Hot Recent Cases in Motor Carrier Law - March 2007
by Steven W. Block
Two federal courts confirm carrier right to remove Carmack claims.
Baker v. Allied Van Lines, 2007 WL 461029 (M.D. Fla. 2007); and Fraser-Nash v. All Points Moving & Storage, 2007 WL 419515 (S.D. Tex 2007)
Over the past few years, we’ve seen a number of federal courts refuse to accept jurisdiction of Carmack claims when plaintiff shippers originally file in state court. Either on the shipper’s motion or sua sponte, those courts, often recognizing authority to the contrary, rule that a party’s right to choose its forum extends to interstate freight claims. They conclude that state courts have jurisdiction, even though federal law applies.
A couple recent cases, one from the Southern District of Texas and the other from the Middle District of Florida, blessed carriers’ removal to federal court. Both actions involved improperly asserted state and common law theories of recovery which the courts dismissed with leave to the shippers to file under Carmack. The analyses are sufficiently thorough regarding Carmack’s preemption of state law to demonstrate the courts were mindful of jurisdiction when electing to hear the cases. Notably, the Fraser-Nash case gives guidance as to how improperly asserted state law claims may be dismissed after removal pursuant to Fed.R.Civ.P. 12(b)(6). These cases properly effect statutory intent, perhaps over considerations of crowded docket clearing.
A ride to the yard counts as commercial activity for purposes of insurance coverage.
Republic Western Insurance Co. v. Williams, 2007 WL 81683 (4th Cir. 2007)
Owner operator Williams had his own coverage for non-commercial use of his tractor through insurer Republic. Williams was under lease to carrier P.B. Express (“PBX”), which had coverage for its leased trucks’ commercial activity through carrier Carolina Casualty, so long as the activity was with PBX’s permission.
PBX required its drivers to report to its terminal in the mornings when they were scheduled to duty, where they would receive their assignments. PBX supplied each leased truck with an accident kit, which included Carolina Casualty’s accident information form.
On the way from an overnight parking lot to the PBX terminal one morning, Williams was involved in an accident. The parties involved in the accident pointed fingers at each other, litigation ensued, coverage from both insurers was implicated, and it boiled down to which insurer gets to cover Williams.
The accident, PBX conceded, was “DOT Recordable,” a circumstance that would apply only if the driver was on company time. After the accident, PBX directed Williams to fill out the Carolina Casualty form in the accident kit. Carolina Casualty urged that Williams could not have been engaged in commercial activity because he was not carrying a load at the time of the accident. However, the driver was doing just what PBX directed him to do by driving to the terminal to get his assignment, which was in the usual course of the carrier’s business.
Carolina Casualty argued that its policy didn’t apply to owner operators, who didn’t require their carriers’ “permission” to operate their own tractors bobtail. However, because PBX procedure contemplated Williams driving his rig to and from work, it was necessarily “permissive.” Carolina Casualty must cover.
Whether freight is “in transit” is a question of fact.
Cargo Master, Inc. v. ACE USA Insurance Company, 2007 WL 121429 (Tenn. 2007)
Carrier S&A Trucking’s driver detached his rig and left a load of tires in the parking lot of the consignee’s facility (apparently, a Tennessee intrastate haul). Next morning, the freight was gone. It’s not clear why the freight was left there – the opinion speaks to “no one [being] there to receive the goods,” and allegations of mechanical breakdown – but a week passed before the theft was discovered.
The shipper and its broker made a freight claim, and coverage under the carrier’s insurance policy was asserted. The insurer, ACE USA, refused coverage on the basis that coverage was for cargo “in transit” only. After a Tennessee state judge granted ACE’s motion for summary judgment, the whole mess went up to the Volunteer State’s court of appeals.
There, the insurer’s case was viewed skeptically. True, the freight wasn’t in motion at the time it was lost, and nothing in the record even suggests it ever would be again. But a review of decisions from various jurisdictions demonstrated that a variety of factors dictate whether freight is still in transit. The court reversed the summary judgment order, finding material questions of fact as to whether the stoppage was “merely incidental to the main purpose of delivery.” Nothing in the record demonstrated the freight had been left as a result of deviation or for the driver’s own convenience. In other words, the purpose and extent of the stop had to be clarified before the court could rule transit had concluded as a matter of law.
Directed verdict affirmed absent evidence suggesting shipper’s improper loading of container was latent and responsible for accident.
Brashear v. Liebert Corporation, 2007 WL 184888 (Ohio App. 2007)
Driver Brashear was tragically killed when the trailer he was hauling for shipper Liebert turned over. Liebert had loaded the trailer with a cargo of batteries. Brashear’s estate sued the shipper in Ohio state court, alleging the freight was not properly loaded. Specifically, the pallets were not secured to the trailer’s floor with “nailers,” allegedly causing it to shift while the truck went around a ramp.
At trial, the driver’s estate put on evidence of how the trailer was loaded. Liebert requested and was granted a directed verdict on the ground reasonable minds could not conclude that the shipper was responsible.
The Ohio court of appeals agreed, and affirmed the directed verdict. While shippers are responsible for securing freight properly when they load their own trailers, drivers bear a duty to ensure their loads are secure that is “superior” to the shipper’s. Shippers have a duty to use ordinary care, and they will be liable only if any improper loading is latent. The court adopted a principle other jurisdictions have applied, i.e., that “what is patent and obvious in an ordinary inspection depends, in part, upon the experience of the observer.”
Brashear, a driver with over ten years experience (much of which with this shipper), could have walked the entire length of the unsealed trailer to make sure nailers were used. A number of other options apparently were available to him to ensure the load was safe. Because no principle of law dictates that a jury must be allowed to deliberate whether comparative fault is a factor, the trial court properly took it away from the jury.
Intervenor’s contract rights limit document production from carrier to drivers.
Owner-Operator Independent Drivers Association v. Landstar Inway, Inc., 2007 WL 521245 (M.D. Fla 2007)
A certified class of drivers under OOIDA sued carrier Landstar Inway alleging improper charge-backs to the drivers’ accounts, which would violate the Truth-in-Leasing provisions of the Motor Carrier Act of 1980. Earlier this year, the U.S. District Court for the Middle District of Florida ruled that Landstar had not improperly hit the drivers with fees. However, the court also ruled that the carrier had failed to disclose documents to the drivers necessary to determine the validity of the charges as required by section 376.12(h) of the federal statute.
When Qualcomm found out Landstar planned to disclose to the drivers confidential information pertaining to Qualcomm pricing, it intervened in the action. The court agreed that the Qualcomm documentation was irrelevant to remaining issues, and preliminarily enjoined the production (the order strongly suggests the injunction will become permanent). In doing so, the court disabused OOIDA’s drivers of the notion that its earlier ruling already holds Landstar responsible for documenting to the drivers its transactions with Qualcomm. Put simply, Qualcomm costs were not “charge-back” items, because they may be financed directly from Qualcomm. The service provider demonstrated it would suffer irreparable harm by the disclosure of its pricing, so the injunction was proper.
and. . .
What remedy is available to drivers for carrier’s failure to disclose documents supporting charges?
Id., 2007 WL 473995 (M.D. Fla 2007)
In preparation for trial on remedies available to the plaintiffs as a result of the nondisclosure, the parties brought motions in limine (mostly addressing evidentiary issues and other points that will guide trial proceedings). The motions fleshed out the nature of the remaining issues. At the heart was a determination of what remedy(ies) the OOIDA drivers could pursue. The court took this opportunity to answer that.
Plain and simple, the drivers have to demonstrate they suffered actual damages as a result of the nondisclosures. The statute provides that equitable relief is available for such violations, i.e., “injunctive relief, damages sustained, and attorney’s fees.” The plaintiffs apparently used this as a second opportunity to seek “restitution and disgorgement” which, they claimed, are species of injunction. The court disagreed, and reaffirmed its earlier conclusion that these remedies are not available to the drivers, as the statute doesn’t provide for them. True, the court has inherent equitable authority, but a line of cases and the court’s discretion dictated a court’s general mandate is not expanded beyond what Congress clearly intends. Various motions in limine to this effect were granted and denied.