FMCSA Will Eliminate Cargo Insurance Requirement For Most Common Carriers

Thursday, June 24, 2010 by Transportation Lawyer
The Federal Motor Carrier Safety Administration (“FMCSA”) announced on June 22nd that it is eliminating the requirement for most for-hire motor common carriers of property and freight forwarders to maintain cargo insurance in prescribed minimum amounts.  In addition these groups will no longer by required to file evidence of this insurance with FMCSA. These changes are to go into effect starting March 21, 2011.

Note that the new rule does not apply to household goods carriers and freight forwarders, however.
 The only shippers that FMCSA considered in need of the protection provided by the cargo insurance requirement are individuals who arrange to move their own household goods.  FMCSA concluded that such individuals are less knowledgeable about carrier liability requirements and need the protection afforded by the existing regulations.

Denial of Certification in Wage & Hour Case in California

Tuesday, May 11, 2010 by Transportation Lawyer
The California Court of Appeals in Arenas v. El Torito Restaurants, Inc. denied class certification to a group of restaurant managers who claimed to be misclassified as exempt from overtime wages with unpaid overtime due to them.  The Court denied certification of the class because the managers did not share a common pool of interest to gain class entitlement to overtime, due to the wide variation in the different manager's duties.  This is relevant because motor carriers in California and around the country are facing wage and hour claims by independent contractor drivers who seek to be reclassified as employees in order to be covered under the applicable wage and hour laws.

Cargo Claims - Supreme Court to Hear Argument on Carmack Amendment vs. COGSA

Wednesday, March 3, 2010 by Transportation Lawyer

The United States Supreme Court is set to hear argument on March 24, 2010 in the companion cases of Union Pacific Railroad Company v. Regal-Beloit Corporation and Kawasaki Kisen Kaisha v. Regal-Beloit Corporation.  The issue before the Court is whether the Carmack Amendment to the Interstate Commerce Act (49 U.S.C. § 11706 for rail carriers and § 14706 for motor carriers) applies to the inland rail portion of an international, multimodal import shipment governed by a “through” bill of lading (i.e., a bill of lading that covers the shipment from origin to destination), where the bill designated the Carriage of Goods by Sea Act, 46 U.S.C. § 30701 et seq., as the law to govern the carriers’ responsibility for cargo loss and damage claims during the entire shipment.

COGSA governs the rights and liabilities of parties to an international maritime bill of lading; and allows parties to extend COGSA liability terms by contract for the entire carriage - including any inland leg of the journey.  The Carmack Amendment supplies the default liability regime for rail and motor carrier transportation within the United States.  The Interstate Commerce Act authorizes both common carriers and contract carriers to contract out of Carmack's default rules (49 U.S.C. § 10709).  The question presented to the Court, therefore, is how to reconcile the potentially conflicting statutory frameworks under the facts of the cases.
 

Bankruptcy Preference Claims Against Transportation Companies Are On The Rise

Sunday, February 21, 2010 by Transportation Lawyer

In the current economy, as more and more shippers and/or logistics companies with broker authority file bankruptcy, the firm has seen a marked increase in the number of preference claims filed against transportation service providers.  Preference claims seek to avoid payments made by the bankrupt entity in the 90 days prior to its bankruptcy filing. When the bankrupt company is a shipper, logistics company, or property broker, the resulting preference claims can affect common carriers, contract carriers, and transportation brokers.  Recently, in the Quebecor bankruptcy the trustee filed over 1,700 preference claims -- approximately 300 of which are against transportation service providers. Defenses to preference claims include that the payments received were made in the ordinary course of business and that additional unpaid services were provided to the debtor after the allegedly preferential payment(s). In addition, in some cases the freight broker regulations or a critical vendor order approving payments to certain transportation service providers may provide additional defenses. Quick analysis of historical data and the assertion of both traditional and transportation specific defenses can potentially limit exposure to preference claims.
 

Rate Filing Requirements for NVOCCs to be Repealed

Friday, February 19, 2010 by Transportation Lawyer
It looks like Non-Vessel Operating Common Carriers ("NVOCCs") will soon have the burden of rate tariff filing lifted.  Here is an excerpt from a news release issued yesterday by the Federal Maritime Commission ("FMC"):
 
The Federal Maritime Commission voted today to initiate a rulemaking that would relieve Non-Vessel-Operating Common Carriers (NVOCCs) from the costs and burdens of publishing in tariffs the rates they charge for cargo shipments. In a 3 to 1 vote, the Commission decided to grant this exemption from publishing rate tariffs to licensed NVOCCs. NVOCCs are common carriers that act as intermediaries between their shipper customers and steamship lines. According to comments filed with the Commission, this action could save many of these businesses up to $200,000 per year.
 
Under the rule, NVOCCs will still be required to publish their rules with tariff publishing services.

Broker Group Proposes Increase to Bond Requirement

Friday, February 12, 2010 by Transportation Lawyer
Trucking (common carrier ) groups have recently pushed Congress to impose tougher financial rules on transportation brokers.   In order to appease groups like the Owner-Operator Independent Drivers Association who want to require brokers open their financial records to scrutiny so that companies using the brokers can determine their financial health, the Transportation Intermediaries Association (“TIA”) is proposing that the freight broker regulations increase the bond requirement from $10,000 to $100,000.  In addition, TIA seeks tougher overall regulations for bonding companies, including the way they collect/pay out claims.  TIA has taken its plan to Rep. Peter DeFazio, D-Ore., chairman of the House Highways and Transit Subcommittee, along with a request that the bonding process be more tightly regulated,  - from the way funds are posted through bonding companies to the way payments are actually made.  They also want the regulations to clarify that motor carriers cannot broker freight to other carriers without themselves posting the $100,000 bond.

Cargo Claims - Court Holds State Law Claims Preempted, Including Claims for Conversion

Friday, January 22, 2010 by Transportation Lawyer

Cargo loss and damage claims against common or contract carriers for damages to interstate shipments have long been governed by the Carmack Amendment. Further, courts have routinely held the Carmack Amendment preempts state law claims for negligence, breach of contract and tort claims.  In other words, since federal law provides the exclusive remedy for cargo loss or damage on an interstate shipment, the claimant can not assert state law claims. 

Earlier this month, a Texas federal court followed this long line of authority and held the Carmack Amendment preempts state law claims – even when those state law claims are for the intentional tort of conversion.  See Tran Enterprises LLC d/b/a Nutrition Depot v. DHL Express (USA), Inc., 2010 LEXIS 2092, at *2 (S.D. Tex. January 12, 2010).  In this case, the plaintiff alleged DHL converted COD checks it collected at the time of delivery, failed to tender these checks to it, and was liable for conversion under state law.  The court held intentional tort claims under state law, like the plaintiff's conversion claim, are preempted and Carmack remains the shipper's exclusive remedy.