Happy Spring to one and all. We are looking forward to meeting up with many of you in San Diego at the annual IMUA meeting in May. Please stop by our table and visit and allow us to show you the CABAdvantage.
This month we report:
CERTIFIED MEDICAL EXAMINERS – The final rule to establish a national registry of certified medical examiners has been released by the DOT. The rule will take effect in May, 2014 and will require training, testing and certification to insure that the specific physical qualifications of interstate commercial truck and bus drivers are meet.
The DOT believes that 40,000 medical examiners are needed for commercial truck and bus drivers.
CARRIER SHUT DOWNS – The U.S. Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) has declared New Jersey-based J&A Transportation, Inc., Oklahoma based Heartland Charters & Tours and Utah based Reliable Transportation Services imminent hazards to public safety, and ordered the companies to shut down their operations.
SPEED GOVERNORS – The FMCSA has released the results of its research on speed governors, concluding that using technology to electronically govern and limit the top speed of commercial trucks creates safer roads. The study concluded that the potential problems with having governed vehicles on the road alongside ungoverned vehicles far outweighed the benefits of the systems. A copy of the report can be viewed here.
ATA TRENDS REPORT – The American Trucking Associations released its latest edition of “American Trucking Trends.”, concluding that trucking continues to dominate the transportation marketplace, hauling 67% of all freight in 2011. Trucking moved 9.2 billion tons of freight or $603.9 billion of the total freight bill. Trucking employs 6.8 million people, 3 million of which are drivers. The report also concludes that ninety percent of carriers operate six or fewer trucks, and 97% of carriers operate fleets of 20 or fewer trucks. This will remain a viable insurance book of business for many years.
CHAMELEON CARRIERS™ – The GOA has released its report confirming that the FMCSA does not adequately detect Chameleon Carriers™. They conclude that it would require the FMCSA to investigate each of the tens of thousands of new applicants that register annually and then complete a legal process for some of these suspected chameleon carriers™, an effort for which FMCSA does not have sufficient resources. Premium Subscribers get to use our Chameleon Tracker™ to help you track possible chameleon carriers™. You can view the report here.
CONTAINER VIOLATIONS – Beginning in July, the FMCSA will charge truckers with certain chassis safety violations, which is the next step toward full implementation of federal chassis safety rules. Carrier will be responsible for violations which should have been detected in pre-inspections.
FDA PROCEDURES ON CARGO THEFT – For our cargo underwriters and claims personnel, the FDA has released its standard operating procedures when there is a cargo theft of products under their jurisdiction and control. Those procedures can be viewed here.
BROKERAGE OPERATIONS – Transport Capital Partners reports that use of brokers by truckers as a way to solicit freight is on the increase. Approximately 33% of motor carriers used freight brokers in February, up from 11% at the same time last year. TCP also found that 34% of larger carriers, with at least $25 million in annual revenue, used brokers, compared with 28% of smaller carriers.
CSA = The strengths and weaknesses of CSA was in the news this month as carriers and the FMCSA continue to clash over the accountability of carriers for accidents. According to Transport Capital Partners carriers are paying attention to the impact of CSA, 65% are using multiple ways to correct and improve scoring. The most popular methods for complying with CSA 2010 regulations are:
– Training for drivers so that they understand how CSA 2010 can affect their careers (78.1%)
– Changing how sub-performing driving is monitored (63.2%)
– Investing in technology to help monitor CSA 2010 (55.3%)
CURRENT CASES
AUTO
Does the simple presence of an MCS-90 on a policy of insurance confer jurisdiction over a coverage dispute. The Western District of New York answered that question in the negative, remanding a case back to state court. In an action in which a plaintiff sought to recover against a carrier’s policy, after the carrier had already been dismissed from a suit, the court held that whether the question of whether other parties were insured under a policy which contained an MCS-90 would not convey subject matter jurisdiction. (Carlson v. American International Group, 2012 WL 1202193)
The Southern District of Ohio granted a motor carrier’s motion to dismiss state law causes of action arising from an interstate accident. Although all of the facts were not stated, the plaintiff sought to avoid the effect of Carmack preemption on the basis that Landstar was acting as a bailee or warehouseman at the time. The court found that Carmack encompasses all services provided, including storage. (Schneider Electrical USA v. Landstar Inway, 2012 WL 1068170)
In a dispute between two insurers over payment of defense costs, the court in the Eastern District of Kentucky held that an insurer’s duty to defend was triggered when the suit was filed even if another insurer was involved in providing a defense. The court analyzed the “arising from the use of an auto” provisions in reaching its coverage determination. In addition the court held that an insurer’s attempt to avoid reimbursing the other carrier due to an alleged failure to properly tender the defense would not be sustained as there was no showing of prejudice. (LM Insurance Corp v. Canal Ins. Co. 2012 WL 984281)
The Court of Appeals in Arizona held that a motor carrier was not responsible for injuries caused by a thief who had an accident while driving the motor carrier’s truck. The carrier had left the vehicle unguarded, in an unfenced lot, with keys under the floor mat in the unlocked cab. The carrier was not required to protect the public from the negligence of the thief. (Delci v. Gutierrez Trucking Co., 2012 WL 1356332)
Many attempts are made by plaintiffs to argue that violation of federal safety regulations establish negligence per se. The District Court in Montana held that while violations can be used to support negligence, it will rise to the level of negligence per se. The court upheld a defense verdict in favor of the motor carrier. (Mann v. Redman Van & Storage, 2012 WL 1232024)
A direct action against a motor carrier’s insurer is not permitted in Oklahoma when the motor carrier is not a registered carrier in the state. The court also held that the fact that there was an MCS-90 would not allow for a direct action as that would circumvent the rule against permitting direct actions against liability insurers. (Foraker v Reeves, 2012 WL 1205673)
CARGO
Jurisdictional issues were a focus issue this month. In the Western District of Arkansas a broker’s attempt to remand a cargo case that it has brought against the motor carrier was unsuccessful. The Court held that while the broker may have had a contract with the motor carrier, the broker and it’s presumably contingent cargo insurer, were simply subrogated to the rights of the shipper. Since the shipper’s claim was subject to the preemptive effects of Carmack the case was properly situated in the federal court. (Propak Logistics v. Landstar Ranger, 2012 WL 1068118)
The District Court in New Jersey also held that claims against a regulated carrier were subject to the preemptive effect of Carmack and dismissed all state claims against the carrier. The moving agent was not, however, as successful. While historically the agent of a Household Goods carrier was not subject to a separate action the court held that it was too early to determine whether there was a separate cause of action against the agent for its own direct breach of contract. (United Van Lines v Lohr Printing, 2012 WL 1072248)
Cargo adjusters pay attention to this case. The Eastern District of Kentucky held that the 2 year suit provision in a cargo policy started to run as soon as the insured had notice of the damage, concluding that the coverage for “the legal liability of the insured” meant the liability assumed at the time that the carrier received the cargo. The suit time did not run from the date of a judgment against the motor carrier. (Travelers Property Casualty Company of America v. Breeding Heavy Haulers, Inc. 2012 WL 1029459)
We bring to your attention a case in the Western District of New York for a purpose other than the reason for the decision. The Court granted a motion for default against a motor carrier for damage to a shipment of chicken delivered out of temperature. Of interest is the fact that the court held that a shipper has a duty to mitigate damages by salvaging the goods. This case supports the argument that even food out of temperature must be salvaged. (Leonard’s Express, Inc. v. Arrowstream, 2012 WL 1014824)
The Eastern District in North Carolina upheld a carrier’s limitation of liability which was incorporated by reference in the bill of lading prepared by the shipper. The Court properly noted that a bill of lading is actually something issued by the carrier, even when prepared by the shipper. Of most interest was the fact that the court held that the standard requirements for a limitation of liability analysis were inapplicable when the shipper’s prepares the bill of lading. The Court held that the Carmack protections were not designed to protect a shipper from its own error. If the shipper prepared the bill of lading it was stuck with it, even if it had no knowledge of the tariff. (Abb v. CSX Transportation, 2012 WL 1016039)
When is delivery complete? The District Court in Maryland held that a carrier had not completed delivery when the driver left the trailer at the consignee but placed a king pin on the trailer and was the only one with a key. Possession custody and control was not fully delivered. The Court also held that the plaintiff, a warehouseman who paid his customer, was entitled to recover the value of the shipment, plus lab tests to test the product, but was not entitled to recover investigation expenses or storage costs. The court also awarded prejudgment interest at the prime interest rate of 4%. (Merchants Terminal Corp. v. L&O Transport, 2012 WL 1416631)
While down the road a piece, the District Court in Mississippi held that pre-judgment interest in a cargo case was based upon state law interest and gave the plaintiff 8% interest. The carrier was found liable as it failed to ever formally answer the complaint and therefore deemed to have admitted all allegations. (Eagle Transportation v. Scott, 2012 WL 1252616)
MISCELLANEOUS
Sometimes I just report on cases which are not transit in nature, because I feel they will be of interest to many who read this report. This month the Middle District of Louisiana considered coverage for electronic data under an inland marine form. The Court held that electronic data was in fact a tangible item and could be subject to direct physical loss, a minimum requirement for a claim under the inland marine coverage. The court also held that the insurer was not acting in bad faith as the question of the tangible nature of the property was subject to conflicting decisions in the courts. (Landmark American Insurance Co. v. Gulf Coast Analytical Systems, 2012 WL 1094761)
In evaluating a motion for realignment of parties to support jurisdiction and a concurrent motion to remand to state court, the Eastern District In Tennessee held that the action was not a direct action against an insurer, after judgment against an insured, and therefore the insurer would not be considered a citizen of the insured’s state for diversity purposes. The court refused, however to align the parties to support diversity when it was unclear that the truck driver and its employer were aligned in interest against the insurer. (Miller v. Northland, 2012 WL 1108131)
