Bits & Pieces

Volume 14, Edition 9


Welcome to Autumn.  Summer sure went by very quickly.  I guess it is time to get back into the swing of things.  The government also seems to be back in service, at least for now, as various groups ramp up on regulation issues.

This month we report:

COSTLY REGULATIONS – It comes as no surprise to those in the transportation industry that the cost of federal regulation is high. President Obama cited the regulations on Hours of Services and Electronic On Board Recorder rules as among the costliest of all in the country.   The current Congress is set to consider whether those very costly regulations are an impediment to job creation and economic growth and should perhaps be eliminated.  The ATA has already petitioned the President to drop the new proposed hours of service rules.

NAFTA – A DOT audit has determined that the FMCSA has failed to properly set up the procedures to monitor Mexican carriers.  This is expected to delay the cross-border program until November. In addition suit has been filed by the Teamsters and Public Citizen Advocacy group contending that the FMCSA has broken various laws in its steps to implement the program.

SURFACE TRANSPORTATION FUNDING – President Obama has extended Highway Trust Fund programs and funding through March 31, 2012.  This is the 8th extension since SAFETEA-LU expired in September 2009.  If March comes with no further legislation, yet another extension will be required. 

TRAFFIC BOTTLENECKS – Do you think you live the worst area for bottlenecks?  When if you live in Chicago that would be true, with Fort Lee, New Jersey following in a close second.  Houston took the next 3 spots.  The full list, including average speeds at the various locations, can be viewed here. The study was completed by the FHA and the ATRI

INSPECTIONS – CVSA’s brake safety week was conducted at the end of the month and we will report on those results as soon as they are made available.   As part of the national Motorcoach Safety Summit, sponsored by the FMCSA, a task force commenced a series of surprise safety inspections of motor coaches, tour buses, school buses and other passenger vehicles at the end of the month.,.  The two-week inspection sweep will continue through Oct. 7, 2011. FMCSA also announced that it will release a new smartphone application in November that will empower consumers by providing access to a motor coach’s company’s safety record before booking a trip and it will also allow consumers to submit safety violation to FMCSA’s National Consumer Compliant Database.

CELL PHONES – The NTSB, which has no rulemaking power, has recommended to the FMCSA that all commercial drivers be prohibited from using cell phones, even hands free cell phones. This recommendation comes following a March 2010 crash which involved multiple fatalities where the driver was believed to have been distracted by cell phone use.

CSA – The DOT has released a report on the status of CSA Op-Model. The report concludes that CSA substantially improves FMCSA’s enforcement and compliance model, and that enables the FMCSA to contact more commercial motor carriers earlier to correct safety problems and ensure compliance with safety regulations in order to reduce crashes, injuries, and fatalities related to commercial motor vehicles. The DOT news release can be viewed here

HOUSEHOLD GOODS VALUATION – The STB has issued a notice that it is delaying its decision on new household goods rules.  There are currently two proposed changes – the first  increasing the limitation of liability from .60 cents per pound to $6.00 per pound, and the second requiring the selection on valuation to be on the estimate.  We will follow these rules as they will greatly impact the exposure for cargo claims for household goods carriers.

DOT REGISTRANTS – Although the DOT was supposed to do away with registrants who could get a DOT number effective September 1, 2011, the implementation of this elimination was delayed through September 1, 2012. This extension was needed to allow the Agency to provide additional implementation guidance based on feedback and information received since the August 9, 2010, notice of procedural change, and will allow States and other stakeholders to make necessary changes to their systems and processes pursuant to this additional guidance.  The elimination of the registrant registration was opposed by rental and leasing agencies who believed it would not eliminate problems with carriers changing names.



The Court of Appeals reversed a directed verdict entered in favor of a trucking company which was found not liable for injuries to the driver. The court held instead that the company could be found liable for injuries caused when a load shifted because of an improperly maintained trailer. It bore a duty to provide contractors with safe equipment.  It was a question of fact for the jury, and not one warranting a directed verdict.  (Benitez v. Joseph Trucking, 2011 WL 3962106)

The exclusion for employee injury under an auto liability policy was upheld in the Eastern District of Louisiana.  While the plaintiff and the motor carrier were continuing a fight on whether the plaintiff was an employee for worker’s compensation, the court ruled that plaintiff was a statutory employee under federal regulations and therefore the exclusion applied.  (Barabash v. Love’s Travel Stops & Country Stores, 2011 WL 4381730)

Violation of the assured clear distance statute, which basically holds the last driver in the chain at fault, was sufficient to establish negligence per se.  However that did not warrant dismissal against the trucking company was initially stopped and caused the chain of events. The Court of Appeals in Ohio overruled prior decisions and held that the violation is not always the proximate cause of the loss where the original trucker could reasonably have seen that there would be injury caused by its action of stopping in the road. (Crosby v.  Radenko, 2011 WL 4124367)

The simple fact that a warehouse loaded a container for delivery to Kansas did not subject that warehouse to a suit by the driver in Kansas for injuries suffered by the improper loading.  The District Court in Kansas held that the simple act of loading the container would not be enough to sustain jurisdiction even when the warehouse knew that the container was destined for Kansas. (Auxier v. BSP Warehouse and Distribution, 2011 WL 3903010)

While Oklahoma will permit direct actions against the insurers of motor carriers, that is limited to motor carriers who are registered in the state.  The Northern District of Oklahoma held that a direct action was not warranted under that statute for a non-registered carrier or under the MCS-90.  A judgment was first required against the motor carrier.  (Adrean v. Lopez, 2011 WL 3880930)


What a difference the transportation documents can make.  The District Court in Massachusetts held that an entity was acting as an international freight forwarder for 12 of 14 shipments when it issued its forwarder cargo receipts which stated it was not liable as a carrier for loss. The claims under the forwarder’s cargo receipt were time barred.  However for the 2 of the 14 in which it issued bills of lading, it was liable as a carrier.  As the plaintiff had failed to properly identify the damages for each container, and 12 were clearly time barred, the court dismissed all claims.  The downstream rail carrier was also successful in getting out of the suit, as the plaintiff was held subject to the downstream rail carrier’s contract which held it liable only for damages occurring as a result of accidents or derailment, with the court concluding that the contract properly waived the provisions of the Carmack Amendment.  (Talbots v. Dynasty International, 2011 WL 302183)

Yes the nine month claim filing requirement continues to be an issue.  The Western District in Arkansas upheld the enforceability of the limitation and concluded that notations on a bill of lading, and oral communications, were not enough to meet the requirements of the regulations.  (Ellis v. W.O. Seale, 2011 WL 3811116)

Since the transportation contract did not contain any provision concerning claim filing requirements the motor carrier was permitted to incorporate its tariff and bill of lading requirements which required a claim within nine months.  The District Court in Connecticut also held that a shipper could not seek administrative costs as part of any validly filed cargo claim.   (Mafcote industries v. Milan Express, 2011 WL 3924188)

The District of Connecticut also upheld the requirement that claims be filed within 9 mos, provided the carrier had such a requirement in its tariff.  The shipper’s attempt to argue that invalidly filed claims could still be used as an offset was not accepted by the court as an affirmative defense.  Finally the court held that while the transportation contract did not permit assignment of the contract, that would not preclude assignment of the right to collect freight charges to a successor company.  (YRC, Inc. v, Royal Consumer Products, 2011 WL 3819651)

Downstream carrier issues were big this month too.  In the Southern District in Indiana the court reconsidered a prior ruling and overturned its decision in favor of the cargo owner. The court held that the shipper was in fact bound by limitation of liability provisions contained within the contracts of downstream entities.  Nipponkoa Insurance  Co. v. Atlas Van Lines, 2011 WL 3739373In the Southern District in New York a downstream carrier attempted a second bite at the apple when it argued that federal common law required that it be permitted to latch on to the limitation of liability of an upstream carrier.  As the court had already ruled that Carmack did not require that result, the court rejected the attempt to argue a change in the rules based on federal common law  (Royal and Sun Alliance Ins Co. v. UPS Supply Chain Solutions, 2011 WL 3874874)

Across the country Royal was also arguing against the application of a limitation of liability to a downstream carrier.  In the District Court in Kentucky the court held that there was a question of fact as to whether the downstream carrier was entitled to a limitation of liability in the master transportation contract with a logistics company.  (Royal and Sun Alliance Ins. Co. v. Mercury Logistics, 2011 WL 3878314)

Forum selection clauses were ruled valid under the Carmack Amendment. However the Western District of Arkansas held that it would not preclude it from transferring a case to a more convenient forum.  When all of the events of a cargo loss occurred in Florida, the fact that the broker had a contract requiring suit in Arkansas did not compel the court to keep the case, instead opting to transfer it to Florida.  (J.B. Hunt Transport v. S&D Transportation, 2011 WL 3703607)

The Northern District of Illinois addressed a claim arising from the imposter scams that have plagued cargo over these last few years.  The carrier who unfortunately used the imposter was unable to assert a defense of public enemy caused by theft.  The court also rejected the carrier’s argument that the Carmack amendment did not apply to stolen cargo.  Finally the cause of action against the carrier whose identity was stolen was dismissed for lack of evidence that it was caused by the actions of the carrier.  (Fireman’s Fund Ins Co. v. Reckart Logistics, 2011 WL 4062508)

Normally preemption through the application of the Carmack Amendment generally is never a serious question.  However, this month in the Eastern District of Wisconsin the court held that even though the plaintiff alleged that the defendant was acting as a carrier, preemption would not necessitate dismissal when the defendant asserted an affirmative defense that it was acting as a broker.  (Navigators Insurance Co. v, Freight Tec Management, 2011) WL4402090.


Ouch says the motor carrier.  The Supreme Court in South Carolina upheld a default judgment entered against a motor carrier because the motor carrier failed to preserve the issue of a meritorious defense, a requirement to vacate a default judgment.  It appeared that the sole opposition was the fact that the plaintiff had offered to settle for $170,000 and wound up with a default judgment for $800,000. The court held that the issue was not preserved and that an offer to settle does not, by itself create a basis for a meritorious defense on damages.  (McClurg v. Deaton, 2011 WL 3890625)

The Southern District of Alabama concluded that it had no jurisdiction over a fight between a tow yard and the trucker’s auto insurance over the industry wide problem of excessive tow bills.  The court held that the Interstate Commerce Act provided no basis for federal court jurisdiction.   (Carolina Casualty Ins. Co. v. Tony’s Towing, 2011 WL 4402147)

We do try to report on the admissibility of experts in the transportation field. The Northern District of Indiana held that J. Terrance Grisim was permitted to testify regarding safety rules under the FMCSA and the carrier’s compliance with the rules. He was not, however, permitted to testify concerning other ordinary negligence issues.  (Johnston v. Chestnut, 2011 WL 4348144)

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