Welcome to Fall. The cooler air in most parts of the country seems to come with more work for everyone as we head into the last quarter of the year. We welcome the newest member of our staff, Robert Haupt who will join us as an Account Executive. Be nice to him when you get a chance to speak with him. We have told him only nice things about most of you! Tiana and I will be at the AAMGA meeting in Tennessee at the end of October and we look forward to getting a chance to catch up with some of you.
In the news this month we report:
VEHICLE REGISTRANTS – The enactment of the FMCSA requirement that all current “vehicle registrant only” operations either switch their designation to a motor carrier registration or deactivate the number has been slowed. The FMCSA has advised that it will now phase in the requirement in order to give states time to address the changes and determine how to minimize the impact on state operations. The DOT number of vehicle registrants is set to expire in mid-October.
SHUT DOWNS – The FMCSA has ordered HP Distribution LLC to shut down stating that the Kansas based operation posed an imminent hazard to public safety,” Apparently the company’s drivers had extensive hours-of-service violations. The out-of-service order included information on repeated violations of hours-of-service laws, and also concluded that the carrier permitted its drivers to falsify logbooks to hide the violations. In other orders, just two months after shutting down Three Angels Farms of Lebanon, TN the FMCSA has now shut down Terri’s Farm in TN. It was ordered to cease operations after investigators found the company was “operating the same vehicles, and maintaining the same operational and safety management structure as former horse transporter, Three Angels Farms.”
ANTI-INDEMNITY STATUTES – Massachusetts has joined 34 other states in outlawing indemnity provisions in truck contracts. Provisions are no longer permitted in motor carrier contracts that provide for shippers to be indemnified for losses caused by their own negligence, making them void and unenforceable. Michigan is expected to follow shortly, with legislation close to signature.
RISE IN EQUIPMENT LEASING – We just learned that there is an Equipment Leasing & Finance Foundation which provides a Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) . This month they report that the index is up to 53.0, up from the August index of 50.2, According to the foundation this reflects an increased optimism and willingness to expand businesses operations even when there are uncertainties over the path of the country. Thank goodness we get some good news.
BUREAU OF TRANSPORTATION REPORTS – The BTS has released a few reports which may be of interest. They released the State Transportation Statistics 2011. It includes calculations showing which states had the highest and lowest number of highway traffic fatalities per 100,000 population in 2010. The ninth annual STS consists of 115 tables of state data on infrastructure, safety, freight transportation, passenger travel, registered vehicles and vehicle-miles traveled, economy and finance, and energy and environment, plus a U.S. Fast Facts page. The report can be viewed here. If you want to know more about the trends for containerized shipments moving in the U.S. they also released a report on the trends in containerized freight. The report can be viewed here.
DRIVER TURN OVER INCREASES – The ATA reports that driver turnover at large truckload carriers (those with revenues in excess of 30 million) reached 106% in the second quarter — the highest level since the final quarter of 2007. A 106% turnover rate means that drivers on average spend less than one year at a particular company. Not good news for an industry already suffering from tight capacity.
TRANSPORTATION REAUTHORIZATION ACT – The FMCSA has announced that it is hard at work on the many mandates contained in the new transportation reauthorization law (MAP-21) and the 34 required changes to truck and bus safety programs and 15 requests for studies. Among the anticipated actions include a new EOBR rule, a proposed safety fitness determination rule that will explain how it will use the Compliance, Safety, Accountability program’s safety measurement system scores to assign ratings to carriers, as well as a final unified registration system rule that will combine three databases to better identify reincarnated carriers, a proposed drug and alcohol clearinghouse rule, and a “patterns of safety violations” proposal aimed at increasing enforcement for truck and bus executives who turn a blind eye to unsafe business practices. The has also indicated that they are in the process of implementing provisions which reducing the safety review of new-entrant trucking companies to 12 months from 18 months, increasing enforcement penalties and its authority to put truck and bus operators who pose an “imminent hazard” immediately out of business; improving standards for states seeking commercial vehicle safety grant simplifying steps for carriers to apply for waivers, exemptions and pilot programs by eliminating a formal requirement for a Federal Register announcement and granting additional authority to order the return of household goods held hostage by movers., as well as developing rules that will expand its authority over the operations of brokers and freight forwarders, require a new written proficiency exam for carriers seeking operating authority and create new registration requirements. The DOT has also released a summary and overview of MAP-21 which can be viewed here.
CASES
AUTO
An insurer in New York was not permitted to void a policy ab initio simply because the motor carrier failed to notify the insurer of a new driver. The Court held that under California law the ability to void a policy related only to misrepresentation in the application and not continuing policy obligations. The insurer was looking to rescind the policy and the MCS-90. From the decision it appears that the Court would actually consider the possibility of rescinding the policy and endorsement when the misrepresentation occurred at the time of application. (Groat v. Global Hawk Ins. Co., 2012 WL 3985098)
In evaluating the pollution exclusion in an excess auto policy, the Western District in Pennsylvania, applying Maryland law, held that petroleum asphalt spill was not a pollutant. The Court concluded that when the insured trucking company was transporting the asphalt in the normal course of business operations it would never be the intention that the exclusion would apply to a spill. (Travelers Indemnity Company v. MTS Transport, 2012 WL 3929810)
Cases on expert issues, and driver injuries seemed to take center stage this month. The Supreme Court in New York allowed for expert testimony against a shipper who may have overloaded a truck with asphalt. The court held that plaintiff should be permitted to allow his expert to testify as to the loading of the trailer and the fact that it may have led to the overturn. In addition the Court allowed the testimony of a DOT Inspector regarding the standards of safety of a vehicle. (Tillson v. Callanan Industries, 2012 WL 3932405)
In a different case a truck driver’s doctor was not permitted to testify as to the potential for future surgery in a personal injury action against a second trucker. The Court concluded that as the doctor could not address with a reasonable degree of certainty the type of surgery which would be needed the testimony did not rise to the relevant standards for expert testimony. (Singh v. Larry Fowler Trucking 2012 WL 3731562)
The Superior Court in Connecticut addressed the obligations of an insurer to settle within policy limits. In this case the Court concluded that the insurer was not liable for an excess judgment when it did offer to settle within the policy limits before the case was tried. The fact that it did not accept the offer within the arbitrary time limits set by the plaintiff was not relevant where the evidence showed that the insurer was fully investigating the matter and had needed to consider many factors before tendering the $1 million trucker’s limit of insurance. (Carford v. Empire Fire & Marine, 20001112 WL 4040337)
In two different decisions the court addressed the admissibility of evidence in a pending trucking personal injury trial. It is interesting reading as the court ruled on requests that the plaintiff be allowed to disparage the trucking industry. The Court also considered the admissibility of testimony from plaintiff’s expert, Larry Cole and his ability to testify on trucking industry standards, (McLane v Rich Transport, 2012 WL 3996832 and 2012 WL 3996732)
In another two decision case, the Middle District in Pennsylvania considered identical motions filed against two plaintiffs, concluding that a cause of action would not stand for intentional infliction of emotional distress simply because a truck driver fell asleep while operating a big rig. The claim for negligent infliction would, however, continue to stand. (Spipramot v. New Century Transportation, 2012 WL 4060741 and Daly v. New Century Transportation, 2012 WL 4060687)
Sometimes even taking the step of filing an interpleader is not enough to end a suit. The Western District in North Carolina held that injured plaintiffs were permitted to proceed against a trucker even when the insurer had already filed an interpleader placing policy limits with the court. The Court held that when additional theories were alleged the cases could proceed, but also held that while the plaintiffs could proceed with a second suit, they would also have to litigate the same issues in the interpleader. (Great West Casualty Co v Fredrics, 2012 WL 3870496)
CARGO
The Central District in California determined that it would accept jurisdiction over a cargo loss involving a shipment from Shanghai to Mexico. The Court held that when the contract provided for California law and Mexico did not provide for an adequate forum for adjudication of the matter. (Nipponka Ins. Co. v. CEVA Logistics, 2012 WL 3999868)
Cargo claims arising from identity theft are starting to work their way through the court system. The District Court in Nebraska is considering a shipper’s claim for recovery under its property policy for two cargo thefts as well as its claim against a broker for negligently retaining someone who purported to be acting for a trucking company and apparently stole the cargo. This time the court ruled that the two claims should proceed together for discovery purposes. Hopefully we will see other decisions addressing the pivotal issues which exist in this case. (Greater Omaha Packing Company v. Liberty Mutual Fire Ins. Co., 2012 WL 4105122)
A cargo owner was sued for the damages suffered to a rail carrier following the derailment of a train, alleged to have occurred due to the improper packing of a rail carrier. The 7th Circuit ruled that while the Supreme Court had held that a cargo owner was bound by the terms of downstream limitations the same rules would not apply when the downstream carriers attempted to invoke the bill of lading provisions against the shipper. In addition the Court held that the owner had no duty to the carriers in the absence of evidence that it knew that the cargo was inherently dangerous or that the entities that loaded and stowed the cargo was incompetent. (Kawasaki Kaisha v. Plano Molding, 2012 WL 3711873)
The Southern District in New York once again considered the terms of a through bill of lading on a domestic loss. The Court concluded that the Carmack Amendment did not apply to the delivering carrier. The Court went even further and held that when the ocean bill of lading properly sets forth a covenant not to sue downstream carriers the plaintiff could not sue the domestic carrier. (Sompo Japan Ins. Co. v. Norfolk Southern Railway Co., 2012 WL 3838162)
An insurer’s efforts to defeat remand of a suit to state court on the basis that the joinder of the agent was done to defeat federal court jurisdiction failed. The Court held that the plaintiff asserted a colorable claim against the agent that it misrepresented the scope of coverage under a cargo policy. That was enough to keep the case in the Northern District of Alabama, (Meteor Exp., Inc. v. Travelers Property Cas. Co. of America, 2012 WL 3776702
On the other hand, in District Court in Massachusetts the court held that the joinder of non-diverse parties by the plaintiff would result only in dismissal of the suit against those parties – and would allow the main action to continue. The Court noted that it would result in multiple suits but still would not allow the defendant to defeat the plaintiff’s forum selection. (Erickson v Johnson Controls, Inc. 2012 WL 3597204)
The District of New Jersey held that Carmack applied even to the claims of the plaintiff that the mover had damaged the home and cost her additional expenses for delay in the sale of her home. The Court also considered the 9 month claim filing requirements, enforcing them with a substantial compliance standard. The Court ruled that the plaintiff had not met the substantial requirement standard. (Raineri v. North American Van Lines, 2012 WL 3757071)
A trucking company whose hazardous materials truck was damaged in an accident with another trucker was entitled to recover for the value of the truck, as well as the loss of its use and loss of profits. The Court in Tennessee held that while you generally could not recover such damages when property was totally destroyed that would not be the case where the property could not be easily replaced, such as in the case of a vehicle equipped for hazardous material transport. (DKB Trucking v. JNJ Express, Inc., 2012 WL 3866462)
MISCELLANEOUS
Technical rules have a way of changing the results in a suit. Many federal courts follow Rule 26 mandatory disclosure. This month the Middle District in Florida held that the failure to properly disclose witnesses would not be fatal for the plaintiff. The Court held that the defendants were not harmed by the failure to disclose the witness as the defendants were made aware of the witness during depositions. (Great American Assurance Co v. Sanchuk, 2012 WL 3860429)
Remand issues often impact both cargo and auto cases. The Northern District in Georgia held that a defendant was not obligated to remove a case until it was reasonably certain that the damages exceeded the jurisdictional limit, which in this case did not occur until the depositions were complete. The Court also held that as long as the petition indicated the consent of all defendants, and the record reflected that all of the defendants worked together on the removal that the technical failure to file consent to removal would not permit remand of the case. (Bramlett v. Bajric, 2012 WL 4329242)
How far can you go in gathering information on a claim against a transportation broker for negligent hiring of a carrier? The issue was considered in the Middle District of Tennessee and the Court concluded that CH Robinson would have to provide information on the safety checks for the particular carrier and its contracts with that carrier. It would not, however have to produce that information for all carriers in its stable. However, once the plaintiff takes a 30(b) deposition it will be permitted to inquire into the overall evaluations done for the carriers which it uses in its operations. (Owens v. Anthony, 2012 WL 4174891)
The 7th Circuit considered an action by a customer who suffered damages from a bribery and kickback scheme involving various transportation companies. The Court held that state law claims for fraudulent misrepresentation by omission, conspiracy to commit fraud were preempted under FAAAA. However claims for conspiracy to violate Wisconsin bribery statute and for racketeering were not preempted. (S.C. Johnson & Son, Inc. v. Transport Corporation of America, Inc., 2012 WL 4215885)
Enjoy the Fall! See you next month.
