Hot Recent Cases in Motor Carrier Law - May 2008
by Steven W. Block
Federal law doesn’t preempt state law that squelches liability waivers
Ryes v. Home State County Mutual, 2008 WL 2038819 (La.App. 3rd Cir. 2008)
Louisiana-based carrier Scout Transportation entered into a lease of a rig owned by Phillip Boudreaux. Scout allowed drivers to carry passengers who signed a waiver of liability for injuries suffered during a haul. Scout assigned its driver Liney Ryes to move a load in Boudreaux’s rig from the Pelican State to Longhorn country. In keeping with Scout’s policy, Liney brought along his wife Beatrice, who had put her John Hancock on Scout’s waiver. Beatrice was injured in a one-vehicle accident in Texas.
The Ryes sued Scout, Boudreaux and their insurers in Louisiana state court. They pointed to a Louisiana statute that puts the kibosh on waivers such as the one Beatrice signed. Scout and company urged that federal law at 49 USC § 14501(c)(1) preempts state law that affects interstate carriage, and argued that Texas law (sans kiboshing statute) should govern. The trial court didn’t buy any of it.
Neither did the Louisiana court of appeals. Affirming the trial court’s summary judgment, the higher court ruled that preemption statutes specifically don’t apply to state law designed to promote safety. Scout’s cited precedents dealt with pricing, and not law that ups the ante on carrier safety responsibilities. Because the contracts and individuals were all in Louisiana, that state had the more compelling interest in enforcing its law. The carrier side is on the hook.
. . . but state regs requiring truckers to be “certified installers” just might be preempted
Taylor v. State of Alabama, 2008 WL 1868083 (11th Cir. 2008)
Certain truckers in Alabama transport pieces of prefabricated homes to destinations where they are assembled into livable dwellings. The Alabama Manufactured Housing Commission (AMHC) regulates the Yellowhammer state’s prefab industry, and decided to make such truckers become “certified installers” of transportable homes, as well as subject to a 72-hour notice provision whereby they must give AMHC a heads up about all moves.
After he “renounced, tore up and destroyed his AMHC license as an installer” right in the office of the agency’s director, trucker Taylor sued the state to rescind AMHC’s new regs. At issue was preemption by 49 USC § 14501. In response to the state’s dispositive motion, the U.S. District Court for the Northern District of Alabama dismissed Taylor’s complaint on the pleadings, finding the regs were within the safety regulatory authority exception of § 14501(c)(2)(A). Taylor appealed to the Eleventh Circuit.
Whether or not a state law falls within that exclusion is a question of fact determinable only on a developed factual record. Moreover, a state law is only preempted of it has a “significant impact on carrier rates, routes , and services,” and the extent of the AMHC regs on interstate carriage was completely undeveloped in the record. Thus, the court of appeals remanded the claim’s dismissal to allow the parties to answer a series of questions which would determine whether preemption applies.
An interesting but unanswered question: Can cargo owners who aren’t shippers of record sue carriers?
OneBeacon Ins. Co. v. Haas Industries, Inc., 2008 WL 1847182 (N.D. Cal. 2008)
Don’t you just hate it when courts raise interesting and profound legal questions, but then proclaim they won’t rule on them because, well, they don’t have to reach the issue? Here’s a prime example of such a frustration-provoking waive off.
Professional Products, Inc. (PPI) purchased electronic equipment from Omneon Video for delivery to City University of New York. Omneon engaged carrier Haas Industries to make the haul. Haas issued a bill of lading naming Omneon as shipper and the University as consignee. The freight arrived short to the tune of some 105 grand.
Omneon filed a cargo claim with Haas, and the carrier pointed to a limitation of liability clause in its bill of lading. Omneon accepted $88.00 from the carrier, representing the limited liability amount. Meanwhile, PPI filed a cargo insurance claim with its insurer OneBeacon, which paid the loss’ full value. OneBeacon then sued Haas in subrogation in the Northern District of California. Haas moved to dismiss based on the doctrine of accord and satisfaction.
The court did an excellent job of expressing its conundrum. “On the one hand,” lamented Magistrate Judge Zimmerman, “judicial economy suggests the owner of the goods should be able to sue the carrier directly under the Carmack Amendment. The alternative would be for the owner to sue the consignor or shipper who would then have to sue the carrier.”
But on the other hand, “allowing someone not a party to the bill of lading to sue the carrier after it has reached an accord and satisfaction with the shipper would seem to discourage carriers from settling claims.”
Whether OneBeacon has standing to sue was unsettled, but the court found it immaterial and didn’t reach the issue. Haas had effectively limited its liability, so the proper plaintiff’s identity didn’t matter. While we’ll never know how this court would rule, the proper answer probably lies in the bill of lading, and the fact that PPI could have protected itself by shipping the freight in its own name after agreeing to acceptable terms with Haas.
A household goods bill of lading is a contract, and shippers need to treat them as such
Hoover v. ABF Freight System, Inc., 2008 WL 1805392 (C.D. Ill. 2008)
Law governing interstate transportation gives consumers quite a bit of leeway that commercial shippers don’t get, taking into consideration that ordinary folks making a personal move just don’t have the capacity to learn industry concepts. Just ask the Hoovers, who moved from Florida to Illinois a few years ago.
They engaged ABF Freight System based largely on its nifty and cost-effective program of having an empty trailer delivered to their old home, loading the trailer themselves, and having ABF transport it to their new residence.
A couple of bumps in the road before ABF took off with the Hoovers’ stuff might have alerted them to future problems. A bill of lading ABF used offered both limited and full liability options, and the Hoovers asked for the latter when they booked the haul. When an ABF driver showed up with his rig to fetch the loaded trailer, the bill of lading he presented showed limited liability. Ms. Hoover called or emailed ABF (she couldn’t recall which), and purportedly was told to sign the proffered bill of lading, and that “insurance” would be provided in the event of an accident. She did so, there was one, and, yes, ABF sought to limit its liability to peanuts.
In response to ABF’s motion after suit was filed, the Central District of Illinois applied general contract integration and parol evidence analyses to the circumstances. The ABF bill of lading, which properly incorporate the carrier’s tariff, was fully integrated. Any statement by a party to the contract that contradicts an unambiguous contract term is excluded as parole evidence. ABF’s liability is limited. One wouldn’t think household goods shippers should have to hire lawyers to get their belongings moved, but as this case shows, shipping contracts are subject to some of the same, often confusing concepts as any other.
Where national uniformity in interstate carriage law falls short: state statutes at the heart of insurance coverage issue
Moper Transportation, Inc. v. Norbet Trucking Corp., 399 N.J. Super. 146, 943 A.2d 873 (March 2008)
Owner operator Moper Transportation, owned by Manuel Flores, was under lease to motor carrier Norbet Trucking. New Jersey was where the companies were located, the transportation service agreement (TSA) was consummated, and both obtained insurance. On the way home from a haul, Flores was headed to his New York home when he was involved in a bobtail accident.
Per the TSA’s terms, Norbet procured a commercial trucker’s liability policy with the Insurance Company of the State of Pennsylvania (ICSOP), and Moper bought a non-trucking liability policy from Great American Assurance Company. The latter coverage applied to bobtail and deadhead movements, and contained a business use exclusion. Neither insurer wanted to pay. ICSOP argued that Flores was bobtail ad driving home (as opposed to running a commercial haul); Great American pointed out that Flores was under dispatch and returning home after a scheduled transport). After an injured claimant’s case against Flores was settled, the coverage mess went up the hill to New Jersey’s high court.
At issue was whether New York or New Jersey law applied. An Empire State law known as a “deemer statute” essentially extends insurance coverage where a claimant would otherwise be left without recourse because a foreign tortfeasor’s auto coverage was limited. ICSOP urged that New York had the greatest interest in applying its law (the accident occurred there); and that the deemer statute would be upset if Moper’s insurance coverage wasn’t extended to cover the loss.
The court disagreed. The companies, their contract, and their insurance all grew in the Garden State. This was a coverage issue, and not the accident claim itself. The goals of New York’s deemer statute wouldn’t be defeated by applying New Jersey law, as there would be coverage in any event. The deemer statute itself didn’t foreclose a choice of law analysis (as ICSOP had further argued without authority). ICSOP gets to pay.
Confusion when Ma-and-Pa truckers go belly up
Crown Transportation, Inc. v. Smith Systems Transportation, Inc. v. SST Financial Group, LLC, 2008 WL 1766736 (N.D. Okla 2008)
Owner operator Crown, owned solely by Charles Crafton, was under lease to carrier Smith Systems. Smith was to pay Crown percentages of collected freight and fuel surcharges. Crown sued Smith in the Northern District of Oklahoma, alleging underpayment of freight and surcharges, and for omitting provisions in the lease agreement that the Truth in Leasing Act, 49 USC § 14704 (TLA) requires. Smith counterclaimed, alleging irregularities in Crown’s administration of a fuel advance account, and for stranding drivers on Smith’s nickel. This sounds like a garden variety operator-carrier dispute, until Mr. Crafton files for personal bankruptcy.
Apparently, Crafton did not apprize his bankruptcy trustee about his ownership of Crown and about Crown’s suit against Smith. This omission prompted Smith to argue judicial estoppel in defense of Crown’s claims. Smith’s theory was that by misrepresenting to the bankruptcy court the extent of Crown’s assets (the claims against Smith being one of them), Crown should be prohibited from pursuing them now. Judicial estoppel serves to prevent a litigant from taking clearly inconsistent legal positions in the same proceeding. Moreover, urged Smith, TLA doesn’t apply to this type agreement, as Crown allegedly didn’t own non-exempt equipment when it entered into the agreement..
The court didn’t buy it. First, Crafton, and not Crown, was the bankrupt entity. There wasn’t enough evidence demonstrating that he was Crown’s alter ego. Second, the failure to disclose a claim isn’t so clearly inconsistent with Crown’s assertions of claims as to warrant judicial estoppel. Crafton hadn’t “succeeded” in persuading the bankruptcy (which, by the way, was a different court and proceeding) to accept his earlier position that no lawsuit existed. Lastly, Smith couldn’t show it would suffer any unfair detriment by the nondisclosure.
As to the TLA, the court found that Crown could have leased non-exempt equipment to Smith at some point in the lease (even if it was after the signing). Too many unanswered issues of fact remain to determine TLA’s applicability on summary judgment, do denial of this part of the dispositive motion was indicated as well.