It was a pleasure meeting with so many of you at the Pacific Coast IMUA seminar. We extend a special welcome to the many who asked to be put onto this mailing list and invite you to view all that CAB offers to the industry. Hope you enjoy this report and find it informative. Once again we remind you that this is a forum for all of you. Information which you believe should be shared with the industry is welcomed. I get tired of finding all of this information and writing this all by myself! I am happy for contributions.
Now on to the news:
ON BOARD RECORDERS - As so it begins. A new administration - new plans. The FMCSA proposal on electronic onboard recorders has been pulled while the new administration contemplates other uses for the program. Current reports indicate that the Obama administration will look to require the recorders on more trucks than before.
FOURTH QUARTER RESULTS - As all we hear is bad news on the economy it is good to report that eight of the publicly traded transportation companies were able to maintain their earnings in the 4th quarter. Although revenues were substantially reduced, most reported that they found ways to lower costs. If the trucking industry, which operates on such a small margin, can find ways to cuts costs, we can only hope that it bodes well for the rest of the country.
CARGO THEFTS - Business Insurance reported this month that truck load thefts rose 13% in 2008. In a report released by Freight Watch International (USA), Inc., which has begun monitoring thefts, the majority of the thefts come from unattended vehicles and occurs within the first 200 miles of transport. Overall the estimate is that $15 to $30 billion in cargo is stolen every year.
JOB LOSSES - Every day we hear reports on loss of jobs in various industries. According to Department of Labor statistics, the trucking industry lost 24,900 jobs in January, the largest loss since the early 1990’s.
FREIGHT FACTS AND FIGURES - The Federal Highway Administration released their “Freight Facts and Figures” report. The report can be viewed on the FHA website by clicking here. Take a peek as it has some really interesting facts on various issues which impact underwriting, whether auto or cargo.
TRUCK FATALITIES - Included in that report, the Federal Highway Administration indicates that truck-involved fatality rates declined in 2007, down 5.8 percent to 2.12 per 100 million miles from 2.25 per 100 million miles in 2006. Since the new hours of service rules the percentage has dropped 10%. The truck-involved fatal crash rate and the truck-occupant fatality rate also declined from 2006 to 2007. The truck-involved fatal crash rate declined 4.5 percent to 1.85 per 100 million miles, and the truck-occupant fatality rate declined 1.98 percent to 0.35 per 100 million miles.
The Eastern District of Missouri permitted a plaintiff to remand a Carmack case to state court. While the sole remedy for the plaintiff was under Carmack, the fact that the plaintiff alleged only a state law claim forced the court to remand the action back to state court as the complaint did not assert a basis for federal jurisdiction. (Edwards v. All My Sons Moving and Storage, Inc., 2009 WL 259737)
If any of you out there insure Never Stop Trucking, a default judgment was entered against them in the Eastern District of New York this month. The judgment arises from a cargo loss of $366,112. The cargo was stolen when left at an unsecured lot and the allegations were sufficient to permit entry of judgment when the carrier defaulted on the complaint. (Fireman's Fund Ins. Co. v. Never Stop Trucking, Inc., 2009 WL 249765)
An action based upon allegations of wanton actions by a truck driver was dismissed this month in the Middle District in Alabama. The court held that in the absence of any specific evidence of anything other than inadvertence on the part of the driver a cause of action for wantonness would not exist. The court, while it dismissed the action, did hold that the cause of action was subject to a 6 year statute of limitation, unlike the claim for negligent entrustment, which was dismissed as it was commenced more than 2 years after the loss. (Murry v. Hodges Trucking Co., 2009 WL 270259)
The workmen’s compensation protection afforded to employers who are sued as a joint tortfeasor by third parties was explained in detail in the 7th Circuit Court of Appeals in an action whose arose when a shipper’s employee was crushed by a tractor-trailer while it was backing into the loading dock. The court confirmed that employers may prevent their contribution liability under Illinois law, which caps an employer’s contribution at the amount of its worker’s compensation liability. An employer can also waive its workmen’s comp lien to avoid a contribution claim. (Baltzell v. R and R Trucking Co.., 2009 WL 249981)
In the 5th Circuit a plaintiff was unable to recover from Wal-Mart Transportation when the plaintiff could not identify the tractor which was pulling a Wal-Mart trailer and injured plaintiff. As the defendant was able to establish that it routinely hired independent motor carriers to transport its trailers the plaintiff could not establish vicarious liability. (Bonilla-Torres v. Wal-Mart Transp LLC, 2009 WL 301849)
Once again a federal court has rejected an insurer’s effort to have a coverage issue decided in its court. In an action between the general liability and auto liability carrier the court in the Eastern District of Pennsylvania held that the action, which would be decided under state law, would be best addressed in the state court which was hearing the tort action. (Scottsdale Ins. Co. v. Broaddus, 2009 WL 349697)
A breach of the Federal Motor Carrier Safety Regulations was sufficient to establish negligence per se in the Eastern District of Tennessee. The driver failed to secure a load of paper rolls in the trailer which caused the load to shift and prevented the driver from stopping and avoiding impact with the plaintiff. (Fortner v. Tecchio Trucking, Inc., 2009 WL 200278)
We know that you all love tow companies and so when we see cases involving those companies we like to bring them to your attention. In this case a trucker objected to the tow and recovery charges of a wrecker yard. Although the decision ultimately allowed the wrecker yard to go back and fight an order requiring it to reimburse the trucker for paid fees, the decision does address the ways to fight those charges, at least in Texas. (Cannon v. TJ Burdett and Sons Recycling, 2009 WL 276797)
A plaintiff actually sought to list defense counsel as a witness in a trucking case! Counsel, representing the trucking company, was present during the accident reconstruction undertaken by the state police and plaintiff contended that counsel could then be called as a witness. The court not only soundly rejected the argument, but also held that sanctions would be imposed on the plaintiff for taking such a position. (Aberkalns v. Blake, 2009 WL 310709)
A shipper who accepted a bill of lading with a limitation of liability, and which also purchased increased coverage with a motor carrier, still sought to recover additional sums from the motor carrier. The shipper contended, without any admissible evidence, that the motor carrier must have stolen the cargo since it could not explain what happened to the shipment of I-Pods. The court in California rejected the shipper’s position and granted judgment to the carrier. (E and S Intern. Enterprises, Inc. v. Yellow Freight System, Inc., 2009 WIL 202030)
The Middle District of Florida held that a tractor-trailer lessor was not liable for the negligence of the lessee in failing to maintain the vehicle or failing to insurer the vehicle. The Graves Amendment precludes the action where there is no evidence that any ownership interest was maintained by the lessor. (Dubose v. Transport Enterprise Leasing, LLC, 2009 WL 210724)
The Middle District of Florida also refused to grant summary judgment to a motor carrier when a consignee was injured while unloading a trailer of cargo. The driver, believing all cargo to have been unloaded, moved the trailer forward to close the doors. Unfortunately at the time the plaintiff was leaning on the door while pushing the last box onto the loading platform. The court held that there were sufficient factual issues which could only be resolved before a jury. (Tackett v. Fryer Creek Trucking Co., Inc., 2009 WL 248248)
Addressing the issue under the Montreal Convention, as it involved international transportation, the court in the Southern District of New York held that Federal Express, in its service rules, could mandate where claims needed to be filed. In this case the cargo owner had simply sent the claim to a local Federal Express office and not to the claim department. Plaintiff’s action was dismissed. Meteor AG v. Federal Exp. Corp., 2009 WL 222329)
Causes of action for negligent entrustment and negligent retention of a driver were permitted to proceed in an action against a trucking company in the District Court in Kansas. The court held that the simple fact that the tractor was owned by the driver, and not the trucking company, did not preclude a negligent entrustment claim. The court also held that compliance with Federal Motor Carrier Safety Regulations on hiring practices is not enough to defeat a claim of negligent retention where a jury could find that the motor carrier failed to exercise reasonable care in selection of its drivers. Fortunately the court did dismiss any claim against the carrier for punitive damages. (Stallings v. Werner Enterprises, Inc., Inc., 2009 WL 412995)
In December 2008 we reported that a Michigan Federal Court limited the rights of a claimant under the MCS-90, holding that a default judgment did not establish that the loss arose from the negligence of the motor carrier and therefore a plaintiff was still required to prove its case before recovery against the insurer. That decision, decided by a Magistrate Judge, was vacated by the District Judge, who held that in fact the default judgment was a decision on the merits. (Hawthorne v. Lincoln General Ins. Co., 2009 WL 304742)
The never ending saga of the impact of the Carmack Amendment on a through bill of lading was addressed by the 9th Circuit this month. The Court determined that Carmack would apply even to forum selection clauses in a rail loss. The court held that a carrier providing non-exempt transportation can enter into contracts which waive the remedies of contract without providing full Carmack protection. Those carriers which are providing exempt transportation must, however, first offer full Carmack protection before contracting out of the provisions of Carmack. Although this decision was addressing rail carriage, similar arguments exist for motor carriers. (Regal-Beloit Corp. v. Kawasaki Kisen Kaisha Ltd., 2009 WL 251949)
In the 3rd Circuit the court also addressed the impact of contract carriage, such as was discussed in Regal-Beloit. The court held that 49 U.S.C. 14709, the rail carrier’s contract carrier statute would not have to be specifically referenced in order to defeat the effects of the Carmack Amendment. The court held that the fact that the contract specifically deviated from Carmack provisions was sufficient to establish the intent of the parties. (Babcock and Wilcox Co. v. Kansas City Southern Ry. Co., 2009 WL 385416)
A little early, but Happy St. Patty’s Day! See you next month.