Hot Recent Cases in Motor Carrier Law - January 2008
by Steven W. Block
A motor carrier – the real one – must receive freight before Carmack controls.
PNS Jewelry, Inc. v .Dubar Armored, Inc., 2007 WL 4216915 (Cal. App. 2 Dist. 2007)
Jewelry store PNS regularly hired motor carrier Dunbar to haul very expensive cargoes of fine stones and such. Dunbar had its own uniforms, its own shipping documentation, and its own secret code by which its employees could be verified when they picked up deliveries from shippers.
In January 2005, a man showed up at PNS in the right garb, with the right truck, uttering the right coded signal, and giving no reason for PNS to suspect he wasn’t legit. PNS handed over jewels it wanted hauled interstate to a trade show. Unfortunately, the man was an imposter with apparent inside connections at Dunbar. Yes, he disappeared with some $1.5 million in jewelry.
PNS sued Dunbar based on common law negligence principles, pointing to an array of alleged no-no’s the carrier committed before, during and after the heist. Dunbar was quick to seek shelter behind Carmack, and sought dismissal of the action based on federal preemption principles. A California state court agreed and tossed the case, but a Golden State appeals court sent it back.
Carmack doesn’t kick in unless and until a motor carrier actually receives freight. Dunbar, by its own admission, never touched the goods here. No cited case supports the notion that a carrier can avail itself of Carmack when goods were stolen before the carrier ever touched them. A phone call PNS made to Dunbar placing the delivery order doesn’t constitute a contract, and the carrier never issued a bill of lading. This is a garden variety negligence case which should be adjudicated as such.
New STAA provisions strengthen employee claims, but not retroactively.
Elbert v. True Value Co., 2007 WL 4395626 (D. Minn. 2007)
Amendments to the Surface Transportation Assistance Act (STAA), 49 USC § 31105(a) were signed into law last August, and carriers should be aware of the tightened standards the new law imposes vis-à-vis employee claims for retaliatory firings. Borne of post-911 safety and security concerns, STAA’s new provisions empower employees who get canned for protesting dangerous conditions to seek up to $250,000 in punitive damages. Such claims may be transferred to a federal district court if the Department of Labor hasn’t taken care of all issues within 210 days.
Driver Elbert thought his employer True Value had fired him for refusing to operate a truck that had bad brakes. He filed with DOL before STAA was revised. When the admin proceeding didn’t yield final results on time, he brought suit against True Value in the District of Minnesota. The employer sought to dismiss on the ground STAA’s amendments aren’t retroactive.
The court agreed. Going through a nice review of retroactive applicability of federal statutes, the court first noted the “deep-rooted presumption” that statutes silent on the issue of retroactivity have force only after the law goes into effect. When a statute is silent (like this one), courts should apply it to past circumstances only if doing so would not adversely impact the defendant’s substantive rights. Elbert urged that jurisdiction within the federal judiciary couldn’t possibly impact his former employer’s substantive position. However, the court ruled that the parties’ earlier proceedings based on the assumption of the pre-amended statute’s terms created circumstances that potentially could negatively impact True Value (i.e., they had actually already gone through discovery and trial).
Owner operator can’t get workers’ comp benefits.
Hernandez v. Triple Ell Transport, Inc., 2007 WL 4531509 (Idaho 2007)
Owner operator Hernandez was under lease to carrier Triple Ell. The contract required him to carry his own workers’ comp insurance coverage. A policy was procured from insurer Liberty Northwest for Hernandez and his employees, but (1) it was issued over an apparently forged signature of Hernandez; and (2) Hernandez himself was excluded from coverage. Hernandez was hurt on the job, and tried to get benefits under Idaho’s State Insurance Fund, which provides health coverage to the Gem State’s injured employees.
The Idaho Industrial Commission went through the usual process of determining that Hernandez was not an employee of Triple Ell, and therefore not entitled to state benefits. Idaho’s Supreme Court, on appeal, agreed. The analysis centers around the degree of control Triple Ell exerted, or had the right to exert, over the individual. As a lessee, Hernandez determined most of his own activity, and could refuse jobs altogether from the lessor. He also owned his own equipment and paid his own costs. Everything pointed to his being an independent contract as opposed to an employee.
This claim differed from the typical in that Hernandez wasn’t otherwise covered by insurance, despite the contractual provision. The issue of a fraudulent signature was not within the Industrial Commission’s purview. While there never was any real coverage for Hernandez himself, the policy wasn’t “illusory” in relevant regard because the owner operator’s deal with the carrier specifically was premised on such coverage. While Hernandez had no employees, he could have had employees, who would have been covered. Thus, the insurance policy was a red herring apparently of Hernandez’ own making. Hernandez is stuck without coverage.
Eighteen-month statute of limitations for motor carriers to sue for freight charges applies to brokers, and isn’t tolled by a failed counterclaim.
Exel Transportation Services, Inc. v. Sigma Vita, Inc., 2007 WL 4150975 (Ga.App. 2007)
Carrier Sigma Vita sued transportation broker Exel to collect unpaid freight charges – eighteen months and five days after the land leg on an international ocean transit had been completed. Apparently, earlier litigation in which the two were involved included a failed motion by Sigma Vita to interpose a counterclaim for unpaid freight charges. Now, the carrier was going after Exel directly.
On cross motions for summary judgment, Exel argued that the claim was time barred under ICCTA’s 49 USC § 14705(a), which imposes on interstate motor carriers an eighteen month statute of limitations to file suit for freight charges. A state court in Georgia shot down each of the carrier’s responses to that defense, and dismissed the action. First, ICCTA governs this haul, as it was the land portion of an international move, even though Sigma Vita’s trucks never left the Peach State. That’s the way the statute is designed.
Second, the statute of limitations applies in claims against brokers (and not just shippers). True, carriers most typically sue deadbeat shippers and only in certain circumstances even have freight charge claims against brokers, but nothing in 49 USC § 14705(a) limits the provision to shippers.
Third, this federal statute preempts state-law statutes of limitations for breach of contract issues, so Sigma Vita can’t simply reword its claim to sidestep ICCTA.
Fourth, nothing in law or logic suggests a motion for leave to file a counterclaim for unpaid freight charges (particularly one that was denied) tolls a statute of limitations. Sigma Vita is out of luck.
Assignment of damaged cargo claim doesn’t violate contractual prohibition of assignments.
Central Transport International, Inc. v. Global Advantage Distribution, Inc., 2007 WL 4482271 (M.D. Fla. 2007)
Carrier Central Transport International (“CTI”) had a service contract with General Electric to transport lighting products to a designated consignee. That contract contained a clause prohibiting assignment of the contract. When some six hundred grand worth of lighting fixtures were allegedly damaged in transit, GE assigned its rights to Osram Sylvania Products to a freight claim against CTI. Osram Sylvania, in turn, authorized Global Advantage Distribution to go after CTI.
In response to Global Advantage’s lawsuit filed in the Middle District of Florida, CTI moved to dismiss based on the non-assignment clause. CTI also urged that GE’s time for filing a notice of claim had expired, and that Global Advantage’s notice was not effective. The court wasn’t impressed.
Assignment of a claim under a contract isn’t the same as assignment of the contract itself. The clause might have been worded so as to avert assignments of cargo claims, but this wasn’t done. Global Advantage, being well onboard after the assignment, could give an effective notice of claim to CTI. Factual issues precluded summary judgment for a series of other theories on which CTI sought dismissal, so this claim continues.