what they should be looking for, please do not hesitate to give us a call. We are here to help you understand all of this data.
CARGO THEFT – Freightwatch has issued its annual report on U.S. Cargo Theft. According to Freightwatch, food and drink items were the most popular target for thieves, accounting for 21% of all theft incidents they recorded, and higher then electronics. In the individual category, televisions were the product stolen most often. Not an award wanted by any state – New Jersey led the way with the most cargo thefts. A copy of the report can be viewed here. Freightwatch also issued its report on the surge in cargo thefts in Mexico, citing the drug violence as a large component of the rise in theft. That report can also be viewed here.
WAREHOUSE OPERATING COSTS – The Boyd Consultants in Princeton released their study on national warehousing costs. The report indicates a great disparity in costs throughout the country, with a trend for warehousing operations to locate in the Midwest, something to be considered for those marketing that book of business. A summary of the report is attached here. The Boyd Company has also graciously offered a complementary copy of the full report to CAB subscribers. If you are interested, please email them at contact@theboydcompany.com, reference your connection to CAB and they will provide you with the full report.
HOURS OF SERVICE – The battle is on. The ATA has taken the position that the FMCSA has misapplied crash data and elevated the impact of driver fatigue on truck crashes. The ATA has opposed the new hours of service contending that the concerns now raised were already considered and did not warrant the reduction and other changes now proposed. Comments on the proposed rules are due at the end of February.
FREIGHT VOLUMES – As I mentioned in the resumé there is some positive movement on freight volumes. That was confirmed by the Ceridian UCLA Pulse of Commerce Index which indicated an increase in the flow of goods at the end of the year. On a year over year basis the index increased 4.1% in December, helping to offset some prior declines. A copy of the report can be viewed here.
TRUCKING PROFITS – It is nice to have all of these positive reports this month. Based on reports by Bloomberg News, virtually all publicly traded transportation companies will exceed prior year 4th quarter results. One analyst indicates that profits will continue to rise as rates are increased and capacity stays tight. For the sake of truckers and insurers we hope this all comes true.
HOUSEHOLD GOODS ANTITRUST SETTLEMENT – A settlement has been reached in a class action suit brought against many of the large household goods carriers for alleged inflated fuel charges. The $40 million settlement will be considered by the court shortly for approval. Class members are defined as those who purchased interstate household goods moving services and directly paid a fuel surcharge between March 19, 2003, and Dec. 31, 2007. If you moved during that time you may wish to consider filing a claim.
UCR FEES – Reports are that there will be an increased effort to recover payment of UCR fees starting February 1, 2011. The fees for 2011 remained unchanged from the 2010 fees. The fees are based on the number of trucks in the fleet, not including trailers.
CURRENT CASES
CARGO
The 9th Circuit addressed an interesting case this month. A broker settled with a cargo owner for damages to goods caused, in part, by its failure to transmit directions to the carrier, and sought confirmation from the court that its good faith settlement precluded any indemnity claim from the motor carrier. The motor carrier was still being sued for the remaining cargo damages. The Court held that the provisions under California law permitting good faith settlements did not violate the Carmack Amendment and that state law settlement procedures were not preempted by Carmack. The court also held that the good faith settlement procedures, which apply to joint tortfeasors would also apply when one of the parties, in this case the motor carrier, had strict liability under the Carmack Amendment. (Mason & Dixon Intermodal v. Lapmaster International, LLC, 2011 WL 135084)
What statute of limitations applies to a claim for loss or damage to goods in interstate commerce? The Court of Appeals in Texas held that the Carmack Amendment does not contain any specific limitation and only permits a carrier to provide for a period of not less then 2 years. Where the carrier does not provide for such a limitation the court should look to the relevant states. In this case the Texas statute of limitations, as the forum state, was held applicable. The plaintiff was ultimately barred from pursuing the Carmack claim as the court held it was not brought within the 2 years as the original complaint, which was filed within 2 years, failed to allege a claim for damage to the cargo, but rather for breach of a settlement agreement. (Daybreak Express v. Lexington Insurance Co., 2011 WL 81302)
A broker is not always held liable as a motor carrier. In the Court of Appeals in California a transportation broker successfully defended an action seeking recovery for a cargo loss. The court held that all of the evidence established that the broker did not hold himself out as a carrier and therefore could not be liable for the cargo. (United Global Logistics v. Nabors Solutions, LLC, 2011 WL 193413)
Even if an item for use in a home is shipped, a carrier is not necessarily a household goods carrier. The 6th Circuit Court of Appeals rejected a plaintiff’s attempt to recover attorney’s fees when it recovered a judgment for cargo damage against a freight forwarder. The court held that attorney’s fees are recoverable only against a motor carrier or freight forwarder who is an authorized household goods carrier. (Osman v. International Freight Ltd, 2011 WL 10058)
Although this decision involves a cargo theft which occurred in England, the principles are the same and should remind cargo adjusters to keep looking when evaluating liability involving multi-modal operations. The Southern District of New York held that the terms of an ocean bill of lading could apply to pre-ocean carriage, even if the bill of lading was not issued. The prior course of dealing utilizing that bill of lading supported its application for all moves. (National Liability & Fire Ins. Co. v. Mediterranean Shipping Co., 2011 WL 182121)
The Southern District in Indiana did not automatically uphold a contractual limitation of liability. The motor carrier entered into a contract with another carrier which contained a limitation of liability. When the loss occurred the shipper sought to invalidate the limitation. The court held that there needed to be evidence that the shipper agreed to the limitation with the first carrier and that the shipper gave the first carrier the authority to enter into other agreements which limited other party’s liability. (Nipponkoa Ins. Co. v. Atlas Van Lines, 2011 WL 202286)
Always pay attention to all of the possible terms of an ocean bill of lading. The Central District in California dismissed an action against a rail carrier under the terms of an ocean bill of lading which contained a covenant not to sue. The contract precluded claims against subcontractors of the ocean carrier – to the benefit of the rail carrier. (Mattel, Inc. v. BNSF Railway Company, 2011 WL 90164)
Proving a prima facie right to recover for a cargo loss is the burden of the plaintiff and sometimes they just can not meet that burden. The Southern District of New York granted judgment to a carrier when the plaintiff could not show good order and condition of a shipment which was loaded into a container before receipt by the carrier and the temperature charts showed that the appropriate temperature was maintained during transport. The fact that the product was damaged at destination was insufficient to show damage. (J.R.J. Enterprises, Inc. v. M/V CCNI Cartagena, 2010 WL 5538516 (S.D.N.Y.))
AUTO
A truck driver was prevented from pursuing a shipper for injuries suffered in a truck accident. The court held that the shipper was the special employer of the driver, with the general employer the trucking company. The shipper was shielded from exposure by the protection of the exclusive remedy rule of worker’s compensation. (Gaynor v. Cassone Leasing, Inc., 2010 WL 5188462)
Since we were talking about statues of limitations above, we report on a New Jersey Court that ruled that recovery of paid pip benefits from a motor carrier and its insurer would be subject to a 2 year statute of limitation. The court determined that the statute should be interpreted to start the statue from the time that the insured submitted its claim form to the plaintiff insurer for payments. (New Jersey Manufacturers Ins. Group v. Holger Trucking Corp., 2011 WL 443237)
The Middle District of Georgia addressed whether a driver of an unscheduled vehicle would be considered an insured under the terms of the MCS-90 endorsement. The driver was operating a vehicle which he had leased to the named insured under the policy. The driver was not named on the policy and the court held that it would not accept the 9th and 10th Circuit rulings to the contrary and determined that the motor carrier’s insurer had no liability under the endorsement for the claim against the driver. Luckily for the insurer the time to sue the motor carrier had expired. (Lancer v. Hitts, 2010 WL 5351842)
According to the District Court of Utah the MCS-90 does not create a right of subrogation for the insurer who issues a payment. In this case the insurer of an unscheduled trailer was required by the court to issue payment to the injured plaintiff. The court held that the payment does not allow the insurer to stand in the shoes of the insured with respect to rights against third parties, and only creates a right of reimbursement from the insured. (Herrod v. Wilshire Ins. Co. 2011 WL 32586)
The Supreme Court in Vermont considered primary excess issues in two trucking polices, considering whether a driver was an employee and therefore an insured under a policy. Ultimately the court concluded that both policies were primary and that allocation of coverage be determined by the other insurance clauses which set forth a percentage based formula according to limits. (Hathaway v. Tucker, 2010 WL 518046)
A claim for punitive damages was dismissed against a motor carrier, and the driver, in the Southern District of Georgia. The court held that in the absence of evidence of entire want of care, or pattern of dangerous driving, such damages were unavailable. The court also dismissed any claim for negligent hiring as the motor carrier admitted responsibility for the actions of the driver. (Ballard v Keen Transport, 2011 WL 203378)
Have a great February. See you next month.
