I don’t know about you but I am done with this winter weather. Spring cannot come soon enough. February is a short month and I feel like I was just writing January’s report.
TRAINING AND INFORMATION SESSIONS – Here is the schedule and links for registration for this month’s training and information sessions:
Focus Training – Wednesday March 12 at 2:00 PM EDT – This month we will have a specially designed session for people involved in claims that will show all the ways the CAB website can be used for claims to help achieve better results. This special session will be led by Jean Gardner. –
https://www1.gotomeeting.com/register/413093200
CAB Basic Training – Thursday March 13 at 2:00 PM EDT –
https://www1.gotomeeting.com/register/573678697
Agent Advantage Preview – Wednesday March 19 at 2:00 PM EDT –
https://www1.gotomeeting.com/register/774081873
SALEs Preview – Thursday March 20 at 2:00 PM EDT –
https://www1.gotomeeting.com/register/434724089
This month we report:
CSA – This month we saw conflicting reports by government agencies on the success of CSA. The Government Accountability Office released its report on the FMCSA’s CSA regulatory compliance measurement program concluding that the system has some problems. The report indicates that small carriers are ‘disproportionately’ affected by the results, concluding that many motor carriers lack sufficient safety performance information to ensure that FMCSA can reliably compare them to other carriers. The GAO found that the FMCSA attempts to compensate for the variances in inspection levels by grouping motor carriers with similar inspection rates in groups within the BASICs categories. Carriers are then compared against other carriers in the same group and ranked based off the violation data of the other carriers. The GAO recommends that the FMCSA conduct an analysis that identifies the limitations of the inspection and crash data used to calculate CSA scores. A copy of the report can be viewed here.
The FMCSA released its own report which concluded that SMS was more effective at identifying commercial bus and truck companies of all sizes for targeted enforcement than the system it replaced. Researchers analyzed the association between historical carrier data and future crash involvement by taking two years of pre-SMS safety data for a subset of carriers, running it through the system’s algorithm, and then following those companies’ crash records for eighteen months. Results show that the companies the SMS would have identified for interventions, such as roadside inspections, warning letters and on-site investigations, had a future crash rate of more than double the national average. In addition, 79 percent of the carriers that SMS would have ranked as high risk in at least one of the seven safety categories it monitors, had higher future crash rates compared to those it would not have identified. A copy of the report can be viewed here.
DRUG AND ALCOHOL CLEARING HOUSE – The FMCSA released its proposal for a drug and alcohol clearinghouse that would store positive drug and alcohol test results; adulterated, substituted drug test results; test refusals; and successful completions of the return to duty process following a positive test result for drivers. The reporting requirements are for prospective and current employers, medical review officers, consortiums, third-party administrators and substance abuse professionals. In the case of owner-operators, the agency is proposing the mandated use of a consortium or third-party administrator to complete the reporting requirements to the clearinghouse. The FMCSA is asking for comment on the question of whether positive results should be held for 3 or 5 years for drivers who come back to work and indefinitely for drivers who do not. Motor carriers would be required to check a driver’s records in the clearinghouse before hiring the driver and to require rechecks on existing employees annually. Drivers who do not provide consent to employers for searches of the clearinghouse will not be allowed to conduct safety-sensitive functions, like driving a truck. It will be set for public comment shortly.
FOOD SAFETY The U.S. Food and Drug Administration released new proposed rules to require certain shippers, receivers, and carriers who transport food by motor or rail vehicles to take steps to prevent the contamination of human and animal food during transportation. The proposed regulation would establish criteria for sanitary transportation practices, such as properly refrigerating food, adequately cleaning vehicles between loads, and properly protecting food during transportation. The proposed rule would not cover shippers, receivers, or carriers engaged in food transportation operations that have less than $500,000 in total annual sales. In addition, the requirements in the proposed rule would not apply to the transportation of fully packaged shelf-stable foods, live food animals, and raw agricultural commodities when transported by farms. The requirements would also not apply to shippers, receivers, or carriers who are engaged in transportation operations of food that is transshipped through the United States to another country, nor to food that is imported for future export and that is neither consumed nor distributed in the United States. Your can view the proposed rule here.
In other food safety news, OSHA has established procedures for handling retaliation complaints by employees who disclose information about possible violations of the Food, Drug and Cosmetic Act against businesses involved in the manufacture, processing, packing, transporting, distribution, reception, holding or importation of food. The whistleblower protections will apply to truckers, providing them with protection if they file notices of food safety violations.
SIMULATOR TRAINING REPORT – The ATRI released a white paper examining safety impacts of simulator training for truck. They conclude that drivers who received the targeted simulator training had fewer safety incidents over time, but those effects dissipated at the 12-month mark. The report, “Safety Impacts of Truck Driver Simulator Training,” investigated the effectiveness of using customized truck driving simulators to target specific driving behaviors that have been associated with increased crash risk.
ECONOMIC UPBEAT – The first-quarter 2014 Fleet Sentiment survey conducted by CK Commercial Vehicle Research (www.ckcvr.com) was released indicating that more than half of the responding carriers will place orders for Class 8 trucks in the next three months. Forty-eight percent indicated they planned to place trailer orders. The CKCVR Buying Index, which combines activity and volume for both planned tractor and trailer orders, calculated to 112.0 the highest reading since the index was established in 2008. You can see the results at here.
INTERMODAL FREIGHT – The IANA released its report on intermodal freight. The report indicates a 7% increase in shipments. The organization’s quarterly market trends and statistics report said total truck-rail freight rose to 3.99 million shipments, including 8% domestic freight growth and a 5.9% rise in international shipments .For the year, intermodal shipments totaled 15.5 million, or 4.6% above the 2012 total that was the previous record. Domestic container shipments were almost 2.5 times greater than in 2000, while international containers increased by 1.5 times through the same period.
OUT-OF-SERVICE REPORTS – The FMCSA declared STSC Transportation Services, Inc., DOT #2350604, to be an imminent hazard and ordered it out-of service. Ricky Hatfield dba Hatfield Trucking, DOT #2385057, along with Ricky Hatfield as a commercial motor carrier driver were also ordered out of service as an imminent hazard. Two drivers, Ronato V. Velasquez and and Devon L. House were also declared an imminent hazard and ordered not to operate and commercial motor vehicles in interstate commerce. In addition Sergio Tristan Maldonaldo dba Tristan Transfer, DOT #2438928, a carrier that had been participating in the FMCSA’s cross border pilot program had its authority revoked for hours-of-service violation.
CASES
AUTO
The Court refused to dismiss an action in the Northern District of California by a truck driver against his insurer for his own injuries. The plaintiff, a foreign citizen, alleged that the insurance agreement he paid for was illusory because plaintiff’s agent knew that he could never collect on the policy because he did not have a social security number The Court also refused to enforce an arbitration clause in the lease agreement between the driver and the motor carrier, indicating that it was yet unclear as to whether the provision was unconscionable in light of the driver’s inability to understand the language. (Villalpando v. Transguard Insurance Company of America 2014 WL 644391)
What is the standard of care for a pilot car? The District Court in New Jersey considered that issue when there was an accident between the trucker and a passenger vehicle which plaintiff blamed, in part, on the escort service. The Court held that plaintiff had not established a standard of care for pilot carriers nor could plaintiff make out a prima facie cause of recovery. Of note for those of you who deal with this issue are the references to the industry manuals available for pilot cars. (DiGerolamo v. Gale, 2014 WL 523005)
The Supreme Court in Ohio saw an interesting suit this month when a vehicle owner argued that a trucker was liable for economic loss of use of plaintiff’s truck which had been hit in an accident. The loss of use claim was based upon the fact that the trucker’s insurer had placed an investigative hold on the truck. The Court held that Ohio courts could not exercise personal jurisdiction over a nonresident defendant based solely on the conduct of the defendant’s insurer and that the mere contractual relationship between an insurer and an insured does not make insurer the “personal representative” of insured but did not reach a decision on the critical issue of liability. (Fraley v. Estate of Oeding 2014 WL 553203)
The Northern District of Alabama considered whether a trucker would be liable for a rear end collision when he was parked in the emergency breakdown lane. The Court concluded that while the standard negligence claim would stand as there was a question of fact as to whether the driver of the passenger vehicle was the sole cause of the accident, it would dismiss claims of wantonness, negligent and/or wanton hiring, training, and supervision and negligent and/or wanton alteration of the end of the tractor/vehicle. (Bishop v. R.A. Wagner Trucking Co., Inc., 2014 WL 636987)
Continuing with the majority view, the Northern District of Mississippi held that a motor carrier should not be faced with independent tort claims when it has admitted vicarious liability for the driver. The Court also concluded that the motor carrier would not be subject to a punitive damage claim for the actions of the driver. (Dinger v. American Zurich Ins. Co., 2014 WL 580889)
The presentation of evidence that a trucker had inspected its tires 4 times in the 32 days before an accident from a blow-out was not enough to allow summary judgment for the trucker. The Middle District of Louisiana held that there was a question of fact as to the nature of the inspections, especially as the tires were retreads. (Hulbert v. Grammer, 2014 WL 414036)
UPS sought indemnity from a trucker when a driver was injured at the UPS site when his truck was flipped on its side by a jet blast from a UPS plane. The trucker, who had undertaken the defense of UPS later attempted to withdraw from the defense. The Western District of Kentucky held that the insurance doctrine of estoppel, applied when a defense was undertaken without reservation, would not apply to a ground handling agreement. Summary judgment on the pleadings was denied to UPS, with the case going forward on the question of indemnity and defense. (United Parcel Service v. Air Transport International LLC, 2014 WL 549400)
The fact that the plaintiff sued a trucker in subrogation for third party physical damage does not preclude that plaintiff from recovering under the MCS-90 endorsement. An insurer’s argument that the MCS-90 was limited to the individual injured party was not accepted in the Eastern District of Missouri. (Tri-National, Inc. v. Yelder, 2014 WL 520989)
The Missouri Court of Appeals remanded a case back to the trial court when the trial court applied Missouri law to an Oklahoma accident. The Court held that the laws in Missouri on standard of care when operating a vehicle on the public roadways and choice of law issues applied only to losses on their roadway. As the defendant was prejudiced because the standard of care was higher the case was sent back for re-trial. (Parrott v. Severs Trucking, 2014 WL 503803)
The Federal Rules on third party practice do not conflict with the Texas rule which allows a defendant to designate, but not join, a responsible third party according to the Eastern District of Texas. In this case, however, the decision was of no avail to the trucker who was found to have missed the time to designate a third party as responsible. (Withers v. Schneider National Carriers, 2014 WL 243458)
A dispute between a g/l and an auto carrier over who was responsible when a lessee driver of a food truck was injured when oil from a deep fryer splashed and burned her while the food truck was being operated. The Court of Appeals in California held that the food truck fell with the mobile equipment exception to the g/l auto exclusion and that the action against the lessor arose from events after the lessor completed its operations and was therefore excluded under the auto policy. (American States Insurance Co. v. Travelers Property Casualty Co. of America, 2014 WL 284540)
A trucking company’s insurer was entitled to bring a subrogation action against cargo owners when the refrigeration waste oil being transported caught on fire causing a release of hazardous vapors and other environmental damages. The Court in California held that there was a proper claim under the Comprehensive Environmental Response, Compensation and Liability Act. (Carolina Casualty Insurance Co. v. Oahu Air Conditioning Service, Inc., 2014 WL 309557)
The Southern District Of Mississippi held that driver records and training records would be excluded during the liability phase of the case and only driver records would be admissible, in part, if the punitive damage claim became an issue after liability was determined. As the Court has already dismissed the punitive-damages claims against the trucker documents related to its fault would be excluded. (Ancar v. Brown, 2014 WL 509312 (S.D.Miss.))
One trucker’s efforts to have his case defended in Federal Court when the plaintiff conceded that its damages were below $75,000. Back the case went to state court. I guess it was a win either way – as damages are capped. (Bryant v. Rosser, 2014 WL 379147)
CARGO
Can the terms of an ocean bill of lading apply to a cargo loss if the ocean bill of lading is not issued before the inland portion of the shipment commences? The Second Circuit held that when the parties were aware that all goods moved under the standard bill of lading then its terms would apply even if not issued. The Court held that the limitation would apply to the issuing carrier even when the warehouse where the cargo was held was complicit in the theft of the goods. (OOO Garant v. Empire United Lines Co., 2014 WL 443590)
Summary judgment was granted to a plaintiff despite the fact that a shipment was delivered without exception. The Court held that when the plaintiff produced evidence that the fruit was decayed along with USDA reports of damages the plaintiff had made out a prima facie showing for a cargo loss. (Total Quality Logistics v. Frye Trucking, LLC., 2014 WL 407645)
Speaking of prima facie cases for recovery, the Northern District of New York denied summary judgment to a motor carrier who contended that the plaintiff had not sustained its burden of showing that the damage occurred while the carrier had the cargo. While the Court did not find that the damage occurred while the cargo was in the possession of the carrier it held that there was enough evidence to defeat a request for summary judgment. The Court also acknowledged that a clean delivery receipt was rebuttable with evidence of damage at destination. (Ridley Electric Co. v. Liebert Corp., 2014 WL 409104)
RELEVANT FOR ALL
A BOC-3 filing designating agents for service of process can compel a carrier to defend cases in jurisdictions with no connection to a loss. The District Court in Minnesota held that a trucker would have to defend an action in that state even though the accident occurred in Texas and the trucker had little connection to Minnesota. The filing of an agent for service of process was enough to sustain personal jurisdiction. (Byrd v. J Rayl Transport, 2014 WL 321218)
Conflict of law is always of concern when evaluating insurance policies. The 2d Circuit held that New Jersey law would apply to the interpretation of a policy issued in New Jersey to a New Jersey insured. The fact that the accident occurred in New York was not enough to allow the application of New York law. (Certain Underwriters at Lloyds v. Illinois National Ins. Co., 2014 WL 504038)
What are the steps necessary to deny coverage for failure to cooperate in New York, and how quickly does the insurer have to take that action. The Court of Appeals in New York held that the insurer was required to show 1) that it acted diligently in seeking to bring about the insured’s co-operation; (2) that the efforts employed by the insurer were reasonably calculated to obtain the insurer’s co-operation; and (3) that the attitude of the insured, after his co-operation was sought, was one of willful and avowed obstruction. The Court also held that whether the disclaimer was timely, which it was in this case, would be fact specific. The fact that the insurer knew that the motor carrier would not cooperate for some time did not require immediate disclaimer when the insurer was still attempting to obtain cooperation from the driver. (Country-Wide Ins. Co. v. Preferred Trucking Services Corp. 2014 WL 590502)
Be careful of what you place in your claim file. The Middle District of Pennsylvania did not allow release of adjuster’s reports, as they were prepared in anticipation of litigation. However parts of a large loss report would be discoverable and subject to in camera review by the Court. Driver logs were also held discoverable. (Johnson v Predator Trucking, 2014 WL 509291)
In a tale of fraud against a premium finance company, the Northern District of Mississippi held that an insurance agent who committed the fraud was not the agent of the insurer’s general agent. The GA was held to have no responsibility for the actions of the downstream agent who collected monies and never obtained policies for the truckers. (First Trinity Capital Corp. v. Western World Insurance Co., 214 WL 460887)
See you next month
