I hope you had a great month. Tiana and I were happy to meet with so many of you at the annual IMUA meeting. It is always a pleasure to get together with old and new friends. We were pleased to sponsor the Transportation Session and hope all those present learned some of the new issues facing the industry in this complex arena. And speaking of Tiana I would like to give her a special acknowledgment, recognizing her promotion to Vice President at CAB. It is a well-deserved promotion.
I would also like to thank the IMUA and especially my friend Pat Stoik for the Excellence In Education Award. I am very proud to receive that award from the IMUA and Pat’s wonderful words meant so much to me. We all need to continue to educate the industry. CAB is proud to help in that endeavor.
Before we head off to provide the news of the month, we take a special moment to thank our serviceman and woman for their service and sacrifice. We are all very lucky to have such wonderful people protecting us.
MOTOR CARRIER SELECTION PROCESS – The Transportation and Logistics Hiring Reform Act was introduced in the Senate this month. It is designed to set national standards for shippers and third parties contracting or hiring trucking companies, requiring them to check a carrier’s federal safety rating, registration and insurance coverage before tendering freight. The Senate bill would prohibit any other information being used against a shipper or broker in a negligent hiring case.
DOT OVERSIGHT – The Inspector General of the DOT will undertake an audit of the ways that an at risk motor carrier are evaluated by the FMCSA. The audit will evaluate investigative practices and the review process for compliance analysis. In addition it will evaluate whether the steps are timely and sufficient.
JOBS INCREASE – There has been an upward tick in jobs, after some significant losses in recent months. The Department of Labor reports that a gain of nearly 2,000 jobs after the industry lost nearly 7,000 jobs the month prior. The “support activities for transportation” exhibited the highest gains with an addition of nearly 5,000 jobs. Only two subsectors showed losses with “transit and ground passenger transportation” losing 400 jobs and water transportation losing 100 jobs.
CARGO THEFT – Freightwatch reports a rise in frequency and severity with 191 verified incidents of cargo theft in the first quarter, a 1 percent increase compared with the same time period last year. The average loss value per incident of $256,966 represents a 26 percent increase in that same time period. The report states that the increase in loss value represents a trend going back to at least the third quarter of 2014, in which organized cargo thieves “are targeting more lucrative shipments” according to the report. Food and drinks top the list of commodities with 131 thefts, followed by electronic and home and garden supplies. New Jersey took the lead over Florida and California with the top reported thefts, 37, followed by California, Texas and Georgia. Roughly 91 percent of all reported thefts occurred in unsecured parking, with 21 percent of those thefts occurring at truck stops. Thefts from warehouses and distribution centers accounted for 5 percent of thefts, followed by secured parking locations with 4 percent in the quarter. The report also states that full truckload thefts were the most common type. Fictitious pickup accounted for roughly 3 percent of all reported thefts.
INSURANCE LIMITS – Truckers appear to be opposed to the proposal that insurance limits should be increased. They held a rally in Washington this month. Currently language in the House version of the Transportation, Housing and Urban Development 2016 appropriations bill will prevent the Federal Motor Carrier Safety Administration from increasing the amount of insurance that motor carriers are required to carry. Efforts to remove that freeze were defeated.
ATRI STUDIES – The American Transportation Research Institute (ATRI) released its study of the safety and operational impacts from the 34-hour restart provisions. According to the ATRI the crash data analysis showed a statistically significant increase in truck crashes after the July 1, 2013, rule change, specifically with injury and tow-away crashes. ATRI’s report indicates that perhaps the changes were caused by drivers abandoning use of the more restrictive 34-hour restart in favor of the rolling recap; expanded use of weekend productivity by drivers, particularly Friday into early Saturday driving and earlier weekend dispatches for drivers to avoid disruptions to early week (Monday-Tuesday) operations.
The ATRI also released phase one of a research report finding that “platooning,” or trucks’ safety systems being synchronized so they can travel close together to combat wind resistance, saves fuel without compromising safety. According to data gathered so far:
• There is up to 10 percent fuel economy for the trailing truck, and up to 5 percent fuel economy for the leading truck.
• Truckload and line-haul LTL operations would likely be the greatest beneficiaries of a platooning system, particularly among larger fleets.
• Fleets and drivers who operate average truck trips of more than 500 miles would experience the highest returns on investment from platooning.
• Modelers at Auburn University confirmed that platooning would not negatively impact traffic flows and could improve traffic flows if truck market penetration reached 60 percent.
• Platoon formation in some operations appears to be feasible, based on a case study using actual truck movement data from ATRI’s truck GPS database, and
• Small fleets and owner-operators required an investment payback period of 10 months, while larger fleets had a mean payback expectation of 18 months.
AMERICAN TRUCKING TRENDS – The ATA released its latest edition of American Trucking Trends. According to the report the trucking industry generated $700.4 billion in revenue; the first year in history the industry topped $700 billion in total revenue. The report also finds:
* In 2014, trucks moved 9.96 billion tons, or 68.8 percent of all domestic freight.
* The $700.4 billion in revenue accounted for 80.3 percent of all freight transportation spending.
* Trucking employed more than 7 million people, including 3.4 million drivers.
* Combination trucks logged 168.4 billion miles in 2013, or an average of 69,000 per truck.
* Since Deregulation, the number of registered motor carriers has grown by 68 times to more than 1.3 million carriers.
* Commercial trucks paid $16.5 billion in federal highway user fees in 2013.
CASES
AUTO:
The Supreme Court in Texas held that a shipper was not bound by the same rules as a motor carrier for purposes of determining liability for retaining a trucking company involved in an accident. The shipper did not control what the carrier did and how it operated. The Court held that duties cannot be created based upon portions of federal motor carrier regulations which the state did not adopt. (Gonzalez v. Ramirez, 2015 WL 2148028)
The Court of Appeals in Waco upheld a defense verdict in favor of a trucking company arising from an auto accident. The Court concluded that the expert’s testimony regarding the drug abuse of the plaintiff was admissible. (Cady v. Cargile, 2015 WL 2058965)
Texas was busy this month. The Supreme Court held that refusing to allow a truck driver to present relevant evidence regarding a second accident that the plaintiff had been involved in had improperly shifted the burden of proof to the truck driver, which was a reversible error. The Court reversed the judgment entered against the motor carrier. (JLG Trucking, v. Garza, 2015 WL 1870072)
Plaintiff cannot prematurely obtain judgment for a negligence action against a motor carrier by simply pointing to the fact that the driver was cited for violations and the plaintiff’s husband died following the accident. The District Court in Nevada held that the plaintiff had failed to establish that there were no questions of facts to be resolved before judgment could be rendered. (Mitschke v. Gosal Trucking, 2015 WL 1992395)
Over in Louisiana the truckers did not fare as well. The First Circuit Court of Appeals upheld a finding that a trucking company was 95% at fault for an accident. The Court concluded that the driver was manifestly negligent for failing to ensure that he cleared the roadway prior to oncoming vehicles passing him. (Edmond v Cherokee Insurance Co. 2015 WL 1874816)
Does the phrase “the owner or anyone else from whom you hire or borrow a covered auto” make the owner of a vehicle, who leased it to someone else who in turn gave it to the relevant party an insured under the policy? (how is that for a mouthful).The Middle District of Pennsylvania concluded that the answer was no. (Castlepoint National Insurance Co. v. Insurance Company of the State of Pennsylvania, 2015 US Dist. Lexis 62525)
Does the motor carrier’s insurer or the driver’s insurer have an obligation to pay PIP benefits? The Court of Appeals in Michigan concluded that when the tractor was not owned by the driver the motor carrier’s insurer was responsible for the PIP benefits. Although he had used the vehicle for more than 30 days his use of the vehicle did not comport with the concept of ownership. (Shelson v. Secura Insurance Co., 2015 Mich App. LEXIS 1058)
The Supreme Court of South Carolina held that a subcontractor was a statutory employee even during a return trip when the nature of the work was the same as that performed by the contractor’s employees and those employees would have been covered during return trips. (Collins v. Seko Charlotte & Nationwide Mutual Ins. Co., 2015 SC LEXIS 172)
When a motor carrier’s insurers went into rehabilitation plaintiff’s acceptance of a settlement offer from the insurer in rehabilitation precluded the plaintiff from recovering from her uninsured motorist coverage. The 8th Circuit held that the insurer was entitled to a credit for any payment made. (McHone v. State Farm Mutual Automobile Ins. Co., 2015 US App LEXIS 7617)
The Third District of California held that in multi-defendant cases an answer must be filed by all defendants before the Court can consider opposition to a motion to transfer venue. The Court held that a motor carrier’s action against its liability insurer was transitory and that proper venue is where the defendants reside. (Cholakian & Associates v. Superior Court of Sacramento, 2015 WL 1939380)
The Appellate Division in New York held that a lessor of a trailer was in fact entitled to summary judgment on the claims against it for vicarious liability and negligent entrustment. The Court held that the Graves Amendment shielded the lessor from liability when it was free from negligence in maintaining the vehicle and that there was no evidence that the lessor had special knowledge of some characteristic of the motor carrier which would have made it dangerous to entrust the equipment to the carrier. The Court also held that the emergency doctrine applied to at least one of the defendants, concluding that the only presented evidence showed that when the driver was faced with an emergecy situation, not of his own making, he acted reasonably and was entitled to summary judgment. Finally the shipper did not fare as well as the Court concluded that there were qustions of fact as to whether the shipper negligence in loading the trailer was a contributing factor to the accident. (Pacelli v. Intruck Leasing, 2015 WL 2398404
CARGO:
Many insurers pursue recovery for cargo losses using Arbitration Forum and more and more carriers have also become members. This month the District Court in Minnesota held that simply because a motor carrier was a signatory to Arbitration Property Subrogation it did not waive its rights under the Carmack Amendment to have the matter heard by the Court. The Court vacated an award given to the plaintiff by Arbitration forum. (Federated Mutual Insurance Co v Con-Way Freight, Inc., 2015 WL 2194863)
Can there be more than one carrier liable for a cargo loss? The Southern District in Illinois held that the fact that one motor carrier was already found to be a carrier for a particular shipment did not preclude a claim against another carrier involved in the shipment. The defendant’s motion to dismiss was denied. (Walters Metal Corporation v. Universal Am-Cam, Ltd, 2015 WL 1880186)
In a related case decision the Court also concluded that negligence claims are preempted under Carmack. (Walters Metal Corporation v. Universal Am-Cam, Ltd., 2015 WL 1880194)
A motor carrier removed a case to Federal Court when plaintiff sought recovery for damages to goods in interstate transport. The Northern District in Texas remanded the case back to state as the carrier has a bill of lading subjecting it to jurisdiction in Texas Courts. The Court held that a Federal Court was not a Texas Court and that the motor carrier had waived its right to remove the case. (Blackwell v. Across USA, Inc., 2015 WL 1879754)
While over in the Northern District of Illinois the Court considered the impact of TQL’s forum selection clause with its shipper on a pending suit. The Court held that where there were questions of fact as to whether TQL was a broker or a carrier for the particular shipment it would not enforce the forum selection in a broker/shipper contract. Preliminarily the Court held that the venue provisions of the Carmack Amendment will trump the forum selection clause if TQL is a carrier. The Court has required further briefing on whether the venue selected by plaintiff meets the venue provisions of Carmack. (DeBecca Natural Foods v. RD Trucking, 2015 US Dist Lexis 65680)
See you next month.
