I am not sure if anyone is out there this week as I hope that most of the industry is off celebrating the holidays. This is the Bits ‘n Pieces that gets the most “out of office” responses each year! It has been an interesting year and I hear from more than one of you (myself included) that most of us will be happy to see 2012 slide in to the history books, especially as reports of the losses from Hurricane Sandy start to be released by insurers. I hope that you took some time to enjoy the end of the year lull (although personally I don’t think there is a lull anymore).
This month we report:
CAB’s LAB – We’ve got a number of exciting new features that will be rolled out at the beginning of the new year. Stay tuned for more details and always remember to pick up the latest copy of our User Guide to learn about the latest enhancements.
CSA – The FMCSA announced 11 changes to CSA this month. CAB has, of course, updated its reports to reflect the new changes. The changes include replacing the Cargo-Related BASIC with the Hazardous Materials (HM) Compliance BASIC, strengthening the Vehicle Maintenance BASIC by including cargo and load securement violations that were previously in the Cargo-Related BASIC, counting intermodal equipment violations found during drivers’ pre-trip inspections, aligning speeding violations to be consistent with current speedometer regulations that require speedometers to be accurate within 5 mph, changing the name of the Fatigued Driving BASIC to the Hours-of-Service (HOS) Compliance BASIC to more accurately reflect violations contained within the BASIC, and aligning the severity weight of paper and electronic logbook violations equally on the SMS for consistency purposes. The change applies to the prior 24 months of data used by the SMS and all SMS data moving forward.
CARRIER SERVICE ACTIONS – The FMCSA commenced a proceeding to revoke Peace of Mind Relocation, Inc.’s operating authority registration following a determination that Peace of Mind Relocation, Inc. held hostage household goods of individual shippers in violation of federal statutes. The FMCSA has also ordered Trusted Moving and Storage d.b.a. Nationwide Top Movers (Trusted Moving and Storage) of Santa Clara, Calif., to return household goods to the original shippers. The order is the first time FMCSA has used new enforcement powers granted to the agency under the federal surface transportation reauthorization program known as MAP-21. FMCSA has also initiated a proceeding to suspend Trusted Moving and Storage’s authority to operate in interstate commerce as a household goods motor carrier.
In the general commodity arena, the FMCSA ordered Two Dayes Trucking and Two Dayes Transport, based in Murfreesboro, NC, and Ben Gordon Enterprises, LLC d/b/a Gordon’s Tree Service of Sidell, LA to immediately cease all transportation services due to a pattern of serious safety violations that pose an imminent hazard to public safety.
In a surprising move, the FMCSA also issued an “out of service” on a driver, Georgia-licensed truck driver Johnny Felton Jr., who was working for DOT Transportation, Inc. out of Mount Sterling, IL, declaring him an imminent hazard and ordering him to immediately cease all commercial vehicle driver operations because of his failure to exercise an appropriate duty of care to the motoring public regarding his medical conditions. It was the first time in at least eight years the agency had released information about an individual driver put out-of-service.
DRIVER IMPAIRMENT – Shortly before Mr. Felton was pulled from the road (see story above) the GAO report, titled “Selected Cases of Commercial Drivers with Potentially Disqualifying Impairments,” was released. The report noted that the FMCSA had established a number of key controls designed to prevent CDL holders from operating commercial vehicles while impaired but that the controls were vulnerable to abuse or manipulation. By matching CDL holders with Social Security disability files, it had found 204 commercial drivers who drove a commercial vehicle as recently as 2011 despite having epilepsy, a disqualifying medical condition characterized by sudden seizures and unconsciousness. Thirty-one of these drivers, the GAO said, were involved in accidents and identified 23 cases where state licensing agencies issued or renewed CDLs for drivers after they were, according to SSA records, diagnosed with epilepsy or had drug or alcohol dependence.
ATRI SURVEY – The American Transportation Research Institute, the research division of the ATA has released a survey report “Compliance, Safety, Accountability: Evaluating a New Safety Measurement System and Its Implications.” The report includes input from more than 6,000 commercial vehicle drivers, over 1,000 motor carriers, dozens of shippers and almost 40 law enforcement personnel. Despite initial concerns over the impact of CSA, the report indicates that of those surveyed almost 90 percent of carriers have fired from 0 percent to just 5 percent of their workforce. The effects of CSA have been more pronounced by prospective truck drivers as employers become stricter on who they will hire.
MOTOR COACH SAFETY ACTION PLAN – The DOT has released the 2012 Motorcoach Safety Action Plan (MSAP). This report provides information on safety measures and new commitments made by the Agencies to improve the safety of motorcoach passengers. The MSAP expands on several motorcoach safety provisions and specifically targets driver fatigue, driver behavior, vehicle maintenance, operator oversight, crash avoidance measures and occupant protection. Also available is the Motorcoach Fact Sheet (December 2012)
DRIVER TURNOVER – The ATA has released the third quarter figures for driver turnover and the numbers are not good. Turnover is 104% for fleets with annual revenue of more than $30 million, a slight dip from the 106% of the preceding quarter. Smaller truckload fleets’ percentage rose to 94% in the third quarter, up from 86% .
DRIVER HAIR TESTS – A bill has been introduced in the House which would require DOT inspectors to undertake a pilot program to evaluate the use of hair samples to test commercial drivers for illicit drug use. This test is designed to hopefully limit the actions of some drivers who provide false identifications and samples for drug tests and is supported by the ATA.
TRUCK INVOLVED FATALITIES – The NTHSA reports that truck-involved highway fatalities rose up 1.9% to 3,757 in 2011 from 3,686 the year before. NHTSA warned the number “disguises” notable increases in several sub-categories related to truck-involved fatal crashes. The number of truck occupants killed in crashes last year increased 20% — to 635 from 530 — while injuries to truck occupants increased by 15%. Fatalities also increased by 19% to 21% in three other categories: truck occupants in single-vehicle crashes, truck occupants in multi-vehicle crashes and people who were not inside any vehicle, such as pedestrians or bikers. On the positive side, the number of people who died in a truck-involved crash while traveling in another vehicle dropped 3.6% to 2,695, from 2,797 in 2010.
FMSCA SUED – The Owner-Operator Independent Drivers Association (“OOIDA”) filed a petition for review with the Court of Appeals requesting that the court to throw out a “de facto” final rule on fatigued driving. OOIDA had requested that the FMCSA reject CVSA’s current out-of-service criteria for fatigue and for the agency to seek an immediate rescission of the amended out-of-service criteria. They further requested that the FMSCA notify state law enforcement agencies that drivers cannot be put out of service based on reasonable articulable suspicion, which is a lesser standard than probable cause. Finally, they asked that all individual driver fatigue out-of-service violations since April be removed from the Pre-Employment Screening Program database. When the FMCSA declined to take the requested action suit was filed. We will keep you advised of the outcome.
TWIC CARDS – Don’t count on those TWIC cards as raising the standard of security for the driver. The Department of Defense has filed a rule making in which it states that TWIC do not even meet its standards and can’t be used for DOD website systems as of Jan. 29, 2013. If the DOD won’t use it why should anyone else?
CASES
AUTO
A New Jersey Appellate court considered the admissibility of expert testimony regarding the use of plugged tires on a tractor trailer. The court held that the expert testimony of Barry Brunstein of Transport Safety Consultants Nationwide to be inadmissible under the net opinion rule which prohibits speculative testimony which fails to give the why and wherefore of an opinion. (Alexander v. Mid-Eastern Transportation, Inc., 2012 WL 5990109)
New Jersey also held that there was a question of fact as to whether a construction company which utilized independent motor carriers to pick up and deliver construction materials would be considered an employer of the driver and therefore vicarious liable for a fatal accident. The Court held that there was sufficient facts to support either broad control or on spot control over the driver to warrant submission of the issue to the jury. (Tappel v. Arango, 2012 WL 6027698)
Failure to maintain records of vehicle data can result in a finding of spoliation. However this time the Court of Appeals in Georgia reversed an order striking a defendant’s answer for destruction of evidence of data from electronics communications system in a vehicle when there was no evidence that the information would have shown the hard brake data the plaintiff was looking for. (Sentry Select Ins. Co. v. Tredwell, 2012 WL 5936004)
The Third Circuit Court of Appeals upheld a $3.6 million verdict against a trucking company stemming from a fatal accident during the repair of an out of service vehicle by a mobile maintenance company. The failure of the defendant to introduce its own evidence of the contributory negligence of the mechanic allowed the court to conclude that it was within the province of the jury to ignore any alleged contributory negligence. (Conlon v. Trans National Trucking, 2012 WL 6013806)
The District Court in Kentucky considered the standards for asserting an unfair claims practices action by a third party injured in a truck accident. The Court denied recovery and held that the plaintiff failed to show that the conduct of an insurer in failing to quickly settle a loss was outrageous and evidences either an evil motive or a reckless disregard of the plaintiff’s rights. (Gale v. Liberty Bell Agency, 2012 WL 6003072)
The MCS-90 does not apply when the plaintiff is only successful in obtaining a judgment against the driver. The District Court in Maryland denied plaintiff recovery when the trucker’s policy at issue did not cover the driver or the vehicle and further refused to extend the MCS-90 to judgments only against the driver. (Forkwar v. Progressive Northern Insurance Co., 2012 WL 6562768)
A plaintiff’s efforts to alter a judgment we reported on last month failed. The Middle District of Florida, which had previously concluded that a non-trucking use policy did not apply when the driver was operating under dispatch, and that the UM coverage was subject to the non-trucking use endorsement, held that no new arguments were raised to defeat the judgment in favor of the insurer. (Great American Ins. Co. v. Sanchuk, 2012 WL 6652835)
There was quite a bit of litigation over indemnity clauses this year. The Court of Appeals in Michigan held that a trucker’s insurer was required to defend and indemnify a general contractor who was sued for injuries caused by an accident which resulted from the use of the trucker’s vehicle. The indemnification agreement was held to be an insured contract under the auto policy. (Russell v. Dan’s Excavating, Inc., 2012 WL 6633988)
An injured plaintiff was unsuccessful in recovering from a vendor who allegedly failed to properly pack barrels for delivery and the plaintiff was injured when it hit him. The Appellate Division Court in New York held that the vendor owned no duty of care to the plaintiff who was a third party to the vending contract. (Cahn v. Ward Trucking, 2012 WL 6115811) In a related decision the Court also held that the trucking company was not entitled to common law or contractual indemnity indemnification from the seller of the chemicals. (Cahn v. Ward Trucking, 2012 WL 5907158)
The Supreme Court in Georgia held that an injured party had no standing to assert, as a third party beneficiary, automobile liability provisions in a contract between the City of Atlanta and its sub-contractor. While the sub-contractor was required, and failed, to insure that a sub-subcontracted trucker has $10 million in auto liability coverage, the injured parties could not assert a claim against the City for failing to insure that the coverage was present. (Archer Western Contractors, Ltd. V. Estate of Pitts, 2012 WL 5915444)
The lessor of a vehicle was not entitled to a defense and indemnity from the lessee’s insurer when the suit against the lessor did not arise from the actions of the lessee, but rather from the alleged negligent maintenance of the vehicle by the lessor. The Court of Appeals in Wisconsin held that a claim by the lessor that it reasonably expected to be covered for any accident involving the vehicle, even if not arising from the actions of the lessee was incorrect. (Ritter v. Penske Trucking Leasing Co., 2012 WL 6095089)
The Court of Appeals in Michigan reversed an order finding the exclusion in a non-trucking policy for loss resulting from the use of the use by anyone to whom it is leased if the less has PIP coverage invalid. The Court held that as the lessee in fact had the PIP coverage when the driver was under dispatch the exclusion was valid and that insurer should provide PIP coverage for the driver. (Perkovic v. Hudson Ins. Co., 2012 WL 6633991)
Negligent hiring was a topic of discussion in the Court of Appeals in Texas this month. The Court upheld a defense judgment for a facility which sold livestock when the plaintiff was injured on the premises when someone else’s tractor trailer ran him over. The simple fact that the driver was notified that there was a load available for pick up was insufficient to establish that the defendant had hired him and was therefore subject to liability for the loss. (Castillo v. Gulf Coast Livestock Market, 2012 WL 6600319)
CARGO
While the Supreme Court held that a receiving carrier under an ocean bill of lading might still be subject to the Carmack Amendment, the court did not fully address who in fact would be considered a receiving carrier. The Southern District of New York held that one does not become a receiving carrier simply by accepting goods for transportation but must also be the principal party to the contract governing the transportation. If you do not fall into that category you may be entitled to the benefit of the ocean bill of lading. (Royal & Sunalliance v. Service Transfer, Inc., 2012 WL 6028991)
The Court of Appeals in Georgia held that a through bill of lading issued by an ocean carrier was not subject to Carmack Amendment requirements. Moreover, the court also held that the railway company who received the shipment was not the receiving carrier when the shipper had actually retained a freight forwarder. Liability was subject to the terms of the freight forwarder contract. (Norfolk Southern Railway Co v. Sun Chemical, 2012WL 5951501)
The issue of who is a receiving carrier received a lot of focus this month. The Southern District of New York refused to reconsider its decision that a carrier was not a receiving carrier and therefore required to issue a Carmack compliant bill of lading to obtain the benefit of limitations. (Hartford Fire Ins. Co. v. Expeditors International of Washington, 2012 WL 6200958)
Once again we see the dilemma in determining whether an entity was a carrier or a broker. Where evidence was presented that the purported broker exercised some degree of control over the driver the court was not convinced that it acted only as a broker. The Court in the Eastern District of Wisconsin also considered claims for negligent hiring and entrustment against the broker. Finally, the Court also held that the actual motor carrier, who issued a through bill of lading to Mexico, was liable for a loss which occurred after it gave up possession to another carrier as that occurred before the final destination on the bill of lading. (Viasystems Technologies Corporation v. Landstar Ranger, Inc., 2012 WL 6020014)
How does a shipper establish good order and condition when the cargo is used equipment? The Middle District of North Carolina determined that video evidence that the machine was operating shortly before transport, and that customary business practice would be to note any problems if they occurred post taping was enough to establish the first element of a claim. The court did limit the prima facie claim to noted damages at destination and refused replacement of the machine as the measure of damages, noting that the cost to repair the limited items noted as damaged was the sole recovery. The court also upheld at least as to one of the defendants, the obligation of timely notice within nine months. (Rush Industries v MWP Contractors, 2012 l 6010059)
A carrier’s efforts to limit its liability in accordance with the provisions of its tariff failed this month in the Western District in North Carolina. There were conflicting bills of lading at play, and there was no evidence that the terms of the limitation were brought to the attention of the cargo owner. (Saacke North America v.Landstar Carrier Services, Inc., 2012 WL 6631713)
HAPPY NEW YEAR ONE AND ALL. SEE YOU IN 2013.
