TNL - March 2009 with picture of baby.pub

March 2009
Transportation Industry Newsletter
Roadability Regulations—Years in the Making to
be Followed by Years of Interpretation?
INSIDE
TEAM UPDATES
PAGE 4
Recent Federal Court Cases
Stress Importance For Parties to
Identify Roles in a Cargo
Shipment……………………..P.2
Shipper Who Assumes
Responsibility of Loading
Cargo May be Liable
for Damages in
North Carolina………………..P.3
In December of last year, the Federal Motor Carrier Safety
Administration (“FMCSA”) adopted the long-awaited regulations
which, for the first time, make intermodal equipment providers
(“IEPs”) subject to federal safety regulations. The regulations
began about the time producers began work on a new “pilot” tv
program called “Seinfeld.” As a result, IEPs will have to register
with the FMCSA by filing a new Form MCS-150C, a requirement
which will affect steamship lines, railroads, and common pool
operators and equipment lessors. After registering, these IEPs
must document their maintenance programs and repairs and
establish procedures for pre-trip inspections by drivers.
Importantly, IEPs will have to ensure that their intermodal
chassis comply with FMCSA requirements before offering them
for interchange and putting them on the roads. Each intermodal
chassis also must now be marked with a USDOT identification
number.
New Reporting Requirements
to Affect Self-Insured Carriers
and Trucking Insurance
Companies: We’re from the
Government and We’re
Here to Help!.........................P.6
North Carolina Department
of Crime Control and Public
Safety May Not Issue a Fine for
a Weight Limit Violation when
Condition of Special Permit is
Not Met……………………….P.7
With certain limited exceptions, these new regulations preempt
any state regulations of IEPs currently in force. South Carolina
(S.C. Code § 56-5-4170), like some other states, had enacted
state roadability requirements years ago, but the federal nature
of most intermodal movements hampered effective enforcement.
What does this mean for motor carriers and drivers? Although
the new regulations primarily affect IEPs, motor carriers do have
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some
new
responsibilities they
need to be aware of. Under the new
regulations, a driver must inspect
intermodal equipment before
accepting it. The inspection includes
review of various components
detailed in the regulations, such as:
visible brake components, trailer
brake connections, lights and
reflectors, tires, coupling devices,
rails and supports, tie down bolsters,
locking pins and clamps, and sliding
frame locks.
Drivers must also
report any defects to the IEP or
motor carrier, as well as the results
of any government inspections
performed. The IEP or motor carrier
then has fifteen days to certify to the
government agency that any noted
violations have been corrected. The
new regulations also provide motor
carriers a procedure to petition the
FMCSA to correct safety data and to
present questions regarding possible
safety violations. The regulations do
not allow IEPs to redirect equipment
citations from themselves to drivers.
In practical terms, mechanical
violations on intermodal equipment,
which had previously been ascribed
to motor carriers, will now be
reported and be reflected on the IEP.
While the new regulations become
effective June 17, 2009, IEPs have
until December 17, 2009 to establish
inspection and maintenance
programs and to submit Form MCS150C and until December 17, 2010
to mark intermodal chassis with
USDOT numbers.
It will be interesting to see what
effect roadability may have on
relations between Motor Carriers and
IEPs, and specifically, the Uniform
Intermodal Interchange Agreement
(UIIA) and its indemnification
provisions. It is expected that Motor
Carriers may argue that the
roadability regulations pre-empt UIIA
obligations to the contrary.
Recent Federal Court Cases
Stress Importance For Parties to Identify
Roles in a Cargo Shipment
There have been two recent decisions which illustrate the importance of
defining what role you play in transportation and the need to do so
clearly. Courts remain conflicted on this issue and it is therefore
important to consistently define your role early on in the process.
In Rexroth Hydraudyne B.V. v. Ocean World Lines, Inc., 547 F.3d 351
(2d Cir.2008), a manufacturer filed a lawsuit against the non-vessel
operating common carrier (NVOCC), as well as the foreign vessel
operating common carrier (VOCC) and its United States agent alleging
breach of contract of carriage. The trial court granted the defendants'
motion for partial summary judgment based upon the Carriage of
Goods by Sea Act (COGSA) package limitation because the NVOCC
and ocean carrier were not deemed rail carriers under Carmack.
In affirming the trial court’s decision to grant summary judgment, the
Second Circuit Court of Appeals held that entities that either provided
the ocean portion of international journey or played a role in making rail
carrier arrangements for the inland leg(s) of continuous international
shipments could rely upon contract based liability protections set out in
bills of lading as authorized by COGSA for the inland leg of a journey
when the injury to the shipment occurred on the inland leg. The court
further held that the misdelivery of cargo that was the result of
negligence was not a deviation that barred resort to the liability
protections of COGSA.
The Rexroth decision conflicts with several other federal district court
decisions holding that ocean carriers were rail carriers which are
currently on appeal, so this topic will remain in a state of flux for the
time being unless the Supreme Court definitively rules on the issue.
In September of 2008, the United States District Court for the Eastern
District of New York addressed liability for a cargo shipment involving
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multiple parties.
In Trans-Pro
Logistic, Inc. v. Coby Electronics
Corp., Trans-Pro, a licensed broker
under the Surface Transportation
Board, entered into an oral
agreement with Coby Electronics
(“Coby), an electronics wholesaler,
for the transportation of electronics
from Coby’s warehouse in California
to a retailer in Hollywood, Florida.
What followed were a series of
transactions made by Trans-Pro and
other downstream parties in
arranging for the transportation of
the cargo.
First, Trans-Pro hired TRT Carriers
to pick up the cargo in the California
warehouse. Second, TRT,
contracted with CSX, Intermodal,
Inc. (“CSX”) to arrange for the
shipment of goods. CSX identified
itself as a “shipper’s agent,” who
arranges the transportation of goods
by rail and motor carrier.
The
agreement between CSX and TRT
was made pursuant to CSX’s
Service Directory, which required
shippers to inform CSX within 24
hours of a shortage of a load. The
Service Directory further required
that all claims made by a shipper
must be made within 8 months or
were barred.
Following its
contractual agreement with TRT,
CSX contracted with American Road
Line, Inc. to transport the goods from
the California warehouse to Union
Pacific Railways.
Union Pacific
Railways, in turn, was to be
delivered to Chicago where another
carrier was to finish the
transportation of the load to Florida.
Upon arrival in Florida, the
electronics retailer signed the bill of
lading stating that the goods were
received “seal intact” but later
discovered that over $80,000 worth
of electronics were missing. As a
result of the shortage, a lawsuit was
filed when Coby refused to pay
Trans-Pro for its shipping services.
Coby, in turn, filed a counterclaim
against Trans-Pro as well as
additional claims against CSX for the
loss of the goods. CSX thereafter
moved for summary judgment as to
Coby’s claims against it because
Coby had failed to abide by the
terms of the Service Directory.
Specifically, CSX claimed that Coby,
inter alia, did not inform it within 24
hours of the shortage and did not file
a claim against it within eight
months.
In deciding CSX’s summary
judgment motion, the Court recited
the general rule that a “shipper who
uses the services of an intermediary
to arrange for the transportation of
its goods is bound by the terms of
the contract between the
intermediary and the carrier.” As the
court explained, in such an
arrangement, a “carrier has the right
to assume that the entity presenting
the goods for shipment has the
authority to ship them and agree
upon the terms of the shipment.”
However, the Court rejected CSX’s
claim that the general rule applied in
the case as CSX was a “shipper’s
agent,” not a carrier. After rejecting
this argument, the Court addressed
whether Coby was nevertheless
bound by the terms of CSX’s Service
Directory.
The Court found that
Coby disputed whether Trans-Pro
was hired to act as its broker or
carrier for the shipment and whether
Trans-Pro had the authority to act as
Coby’s agent and bind it to
subsequent transactions, including
the Service Directory.
Because
these facts were in dispute, the
Court declined to find as a matter of
law that Coby was bound to the
Service Directory.
Trans-Pro and Rexroth illustrate the
importance for parties (including
motor carriers, brokers, and
shipper’s agents) to properly identify
their respective roles prior to
entering into agreements to transport
goods. Motor carriers, brokers, and
shipper’s agents should demand that
all arrangements made for a
shipment of cargo be formalized in a
written contract prior to agreeing to
be involved in a particular load. By
demanding a written agreement,
each party will have full knowledge
of their potential exposure to liability
in the event there is a cargo loss.
Shipper Who Assumes Responsibility of Loading Cargo May be
Liable for Damages in North Carolina
In a recent North Carolina Court of Appeals decision, Hensley v. National
Freight Transportation Inc., the Court of Appeals ruled that if evidence
establishes that a shipper maintains responsibility with respect to how cargo
was loaded onto a truck; the shipper may bear liability for the ensuing
damages. In this case, the carrier arrived at the shipper’s warehouse where the
carrier was to pick-up a load of zirconium wire coil. The driver for the carrier
supervised the loading of the coils, which was performed by the shipper’s
employees. Of significance was the fact that the shipper dictated how the coils
were both stacked on the pallets and how the coils were banded. After leaving
the facility, one of the coils fell off the truck. A following motorcycle struck the
coil and a passenger on the motorcycle died as a result of the accident.
Although the general rule is that the primary responsibility of loading cargo and ensuring that the cargo is adequately
secured falls on the shoulders of the carrier, a shipper may nonetheless be liable if it assumes the responsibility of
loading for any latent or concealed defects which cannot be detected by the carrier’s ordinary observation. The North
Carolina Court of Appeals ruled in the Hensley case that if it is determined that the shipper, through its actions of
stacking and banding the coils, maintained responsibility for how the truck was loaded, the shipper may be liable for
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ensuing damages due to improper loading.
Transportation Team Update
Rob Moseley
Greenville
Erik Albright
Greensboro
Rick Coughlin
Greensboro
James Faucher
Greensboro
Steve Farrar
Greenville
Brooke Hammond
Greenville
Jay Holland
Wilmington
Jason Maertens
Greenville
Fredric Marcinak
Greenville
Bob Persons
Atlanta
Jason Pfister
Raleigh
Jack Riordan
Greenville
Cari Hicks
Greenville
Francesca Mosteller
Greenville
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Kurt Rozelsky
Greenville
Jon Berkelhammer
Greensboro
Matt Staab
Greenville
Manning Connors
Greensboro
Marc Tucker
Raleigh
Looking to The Road Ahead...
Smith Moore Leatherwood Trucking Law Updates
May 12, 2009 — Greenville, South Carolina
November 10, 2009 — Greensboro, North Carolina
ATA Safety Management Council, Atlanta 7/15-17/09
Rob Moseley will be the presenter of the SMC3 Contract Seminar, Atlanta, April 15
Register online at: www.smc3.com/go/cls/ml (Use promotion code MOSELEY for a $245 client discount)
April 16—SCTA Roadability Session, Charleston
NCTA Management Conference and Safety Council, Myrtle Beach, SC, July 23-26
SCTA Annual Management Conference June 10-13
Conference of Freight Counsel, Philadelphia, June 28 -29
Kurt will be speaking on a panel discussing "Judicial Hellholes" at the FDCC Annual meeting July 29-August 1.
Steve Farrar is the Convention Chair.
Rob Moseley will be part of an Insurance Panel at the ATA General Counsel Forum in Vancouver, BC, July 27-29
Expected arrival of Moseley Child # 7—June 1, 2009
Making
Tracks...
Rob Moseley, Jason Pfister, and Matt Staab attended the Conference of Freight Counsel in
Savannah in January.
Rob Moseley, Fredric Marcinak, and James Faucher attended the TLA Regional in Chicago.
Rob spoke/moderated a panel on insurance coverage issues.
Rob Moseley spoke at the “Wheels” Captive Educational Session in New Orleans, LA,
discussing “Depositions, Drivers and Documents”.
Smith Moore Leatherwood presented the first joint SCTA/NCTA Cargo Claims Seminar,
Charlotte, NC on March 17, 2009.
Kurt Rozelsky has been appointed Vice Chair of the FDCC Transportation Law Committee.
Jack Riordan and his wife attended the Transportation Megaconference IX and can report
that Bourbon Street and the French Quarter seem fully recovered from Katrina and suffering
little effect from current economic woes.
Steve Farrar joined with other FDCC members and NFL Referee Ed Hochuli to present a fast
paced Two Minute Drill on Negotiation Strategy & Ethics at the Winter Meeting held in Kauai,
Hawaii. Steve was proud that while many of his fellow panelist were penalized he was not!
Also, he was more proud of finding an airline ticket to and from Hawaii for less than $500!
Manning Connors attended the conference as well.
Marc Tucker and Jason Pfister spoke to the NCTA Safety Council on March 4, 2009.
Rob Moseley spoke at Marsh’s Fleet Solutions Captive Meeting in Hilton Head on the subject
of document management and corporate practices. Rob says it was really cold there so
everyone would feel sorry for him.
Welcome Micah
North Hicks!
Cari Hicks and her husband Daniel of the Greenville office welcomed Micah North Hicks to
the world on February 10th. He weighed 8 lbs 10 oz. Mom and baby are fine. Big brothers
Elija and Jonah have really taken to Micah. Congratulations to the whole family!
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New Reporting Requirements to Affect Self-Insured Carriers and Trucking Insurance
Companies: We’re from the Government and We’re Here to Help!
The new Medicare Mandatory Reporting Requirements go into effect July 1, 2009. Get ready! Companies with worker’s
compensation exposure have been living with the concept for longer than most (that of a Medicare Set Aside), but
starting in July, companies who pay tort settlements will begin to experience the pain.
Background
In 2007, Congress passed legislation to add teeth
to the existing Medicare Secondary Payer Statute
(“MSP”), codified at 42 U.S.C. § 1395y. The MSP
law guarantees that Medicare is secondary to any
primary payer for the health care costs of a
Medicare beneficiary. This new legislation can be
found in Section 111 of the Medicare, Medicaid
and SCHIP Extension Act of 2007 (“MMSEA”).
The 2007 legislation does not change existing law;
it simply imposes new reporting requirements.
The penalty for non-compliance
is $1,000 per day per claim.
Who Must Report?
Section 111 of the MMSEA mandates that Responsible Reporting Entities (“RREs”) report specific information to CMS
beginning in 2009. An RRE is a party who pays any claim on behalf of a Medicare eligible individual. So how will you
know when this applies? The Centers of Medicare and Medicaid Services (“CMS”) will provide a secure query function
on its website in order for individual RREs to determine if the individual claimant is a current Medicare beneficiary or a
Medicare eligible beneficiary.
Can I hire someone to deal with this for me? Yes, government job creation at its best (?). The RRE may contract with an
agent for reporting purposes, but CMS has clearly indicated that the agent is not the RRE. Therefore, the liability for
noncompliance remains with the RRE and not the agent.
The new regulations distinguish between Group Health Plans and Non-Group Health Plans. Group Health Plans began
reporting January 1, 2009. But the deadline for Non-Group Health Plans, which includes liability insurance (including
self-insurance), no fault insurance, and workers’ compensation plans, is July 1, 2009. Prior to July 1, 2009, Non-Group
Health Plan RREs must register with CMS. The registration period begins on May 1, 2009 and ends June 30, 2009.
During the initial registration process the RRE must complete the registration to obtain the identification number (the
“RRE ID”); thereafter the agent may complete the data entry.
What Must be Reported?
Pursuant to the MMSEA, the Secretary of the U.S. Department of
Health and Human Services was given wide latitude to determine
what information RREs were required to report. The CMS website
states that an RRE must report “the identity of a Medicare
beneficiary, whose illness, injury, incident or accident was at issue
as well as such other information specified by the Secretary to
enable an appropriate determination concerning coordination of
benefits, including any applicable recovery claim.” In December
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2008, CMS provided an interim layout that includes over 109 data fields that must be reported to CMS pursuant to the
new regulations.
In addition to name, address, and date of birth, the data elements include social security number, date of injury, ICD-9
and injury codes as well as plan information, settlement amounts, and legal representation information.
At this early stage, the data required by CMS appears to be far more robust than any data currently collected when a
company pays a tort settlement. Pursuant to the Paperwork Reduction Act, all Section 111 MMSEA reporting will be
electronic. Moreover, the data must be included in a specific form and format and must be reported quarterly. CMS has
indicated that the User Guide for the Non-Group Health Plans will be published within a few weeks, sometime in midMarch. The initial deadline was the end of February. CMS has assured the industry that the User Guide will clarify many
of the details that remain uncertain at this time.
Smith Moore Leatherwood’s Transportation Team is working closely with the Health Care Team to provide you the latest
information and developments in this area.
North Carolina Department of Crime Control and Public Safety May Not Issue a Fine
for a Weight Limit Violation when Condition of Special Permit is Not Met
The North Carolina Court of Appeals has ruled in the case Daily
Express, Inc. v. North Carolina Department of Crime Control and Public
Safety, Division of State Highway Patrol that the North Carolina
Department of Crime Control and Public Safety (“NCDCCPS”) may not
fine a trucking company for a weight violation which results from a
failure to comply with a requirement of a special permit. The trucking
company in this case obtained a “single trip permit” from the NC
Department of Transportation to transport a truck and trailer with a gross
weight of no more than 196,000 pounds. Without this permit, the truck
and trailer could not legally exceed 80,000 pounds under North Carolina
law.
When the truck and trailer stopped at a weigh station, NCDCCPS
noticed that the trucking company’s permit required both a rear and front
escort due to the weight of the truck and trailer. It was undisputed that
only one escort accompanied the truck. The trucking company received
a fine for both the violation of the permit and a weight violation based on
the failure to travel with two escorts. The NCDCCPS reasoned that if
the trucking company is not in compliance with one or more of the
conditions set forth in its permit, the weight limit authorized by the permit
is inapplicable and the trucking company is subject to a weight limit violation as if it had no permit at all. The North
Carolina Court of Appeals rejected this line of reasoning and concluded that the statutory provisions did not authorize the
imposition of a fine for a weight violation when the truck and trailer did not exceed the weight limit set forth in the special
permit.
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