Hope this spring finds you well.  It was great to catchup with many of you in Dallas at the IMUA regional meeting.  This month I am looking forward to meeting some of you at the Board of Marine Underwriters and the AAIS annual meeting.  If you are there stop by and visit!

Our first quarterly session is being held on Thursday March 31st at 2PM EDT and we hope you enjoy it.  Registration is available here (please review the eligibility requirements before registering). Please email us with any recommendations that you may have for future sessions.

This month we report.

CSA ATTACK – A trade association consisting of more than 30 national and state transportation trade associations is fighting the FMCSA’s decision to use CSA data to determine safety fitness. This month the association filed a letter with the appropriations committees in both the Senate and the House of Representatives seeking to convince Congress to defund the program which would allow for the new rating program that CSA seeks to implement. Stay tuned.

INSPECTION BENEFITS – The FMCSA announced that it has concluded that roadside safety inspection and traffic enforcement programs saved 472 lives in 2012 and more than 7,000 lives since 2001. Data from 2012 is the most recent available from FMCSA’s annual Roadside Intervention Effectiveness Model. The agency’s release also estimates that the safety programs prevented nearly 9,000 injuries from more than 14,000 crashes involving large commercial trucks and buses. Some trade organizations have rejected these results. Are you surprised?

CONGESTION ANYONE? – The 2015 Traffic Scorecard measuring traffic congestion in U.S. cities was released.  Los Angeles leads the pack followed by Washington, D.C. More than 8 billion extra hours were wasted in traffic, about 50 hours per driver. Boston, New York, San Francisco, Seattle and Washington, D.C. alone racked up 1.5 billion extra commuting hours. That is why I take a boat – less congestion.  The top 10 cities which reflect the extra hours for commuting are Los Angeles – 81 hours, Washington, D.C. – 75 hours, San Francisco – 75 hours, Houston – 74 hours, New York – 73 hours, Seattle – 66 hours, Boston – 64 hours, Chicago – 60 hours, Atlanta – 59 hours and Honolulu – 49 hours (but I have to think this can’t be as bad as congestion in the other nine!).

DRIVER FATIGUE STUDY – The National Academies of Sciences, Engineering and Medicine has released a report which concludes that insufficient sleep can decrease a commercial motor vehicle driver’s level of alertness, and potentially increase the risk of a crash.  The report did conclude that there is a need for more data to determine the real impact of fatigue on carrier operations, noting that we need more information to understand the factors that affect health and wellness of drivers. The study was sponsored by the U.S. Department of Transportation and can be viewed here.

In other related news, a study by the University of Minnesota Morris concluded that truck drivers who do not address sleep apnea problems sufficiently are 5 times more likely to have a serious crash.

FHWA RESPONSE TO FAST ACT – The FHWA has concluded its evaluation of the impact of FAST on size and weight limits for commercial vehicles.  The evaluation results in a number of federal and state regulatory changes. The changes are:

Federal changes include:

• Milk Products: No longer is bulk milk considered divisible. States may issue permits for milk haulers to exceed 80,000 pounds or use the federal bridge formula.
• Emergency Vehicles: States must allow an emergency vehicle a weight limit of less than 24,000 pounds on a single steering axle, 33,500 pounds on a single drive axle, 62,000 pounds on a tandem axle, or 52,000 pounds on a tandem rear drive steer axle (up to a maximum gross vehicle weight of 86,000 pounds). An “emergency vehicle” means a vehicle designed to be used under emergency conditions to transport personnel and equipment; and to support the suppression of fires and mitigation of other hazardous situations. States need to consider these vehicle weight limits when load rating and posting highway bridges.
• Covered heavy-duty tow and recovery vehicles: A vehicle that is transporting a disabled vehicle from the place where the vehicle became disabled to the nearest appropriate repair facility and has a gross vehicle weight that is equal to or exceeds the gross vehicle weight of the disabled vehicle being transported is not subject to Federal weight limitations.
• Natural gas fueled vehicles: A vehicle with an engine fueled primarily by natural gas may exceed any vehicle weight limit on a single axle, tandem axle, and bridge formula weights by an amount that is equal to the difference between the weight of the vehicle attributable to the natural gas tank and fueling system carried by that vehicle and the weight of a comparable diesel tank and fueling system (up to a maximum gross vehicle weight of 82,000 pounds).
• Automobile transporter backhaul, length, and overhang: 1) A transporter is allowed to transport cargo or general freight on a backhaul, so long as it complies with weight limitations for a truck-tractor and semitrailer combination. 2) A state cannot impose a vehicle length limitation of less than 80 feet on a stinger-steered automobile transporter with a front overhang of less than 4 feet and a rear overhang of less than 6 feet.
• Commercial delivery of light- and medium-duty trailers: A state cannot prescribe or enforce a regulation of commerce that has the effect of imposing an overall length limitation of less than 82 feet on a tow-away trailer transporter combination. A “tow-away trailer transporter combination” means a combination of vehicles consisting of a trailer transporter towing unit and 2 trailers or semitrailers with a total weight that does not exceed 26,000 pounds, and in which the trailers or semitrailers carry no property and constitute inventory property of a manufacturer, distributor, or dealer of such trailers or semitrailers.

State specific changes:

• Grandfathering of operation on highways in Texas: On any segment of US 59, US 77, US 281, US 84, Texas State Highway 44, or another roadway that is designated as I69, a vehicle can operate legally with the limits that were in place before the date of the designation.
• Grandfathering of operation in Arkansas: On any segment of US 63 between the exits for highways 14 and 75 that is designated as an interstate, a vehicle can operate legally with the limits that were in place before the date of the designation with regards to the single axle weight, tandem axle weight, gross vehicle weight, and bridge formula limits.
• Covered logging vehicles in Wisconsin: Covered logging vehicles operating on I39 from mile marker 175.8 to mile marker 189 may have a gross vehicle weight of up to 98,000 pounds if equipped with 6 axles or more.
• Covered logging vehicles in Minnesota: Covered logging vehicles operating on I35 from mile marker 235.4 to mile marker 259.552 may have a gross vehicle weight of up to 99,000 pounds if equipped with 6 axles or more.

FREIGHT ON THE RISE – The Bureau of Transportation Statistics (BTS) and the FHWA report that the transportation network will grow by 40 percent in the next three decades.  The value of freight will increase by 92 percent.  Underwriters of cargo should pay attention as inadequate limits will result in more policy limit claims.  By 2045, the total freight on all modes — air, vessel, pipeline, rail, and trucks — is projected to reach 25 billion tons while the value is expected to grow to $37 trillion. The projections are from BTS’ and FHWA’s latest version of the Freight Analysis Framework (FAF), which can be viewed here.  Trucks are by far the single most-used mode to move freight, moving 64 percent of tonnage in 2015 and 69 percent of the value. Tonnage for trucking is forecast to grow 44 percent by 2045, and value is forecast to grow 84 percent.

IMMINENT HAZARD CHANGES – The FMCSA has announced a new high risk motor carrier definition and associated investigative procedural changes. Under the new definition, passenger carriers are “high risk” if they have two or more BASICs in unsafe driving, crash indictor, HOS compliance or vehicle maintenance at or above the 90th percentile for one month and they have not received onsite investigation in the previous 12 months. Non-passenger carriers are considered “high risk” if they have two or more of these BASICs at or above the 90th percentile for two consecutive months and they have not received an onsite investigation in the previous 18 months.

VOLVO RECALL RESULTS IN OUT OF SERVICE MANDATE –  FMCSA has determined that commercial motor vehicles manufactured by Volvo Trucks North America (Volvo Trucks) and affected by the National Highway Traffic Safety Administration (NHTSA) Part 573 Safety Recall Report No. 16V-097000, that have not already received the interim or permanent recall remedy repair specified by Volvo in the recall, are likely to cause an accident or breakdown because of a defective steering shaft which may disconnect from the junction block without warning, causing the vehicle to be in an unsafe condition. FMCSA is notifying commercial motor vehicle operators that vehicles subject to the recall without the interim or permanent repair will be subject to an immediate out-of-service order under 49 CFR 396.9 or compatible state regulations.

MEXICAN INSPECTIONS – Beginning May 19, 2015, Mexico-domiciled motor carriers must take their vehicles to a Secretaría de Comunicaciones y Transportes-approved inspection center for a mandatory vehicle inspection. The inspections must be performed once every year, and on the months set on the inspection calendar,   The FMCSA will accept these inspections as compliant with US regulations, noting that the differences in the inspections are not substantial.

CASES

AUTO

We talk constantly about how related companies get brought into litigations and we saw the impact that it can have this month.  The 11th Circuit Court of Appeals concluded that the trailer owner’s insurance company provided no coverage when the owner leased the trailer to a company owned by the ex-wife of the owner, concluding that the driver was not insured under the policy. The Court also concluded that the MCS-90 was inapplicable as the trailer owner was not the motor carrier engaged to transport the cargo which was being hauled at the time of the accident.  While ultimately the result was favorable, it still likely resulted in substantial litigation expense.  (National Specialty Ins. Co. v. Martin-Vegue, 2016 WL 737780)

It looks like the Court is in for a long road in a serious action brought in the Western District of New York involving a fatal bus and tractor trailer accident.   The driver of the bus brought crossclaims against the bus manufacturer for negligent repair and breach of warranty.  The Court dismissed the breach of warranty claim, allowing the negligent repair claim to go forward. The Court also denied, without prejudice, another Canadian repair facility’s motion to dismiss for lack of jurisdiction. The jurisdictional fight took 10 pages to address and still questions of fact remain.  (Hume v. Farr’s Coach Lines, 2016 U.S. Dist. LEXIS 29757)

A truck driver who stopped to help an injured person may have regretted his decision when his vehicle was struck in the rear, causing injuries to the driver. The District Court in Colorado held that there were questions of fact on whether the driver parked his vehicle safely and acted responsibly, denying summary judgment to the motor carrier.  (Salyards v. Sellers, 2016 U.S. Dist. Lexis 24520)

The Eastern District of New York, in a rare move, granted a defense verdict to a motor carrier when plaintiff failed to prove that an accident caused the injuries claim or that the injuries were serious under NY law. The decision found the plaintiff and his witnesses to lack any credibility.    (Krynski v. Chase, 2016 US Dist. LEXIS 30056)

A motor carrier’s request to dismiss a declaratory judgment filed by its insurer, or to transfer the case to California or Nevada was denied by the Eastern District of Missouri.  The Court concluded that California law applied to the interpretation of the policy and that if it transferred the case to Nevada the Nevada Court would apply its own law and further concluded that transfer to California was not in the interest of all parties.  (Spirit Commercial Auto Risk Retention Group v. Kailey, 2016 WL 880484)

The Court in the Southern District of New York considered the applicability of coverage for the liability of a shipper and consignee when cargo killed someone during the unloading process.  The Court held that the business auto policies issued to the consignee and the shipper were inapplicable. The consignee’s policy was inapplicable because of the employee exclusion and for the shipper coverage was excluded under the mechanical device exclusion because it was a shipper representative who was unloading the cargo at the time of the incident.  (Employers Ins. Co. v. Harleysville Preferred Insurance Co., 2016 WL 815277)

A motor carrier who was found vicariously liable for the actions of its truck driver was unsuccessful in obtaining a new trial and avoiding the underlying verdict when the driver did not appear at trial. The 10th Circuit held that the exclusion of the driver’s testimony did not prejudice the motor carrier’s rights and that the damage verdict of $3.32 million was not excessive.  (Hill v. JB Hunt, 2016 WL 737449)

The Court of Appeals allowed a plaintiff the right to obtain all of the medical records of the motor carrier’s driver when the plaintiff sought to determine if there were issues with the driver’s ability to operate the vehicle safely. The driver’s argument that he should not be required to breach the patient-doctor privilege was not accepted by the Court. (Carrrazana v. Western Express, Inc., 2016 WL 797915)

As we have reported over the last few years, more states are enacting anti-indemnity statutes. There are not many cases on the various statutes.  This month the Supreme Court of Iowa held that the statute was inapplicable to a claim against the lessor and its driver by a shipper’s insurer for reimbursement of tow and wrecker bills it paid following an accident.  The Court held that the anti-indemnity statute was inapplicable to private carrier, the lease barred recovery and the driver was an insured under the policy and therefore the anti-subrogation rule applied. (United Suppliers v. Hanson, 2016 WL 929355)

CARGO

The Supreme Court of Florida held that while a cargo loss is generally preempted by the Carmack Amendment a claim for conversion, criminal activity and Florida’s Deceptive & Unfair Trade Practices Act for unauthorized use of an artist’s name was not preempted because a claim for theft of the artist’s work was a harm which was separate from the value of the property.  (Mlinar v. UPS, 2016 WL 825261)

The District Court in New Jersey upheld the preemption doctrine, concluding that a pro-se plaintiff was limited to a cause of action for damages under the Carmack Amendment for damage in an interstate shipment.  (Soares v Bekins Van Lines, 2016 WL 797046)

The Court of Appeals In Kentucky held that the Carmack Amendment permitted a carrier to limit liability for loss or damage to goods but that there was a question of fact as to whether there was a fair opportunity to declare a value.  The Court held that this question of notice also impacted whether the motor carrier was liable for consequential damages.  (Royal Consumer Products v. Saia Motor Freight, 2016 WL 748176)

Forum Selection Clauses are always an issue, whether addressed under COGSA or Carmack.  The District Court in Idaho considered a forum selection clause in a bill of lading involving a shipment from Korea to Idaho. The Court concluded that COGSA, and not Carmack applied under Regal Beloit. Ultimately the Court concluded that circumstances warranted the rejection of the forum selection clause, requiring defendant to litigate in plaintiff’s selected forum. (Idaho Pacific Corp. v. Binex Line Corp., 2016 WL 843254)

There was an interesting case addressing imposter thefts in the Northern District of Illinois.  A broker sought to recover from the warehouse who released freight that was apparently stolen by the driver.  The plaintiff/broker lost because it had previously obtained a judgment against the motor carrier for the loss. The Court held it was inconsistent to allow a second recovery for failure to release the freight to the right carrier when the plaintiff obtained a judgment against the motor carrier for accepting the freight.  (American Transport Group v. California Cartage Co., 2016 WL 890699)

See you next month.