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Bits & Pieces

Volume 20, Edition 2

We have to start this month’s Bits and Pieces with a big cheer to Tiana. For those of you who did not hear Tiana got married this month!  Mrs. Schowe.  We wish her and Ben a wonderful life together!

Short month, short report this month.  We report:

BTS STATISTICS – The BTS reports that the Transportation Services Index for freight rose 3% in 2016. That is good news for trucking since 2015 was a down year.  The Transportation Statistics Annual Report (TSAR) was released and can be viewed here.  Some of the highlights include:

1 – More than 18 billion tons of goods valued at more than $19 trillion were moved in 2015, an increase of 6.5 percent and 8.2 percent from 2012, respectively.

2- Trucks carried more than 60 percent of both the weight and value of 2015 freight.

3 – In 2015, exports and imports made up more than 11 percent of all freight weight and 21.7 percent of the value.

4-Electronics accounted for the highest value, followed by motorized vehicles and mixed freight.

5- NAFTA accounts for nearly 30 percent of international merchandise trade. In 2015, U.S. imports from Canada and Mexico exceeded exports.

6 – Trucks carried 64.3 percent of the NAFTA export/import value and 25.6 percent of the tonnage.

7 – More than 8.3 million “combination trucks” were registered in 2014, up more than 200,000 from the previous year.

8 – Vehicle-miles-traveled by trucks also increased by nearly 1.4 billion miles in 2014.

There is a wealth of data in the report.  Give it a glance to see how it impacts your market strategy for the coming years.

CSA ATTACK – A coalition of organizations had requested that the new DOT Chief rescind and delay the proposed carrier safety fitness determination rule which is based on CSA data. The organizations contend that the data is flawed. It requested this delay in light of the study being done by the National Academies of Science, believing that reforms will be coming to the program in the coming year.

REGULATION DELAYED – In light of President Trump’s mandate to delay implementation of proposed rules which were not already effective, the FMCSA postponed the effective date of the entry level driving training rule.  It is now delayed until March 21st but will not be enforced for 3 years after its effective date.

BRIDGE REPORT – The ARTBA issued its report on deficient bridges.  1,900 bridges on the interstate shipment are deficient, with an average age of 67 years.  A bridge is classified as structurally deficient and in need of repair if its overall rating is four or below. 41% of the bridges have not had major reconstruction work. You can view the report here.

CURRENT CASES

CARGO

This was a unique and interesting issue.  The Fifth Circuit held that a trucker’s claim against a tank wash service was preempted by the Carmack Amendment. The Court concluded that the service of washing the truck, which was done incorrectly and resulted in a cargo loss, was an integral part of the transportation and was related to the interstate transportation.  (Heniff Transportation System v. Trimac Transportation Services, Inc., 2017 WL 405626)

The Eastern District in California denied a motion to transfer venue to the forum selected in a broker carrier agreement.  The Court rejected the request concluding that the underlying policy of the Carmack Amendment, which provides its own venue options, permitted the action to stay in the pending forum.  (Celtic International, LLC v JB Hunt Transport, 2017 WK 696017)

There is a new tariff provision which may impact subrogation recovery for a cargo loss. In a related case to the above decision, the Eastern District held that the plaintiff could not pursue the rail carrier who damaged 3 shipments of wine in a derailment.  The rail carrier was hired by JB Hunt (defendant in the case above) to perform the rail transport.  Under the terms of the rail carrier’s tariff only the party that engaged and paid the rail carrier was permitted to sue the rail carrier for damage.  The Court held that such a provision was not barred by the Carmack Amendment and granted judgment to the rail carrier.  (Celtic International, LLC v. BNSF Railway Co., 2017 WL 714379)

The Northern District of Texas allowed a plaintiff to amend its complaint to more properly allege its standing to sue a motor carrier for loss or damage to cargo.  At least one of the motor carriers was dismissed when the plaintiff could not support any factual basis for a claim against that carrier.  (Miramore Trust v. United Van Lines, 2017 WL661374)

When does transit end and carrier liability change to warehouseman liability?  That was the issue addressed in the Southern District in Florida.  The shipment was stolen while at the motor carrier’s warehouse.  The Court held that the bill of lading indicated that transit was not yet completed and the facts of the loss confirmed that the shipper fully intended the shipment to be held only until such time as the motor carrier could obtain a delivery appointment.  The Court dismissed the action, which alleged only state law causes of action against the carrier, concluding that the claims were subject to the preemptive effect of the Carmack Amendment.  (Starboard Holdings, LTD v. ABF Freight Systems, 2017 WL 696124)

Figuring out who the correct insurer is can be critically important as one motor carrier found out in the Central District of California.  The motor carrier sought to proceed on a bad faith claim under a cargo policy, alleging that the insurer did not do an adequate investigation on whether there was forced entry. However the motor carrier did not sue the issuing company and was denied a right to amend to add the correct party. The parent was not liable on the policy of insurance. (Freedom Transport v. Travelers Companies, 2017 US DIST Lexis 18744)

AUTO

The District Court in Maryland reconsidered a prior decision exonerating an insurer from liability under the MCS-90 endorsement.  The Court held that when determining the applicability of the endorsement the Court should examine the essential character of the shipment from the shipper’s intent at the time of the accident in order to determine whether the shipment was interstate in commerce. In that case, as the shipper asked the motor carrier to travel from its home location in one state to a location in a different state to transport an intra-state shipment, the MCS-90 endorsement applied.  (Titan Indemnity v. Gaitan Enterprises, Inc. , 2017 WL 660802)

Unloading material from a trailer is an activity encompassed by the unloading exclusion in a general liability policy.  The fact that the trailer may have been defective did not give rise to a separate claim. The 1st Department in New York held against the auto liability carrier who sought contribution under the general liability insurer for a settlement it reached on behalf of the insured.  (Country-Wide Ins. C. v. Excelsior Ins. Co., 2017 WL 439730)

The Middle District of Pennsylvania held that a repair facility could be subject to punitive damages when it failed to undertake the proper steps to repair a trailer and train its employees, sending the driver off in a trailer which caught fire.   Unfortunately, the driver died trying to put the fire out.   The Court held the facts sufficiently egregious to warrant possible punitive damages.  (Wilson v. TA operating LLC, 2017 U.S. Dist. LEXIS 18754)

A request for remand was denied to a plaintiff in the Eastern District of Louisiana.  The Court held that the defendant was not obligated to remove the case until it received sufficient paper work which supported damages in excess of the jurisdictional requirement.  The complaint did not allege a specific sum of damages.  The fact that the defendant received paperwork before the suit which indicated excessive damages was insufficient as the statute requires receipt of paperwork after the initial suit is filed.  (Wright v. National Interstate Insurance Co., 2017 U.S. Dist. LEXIS 9529)

When does the law of the case apply?  The Court of Appeals in Louisiana held that it did not apply to an interlocutory ruling by the Trial Court since they may always change the substance of its ruling.  Having made that finding the Court of Appeals went on to support the decision of the Trial Court that the driver was not acting in the business of the motor carrier at the time of the accident, which triggered coverage under the bobtail coverage for the driver.  The Court held that while there was presumption that a leased vehicle was in the business of a motor carrier such a presumption applies only when the claim is for an injured party, and not for UM coverage under the policy. (Guidry v. USA Agencies Casualty Ins. Co., 2017 WL 658735)

Volume 20, Edition 1

New Administration. That says it all.  Changes are coming and the impact on trucking will be big. We have a new leader at the DOT, Elaine Chao.  There are wish lists flying all over as everyone looks to see what items on their agenda can be finagled.  Buckle your seat belt and we will see where this goes.

FEDERAL REGULATIONS – President Trump has declared a moratorium on regulations.  All new regulations are postponed and the moratorium delayes the effectiveness of rules that have been published but with future effective dates.   The entry level driving training rule may be delayed.  There has been some opposition to the regulation as a request for reconsideration has been filed.

PASSENGER CARRIERS – The FMCSA has released a web page styled “Understanding Passenger Carrier Regulations,” Organizations and businesses that transport passengers will now receive clarification on existing Federal Motor Carrier Safety Regulations (FMCSRs), as well as requirements that have been changed over the years through legislation, rulemaking, and litigation. It will provide USDOT operating authority registration requirements, minimum levels of financial responsibility, and applicability of safety and commercial regulations.

2017 POCKET GUIDE TO TRANSPORTATION – For you statistics junkies the DOT has released the 2017 Pocket Guide to Transportation.  The guide indicates that in a 10 year period, until 2014, there were 11 million trucks on the road.  In 2015, trucks carried more than $13 trillion of freight, nearly $1 trillion more than in 2012. Trucks are expected to carry more than $24 trillion of freight in 2045, approximately twice as much as 2012.

URS DELAYED – In case you missed our news blast,  FMCSA is extending the implementation date of the final stage of the Unified Registration System (URS) beyond January 14, 2017 because additional time is needed to securely migrate data from multiple legacy platforms into a new central database and to conduct further compatibility testing with its State partners.

TRUCK FATALITIES – The NHTSA has reported that driver fatalities rose 8% this year. There was an estimated 27,875 people killed.  The fatality rate increased 1.15 fatalities per 100 million vehicles miles traveled.

ELD – The 7th Circuit has denied a motion for rehearing on the challenge to the ELD rule mandating electronic logging devices (ELDs) for drivers required to maintain records of duty status (RODS). Unless the Supreme Court or Congress act to overturn or delay the rule or FMCSA reverses or postpones the rules the ELD will go into place on by December 18, 2017.

CRASH ACCOUNTABILITY – The DOT has released a study that confirms that driver experience is critical to reducing crashes.  The analysis which can be viewed here shows a link between years of experience behind the wheel and the reduced likelihood of the driver named as the “critical reason” for the crash. Less than 10 percent of the crashes studied listed the driver as the critical reason for the crash. If a driver had more than 10 years of experience the risk of being assigned as the critical reason for the crash was14 percent lower.  You can see the position statement here.

SAFETY FITNESS DETERMINATION – The FMCSA issued a notice of proposed rulemaking which seeks to amend the Federal Motor Carrier Safety Regulations (FMCSRs) to revise the current methodology for issuance of a safety fitness determination (SFD) for motor carriers. The proposed new methodologies would determine when a motor carrier is not fit to operate commercial motor vehicles (CMVs) in or affecting interstate commerce based on the carrier’s on-road safety data in relation to five of the Agency’s seven Behavior Analysis and Safety Improvement Categories (BASICs); an investigation; or a combination of on-road safety data and investigation information.

DOT STRATEGIC PLAN – The DOT released its 5 year research, development and strategic plan.  U.S. DOT has defined four critical transportation topic areas that will be supported by U.S. DOT RD&T over the next five years: Promoting safety, improving mobility, improving infrastructure and preserving the environment. The Strategic Plan also describes four overarching research themes, policy research, emerging technology, strengthening research coordination, and big data.

TRAFFIC CONGESTION – The DOT has reported that the struggling infrastructure contributes to traffic congestion that often delays trucks along freight corridors.  This pressure on freight corridors is expected to worsen in the coming years as truck traffic is projected to increase along large metropolitan areas, according to DOT’s biennial report, “2015 Status of the Nation’s Highways, Bridges, and Transit: Conditions & Performance.” Truck traffic accounted for 67% of freight tonnage and 64.1% of freight value in 2012. Trucks usually are the primary method for freight trips consisting of less than 500 miles, An American Transportation Research Institute study last year revealed congestion cost the trucking industry nearly $50 billion in 2014.

CAB FINANCIAL RATINGS – We have compiled our annual summary of CAB Financial Ratings for the prior year. Over one quarter of carriers we look at are rated POOR or below. So it is always a good idea to monitor the financial condition of motor carriers.

CASES 

AUTO

The Eastern District of Louisiana held that the MCS-90 did not allow for a direct action in the absence of a judgment against the motor carrier.  The insurer, who had already received a ruling that the policy did not provide coverage, was granted summary judgment.   The Court also held that the lessor of a vehicle was not liable for negligent entrustment of a vehicle when there was no evidence to support such a claim. (Cherkaoui v. Pinet, 2017 WL 1111276)

A jury’s finding of direct negligence on the part of a trucking company was upheld when the evidence showed that the company failed to use ordinary care in instructing the driver and making sure that he could operate the vehicle.  The Court also upheld the lower court ruling excluding evidence of the plaintiff’s mental health and drug use at the time of the accident.  (JBS Carriers, Inc. v. Washington, 2017 Tex. App. LEXIS 148)

The Court of Appeals in Ohio upheld a trial verdict, denying a JNOV and a request for a new trial.  The court held that a truck driver had sufficiently established loss of income following an accident in which he was thrown from the back of his truck to the front when the vehicle was struck during unloading.  (Austin v. Chukwuani, 2017 WL 123336)

The Court of Appeals in Texas withdrew an earlier decision and vacated its prior judgment in a case addressing the appeal of a trial court judgment.  The Court upheld the trial court decision, concluding that there was evidence of gross negligence on the part of the driver and the motor carrier in entrusting the vehicle, and  evidence of “pattern logging” of hours by the driver, both of which supported the judgment.  (Greenwood Motor Lines v. Bush, 2017 WL 7488859)

A motion to remand failed in the Eastern District of Louisiana. The trucking company removed the case after it received discovery which lent support for the assumption that damages would exceed the $75,000 jurisdictional limit. It was only after receipt of that information was it clear and certain enough to justify removal.   (Wright v. National Interstate Insurance Co., 2017 U.S. Dist. LEXIS  9529)

CARGO 

A broker was entitled to partial judgment on the pleadings when a plaintiff asserted a claim against the broker under the Carmack Amendment.   The Southern District in Ohio held that brokers were not liable under the Carmack Amendment and declined to exercise jurisdiction over state law claims asserted against the broker.  (Mitsui Sumitomo Insurance USA v. Maxum Trans., Inc. , 2017WL 7496737)

A motion to dismiss filed by a carrier failed in the Eastern District of Pennsylvania. The motor carrier argued that it was entitled to the benefit of an air waybill when it failed to maintain proper temperature for a shipment of HGH.  The Court held that there were questions of fact as to whether the air way bill or a separate ground transport bill of lading governed the move.  (Baloise Insurance Ltd. V. Philadelphia Truck Lines, Inc., 2017 WL 118100)

The District Court in Illinois denied a motor carrier’s motion to dismiss any cause of action other than a claim under the Carmack Amendment.  While the Court concluded that state law causes of action were preempted, it held that plaintiff could proceed with a cause of action for violation of federal safety regulations and a cause of action that the motor carrier’s failure to stop the driver from operating a vehicle with severe violations.  (Starr Indemnity & Liability Company v . YRC., 2017 US Dist LEXIS  6260)

A default judgment for all requested damages was entered in favor of the plaintiff in the Central District of California. The Court considered all relevant factors and concluded that damages were proved and there was no basis to not grant judgment for a loss to cargo damaged in transit    (Craneveyor  v. AMK Express, Inc., 2017 WL 89553)

In the 3rd Circuit the Court vacated a default judgment entered against a motor carrier who contended that the cargo at issue was delivered hot and that the refrigeration unit did not fail.  The Court held having the matter litigated on its merits when there was a defense warranted the judgment being vacated. (Mrs. Ressler’s Food Products v. KZY Logistics, 2017 WL 167464)

Stay warm.  Have a great February.

© 2017 Central Analysis Bureau