Hot Recent Cases in Motor Carrier Law - September 2007

by Steven W. Block 
 
Driving a rig to and from the depot implicates bobtail coverage.  United States Fidelity & Guaranty Co. v. American Automobile Ins. Co., 2007 WL 2238532 (N.J. Super. A.D. 2007)

Owner operator Mattis, under lease to carrier WRJ, was allowed to drive his rig bobtail to and from the depot.  One day, he was involved in an accident on the way home.

WRJ had truckers liability insurance coverage through insurer USF&G.  By virtue of his membership in the Independent Truckers Association, Mattis had bobtail coverage through insurer American Automobile.  When the estate of a man tragically killed in the accident sued Mattis, American denied coverage on the ground its policy doesn’t apply when tractors are being used for business.  USF&G provided a defense to the accident claims, and later sued American to recover its defense costs.

Affirming a trial court’s granting of summary judgment to USF&G, a New Jersey appellate court reviewed a series of precedents from around the country and concluded that Mattis was operating his rig “for his own convenience” and at his own election.  Insurance policy exclusions must be narrowly construed.  One precedent proclaimed that whether a driver’s commuting to work constituted business use of a truck is a jury contract not proper for summary judgment disposition, but that position was not intended to apply across the board.

Earlier ICC decisions tending toward coverage only apply when the challenge is by a claimant or an insured.  Those decisions pointedly don’t apply when two insurers are duking it out to see who gets stuck holding the bag.  In other words, the feds are worried about protecting the public; they are not concerned with protecting insurers from each other.

But with American on the hook, which of the two carriers, if either, is primary (i.e., has to pay through its own policy limits before the other carrier’s policy kicks in)?  Here, the policies’ language controls.  However, the USF&G policy provided that the driver’s lease must require WRJ to provide coverage for the leased auto section of that policy to apply.  It didn’t, so American gets to stand first in the coverage line.

Carrier has to fight hard for a chance to show a driver isn't its employeee for purposes of unemployment benefits.  NOW Courier, Inc. v. Review Board of the Indiana Department of Workforce Development, 871 N.E.2d 384 (Ind. App. 2007)

So you thought carriers getting out of employment benefits claims brought by their leased owner operators was a simple matter of pointing to federal and state statutes dictating they were independent contractors, right?  That’s not the case, at least not for one carrier in Indiana that terminated a driver’s lease for allegedly making improper advances on a customer.  Check this one out to see the confusing myriad issues that can arise in a driver’s employment benefits claim.

Indiana processes worker unemployment compensation benefits claims through a Review Board.  Apparently, a hodgepodge of factual circumstances and legal misunderstandings prompted the Review Board to conclude there was inadequate evidence to support carrier NOW’s contention that the termination was for willful misconduct.  The Board wouldn’t allow NOW to supplement the record with the legal argument that, hey, this guy doesn’t qualify for benefits under state or federal law regardless of the termination’s cause.

The squabble devolved to whether this was a tax, eligibility or liability issue (i.e., the driver’s eligibility to collect – which is within the Board’s authority – or whether NOW was liable to pay – which is not), and whether NOW had made its points on time.  Hmm.

The Court of Appeals saw this as a fundamental failure of due process, and remanded the matter for consideration of NOW’s arguments.  The state statute addressing owner operator exemption implicates both liability and eligibility, so both were before the Board.  NOW made its legal argument as soon as it could.  A whole lot of fighting for what seems to be such a simple point, but NOW appears to be in good shape.

Court cautiously blesses parties' agreement to dismiss state claims because of Carmack dominion, joining jurisdictions that apply complete preemption.  Andrews v. Atlas Van Lines, Inc., 2007 WL 2409982 (N.D. Ga. 2007)

This case presented a common scenario, but with higher-than-usual court scrutiny that produced some potentially useful precedential authority.  A household goods shipper sued Atlas in Georgia state court for allegedly damaging his household goods, asserting the usual array of state-law claims.  Atlas removed to the U.S. District Court for the Northern District of Georgia, then moved to dismiss based on Carmack preemption.

Here’s where the routine altered a bit.  The shipper actually stipulated to the dismissal.  The court, however, didn’t rubber stamp the parties’ harmonious voice, instead going through an elaborate analysis of whether it had subject matter jurisdiction even to bless the theory on which Atlas’ motion was based.  The opinion is worth a read just to see how Carmack’s preemptive effect works from a jurisdictional perspective.

The court concluded the action had indeed been properly removed, notwithstanding the fact that the complaint, on its face, didn’t state a federal claim.  The court couldn’t reach the issue on the “well-pleaded complaint rule,” but Carmack’s supremacy over interstate freight claims constitutes “complete preemption.”  The Eleventh Circuit hasn’t considered that concept (neither has the U.S. Supreme Court, actually), a determination this court made based on what other jurisdictions have been doing, and what the Eleventh Circuit has ruled regarding other statutes.

In an abundance of caution, the court asked the plaintiff shipper to amend the complaint to specify Carmack, but complete preemption appears to be on solid ground in the southeast.

Carrier not liable for injuries caused by hazardous material left in its trailer.  Lamb v. Scotts Miracle-Gro Company, et al, 2007 WL 1959291 (E.D. Okla. 2007)

A J.B. Hunt driver picked up an empty trailer from a Texas Wal-Mart distribution center, inspected it with a flashlight, drove the trailer to shipper Standard Waste’s facility, and loaded it with bales of paper.  He then transported the load to Georgia Pacific’s plant in Oklahoma, where the consignee’s employees offloaded it.  While sweeping dust and debris from the empty container, the employees became ill from sodium PCP which remained within the trailer.

The employees sued J.B. Hunt and others in the Eastern District of Oklahoma, alleging negligence and other tort theories.  The carrier moved for summary judgment dismissal of the claims.  J.B. Hunt’s motion focused on the absence of any duty it owed to Georgia Pacific’s employees.  Inexplicably, plaintiffs’ opposition to the motion didn’t address duty, instead focusing only on causation.  On that basis alone, the court concluded it could grant the carrier’s motion.

The court addressed causation anyway, and found plaintiffs had submitted insufficient evidence that J.B Hunt’s cleaning practices contributed to the injury.  Similarly, the court ruled no evidence suggested Standard Waste’s paper was contaminated with PCP.  Federal regulations dictate how this kind of freight must be secured, but there was insufficient evidence of a regulatory violation or, more importantly, that plaintiffs were a class intended for protection by those regs.

Plaintiffs pointed to the doctrine of res ipsa loquitur, urging basically that injuries of this sort don’t happen unless the carrier did something wrong.  However, the court found a lack of sufficient evidence demonstrating the carrier had exclusive control over the trailer at all times material.  All in all, a bad day for the plaintiffs in a court that was requiring quite a strong factual showing before trial.

Interstate carrier's household goods agent not liable for carrier's alleged no-no's.  Moore v. Law Habra Relocations, Inc., 2007 WL 2269818 (C.D. Cal 2007)

Household goods shipper Moore retained La Habra Relocations to book interstate transit of her household stuff.  La Habra apparently isn’t a transportation broker, but it was a disclosed agent of carrier Wheaton.  Wheaton apparently refused to release Moore’s freight until she paid an additional fee, prompting Moore to sue La Habra.

La Habra removed the action from a California state court to the Central District of California, where La Habra moved to dismiss based on Carmack.  The court granted the motion.

In addition to some apparent procedural screw ups, general principal-agency law renders this action unsustainable.  The bill of lading between Moore and Wheaton made clear La Habra was a disclosed agent for its principal Wheaton, and was not a party to the contract of carriage.  The same analysis was applied as if La Habra were a broker.