Association of Independent Property Brokers and Agents, Inc. v. Foxx, et al., 2015 WL 4393729 (M.D. Fla 2015)
The Association of Independent Property Brokers and Agents, Inc. (“AIPBA”) recently lost another round in its bid to nix the $75,000 minimum bond requirement imposed by the Moving Ahead for Progress Act in the 21st Century (“MAP-21”) signed into law in 2012 (yes, it’s been three years!). AIPBA raised the same arguments FMCSA rejected last year to the U.S. District Court for the Middle District of Florida, and was met with the same result.
AIPBA believes increase of the mandatory broker bond from $10,000 to $75,000 is an arbitrary agency act, one that evidence does not confirm would reduce fraud or promote any other end intended by the Motor Carrier Act. In pre-MAP-21 talks, FMCSA actually considered an increase just to $25,000 which appeared adequate, but Congress took it higher to the $75,000 mark. AIPBA is concerned an increase of this magnitude will run smaller brokers out of business.
In fact, AIPBA contends that’s exactly what larger transportation industry groups like the Transportation Intermediaries Association, the American Trucking Associations and others intended by lobbying Congress for a big hike. That, urged AIPBA, is an anticompetitive collusion, one which would have negative impacts on consumers and industry participants.
The court refused to rule on that basis, finding that when Congress passes a statute, it’s constitutional if “there is any reasonably conceivable state of facts that could provide a rational basis for [it].” In Congress’s eyes, the minimum $75,000 bond might very well have a rational basis, and the court ruled AIPBA didn’t meet its burden of proving otherwise. Congress isn’t bound by FMCSA’s analysis, and may have considered different points. Per the court, this is the so-called “rational basis inquiry,” one which isn’t impacted by anticompetitive lobbying. If “any conceivable basis exists” to justify Congress’s action, it flies.
This isn’t likely the end of the line for AIPBA’s mission to lower the bond requirement, one that has garnered considerable industry attention since before MAP-21’s inception.
Advance Copy Technologies, Inc. v. Fallon Moving & Storage, Inc., 2015 WL 3874990 (Sup. Ct. Conn. 2015)
This Connecticut state court case makes a fine analysis of preemption of carrier liability for destroyed cargo under a state consumer protection act in the context of a haul that was wholly intrastate. The shipment of a printer from Simsbury to Cromwell, both within the Constitution State, arrived irreparably damaged to the tune of some 84 grand. Shipper Advanced Copy Technologies (“ACT”) sued carrier Fallon Moving & Storage, alleging, among other things, liability under the Connecticut Unfair Trade Practice Act (“CUPTA”). The CUPTA theory was that Fallon’s failure to strap down the printer allegedly violated a Connecticut motor carrier state statute designed to ensure road safety, which can be the basis of CUPTA liability.
Fallon moved to strike the CUPTA claim on the ground it is preempted by 49 USC §14501(c), a federal statute that precludes state enactment of any “law related to a price, route, or service of any motor carrier.” ACT believed that CUPTA was exempted from federal preemption with respect to safety issues, as provided by §14501(c)(1). Additionally, it argued 49 USC §14501(c)(3)(A)(ii) provides an out, as it exempts from preemption state law related to the enforcement of “uniform bills of lading or receipts for property being transported” (i.e., the subject haul had been governed by a bill of lading).
The court agreed the federal statute won’t preempt state law primarily aimed at safety. However, while violation of a safety statute under Connecticut law can be the basis of a CUPTA claim, CUPTA wasn’t legislated and enacted with safety concerns in mind, or the intent to regulate motor carrier safety. Thus, per state and federal precedents, it didn’t fall under the exemption. Moreover, Fallon’s failure to strap down cargo didn’t rise to the level of immoral, egregious or repetitious misconduct CUPTA was designed to redress, so it wouldn’t apply anyway. The court threw out the CUPTA claim.
Pal-Con, Ltd., et al. v. Wheeler, 2015 WL 3824777 (5th Cir. 2015)
Here’s a look at various legal issues that arise when a pilot car driver gets sued based on a truck’s collision with an overpass. Shipper Pal-Con hired carrier Friend’s Express to haul separate halves of a gas turbine engine regenerator through Ohio. The oversize loads required permitting and pilot car escorts. Friend’s hired pole car operator Bert Wheeler for the task, and dispatched its driver Maples for the run.
Wheeler obtained the necessary permits from Ohio. During transit, Maples, with Wheeler a half mile out in front, apparently missed a turn and ended up going north on a highway he should have been southbound on. Maples alerted Wheeler, who joined up with him. The two continued northbound for twenty miles without scouting a new route or contacting state police or the permit office. Wheeler’s pole hit an overpass, and he radioed Maples to stop. Maples claimed he couldn’t because of traffic, and yes, he collided with the bridge. The cargo was destroyed.
Pal-Can had to build a temporary regenerator for its customer, followed by a permanent replacement. It managed to recoup the costs of the temporary through a later sale. But it sued all concerned in the U.S. District Court for the Northern District of Texas, where a jury found Wheeler 35% liable. He took the matter up the hill to the Fifth Circuit.
Wheeler’s first contention was that the economic loss doctrine barred Pal-Con’s recovery against him. Generally, the economic loss rule bars claims in tort for economic losses incurred by a party’s failure to perform under a contract. But it doesn’t shield liability for damage to property in which a non-contracting party has an interest, such as Pal-Con’s customer. Moreover, if the defendant has duties to the plaintiff independent of the contract (such as duties to operate safely on roadways), the rule doesn’t apply.
Wheeler also believed Pal-Con hadn’t adduced sufficient evidence of negligence against him to warrant a judgment, such that reversal was proper. While a court of appeals can assess whether a negligence verdict is supported by substantial enough evidence, reversal on that ground is a particularly tough nut to crack. The analysis of a duty based on foreseeability involves a comparison of the size of the risk versus burden to guard against it, and which entity is best suited for the task. Wheeler apparently lost in the analysis at trial on grounds the court of appeals considered adequate. Moreover, experts testified that Wheeler was wrong not to reroute or contact the permit office.
Wheeler prevailed on the costs of the temporary regenerator given that Pal-Con got that money back, but lost on a jury instruction issue. All in all – a bad day for Wheeler.
G&P Trucking Co., Inc. v. Zurich American Ins. Co., et al., 2015 WL 3842842 (D. SC 2015)
Here’s another case that shows how incomplete documentation practices can produce legal difficulties, this time in the intermodal context. Shipper SKF Espanola (“SKF”) shipped a cargo of ball bearings from Spain to Clarksville, Tennessee through the Port of Savannah. It booked the transit through forwarder Panalpina with Panalpina’s ocean carrier arm, Pantainer, which issued a bill of lading. Pantainer’s bill of lading form is multi-purpose, designed to be used in various shipping arrangements, some of which include intermodal surface carriage. The reverse side’s terms and conditions provided separate schemes applicable to port-to-port or combined transport. The consignee was named as SKF in Tennessee, but “place of delivery” space was left blank.
When the cargo arrived in Savannah, Panalpina booked connecting transit with motor carrier G&P Trucking, whose truck was involved in accident in Atlanta that damaged the cargo. SKF was paid a $101,000 claim from its insurer, Zurich, which sought to recoup its losses from G&P. The trucker beat Zurich to the punch with an action for declaratory judgment in the U.S. District Court for the District of South Carolina, and the parties filed cross motions for summary judgment regarding limitation of liability.
At issue was whether G&P’s transport was encompassed by the Pantainer bill of lading, and thus whether the trucker could limit its liability under COGSA or Carmack. The court recognized the threshold question of whether Pantainer’s document was a through bill of lading, or whether the parties contemplated a new contract of affreightment originating in Savannah.
The court summarized points pertaining to Carmack and COGSA liability, and then turned to the three factors precedents consider in deciding whether a bill of lading covers through transportation. If these can be determined as a matter of law, then whether the COGSA ocean regime or Carmack surface regime governs will follow.
First, the court looked at whether the bill of lading indicated a final destination. This was ambiguous at best. While SKF’s Tennessee address was listed for it by its designation as “consignee,” the blank “place of delivery” suggested the consignee wasn’t yet sure where it wanted its stuff taken. Second, the record didn’t make clear whether the entire transit had been prepaid, a point that can be indicative of what the parties originally intended. Third, a point the court concluded was no longer of much analytic value, was the absence of a G&P-issued bill of lading. As the U.S. Supreme Court has made clear, the existence of a trucker bill of lading strongly implies separately-arranged surface transit such that Carmack applies, the absence of one doesn’t ipso facto render Carmack inapplicable. In other words, that G&P might have erroneously neglected to issue a bill of lading doesn’t automatically mean COGSA applies.
Thus, the court found the current record was inadequate to grant summary judgment in anyone’s favor. The parties will have to present additional evidence as to what kind of transit was intended before the liability regime can be determined.
CSX Transportation, Inc. v. Taylor, et al., 2015 WL 3682357 (N.D. Ohio 2015)
Here’s a little scuffle of freight charge litigation of the variety that was common circa 2008 when the economy was in the toilet. Glenn Taylor formed freight broker Intermodal USA, Inc. to operate alongside his motor carrier operation GRT Transportation. Intermodal booked some 117 grand worth of motor carrier transit with CSX in January-February 2011, but never paid the freight charges. CSX sued Intermodal in the U.S. District Court for the Northern District of Ohio; Intermodal defaulted; and CSX sued Taylor individually.
Having learned that Ohio had administratively dissolved Intermodal for nonpayment of fees in 2007, CSX pointed to Ohio law that holds “principals” of nonexistent corporations personally liable for the debts they create in the “corporation’s” name. This got Mr. Taylor’s attention.
He sued shipper Macy’s, alleging that it is ultimately liable for CSX’s charges, and had GRT Transportation intervene in the lawsuit on the ground it “was actually doing business with both CSX and Macy’s,” and was entitled to a cut of what Macy’s might pay. He also filed a statement to the effect he didn’t know Ohio had revoked Intermodal’s charter, which can be the basis for putative shareholder to avoid personal liability.
The court was not sympathetic to the cloudy mess Taylor was creating with the new parties, but agreed an issue of fact as to Taylor’s knowledge about the administrative dissolution was sufficient to avoid summary judgment in response to CSX’s motion. CSX argued how inconceivable it was that Taylor hadn’t gotten his mail, but the court refused to rule on credibility in a dispositive motion.
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