Truck Law

A Transportation Law Blog from TransportationAttorneys.NET

Month: August, 2017

Cargo Claims, Declaratory Relief and Carmack: A new twist on an old favorite. Motor Carriers Can Go On The Offensive In Cargo Claims!

by G. Spencer Mynko, Esq.

All of my motor carrier clients know all too well that a cargo claim invoking the Carmack Amendment makes them the primary target when goods are lost or damaged. Generally speaking, most transportation lawyers will tell you that the Carmack amendment makes the motor carrier A de facto insurer of cargo. Or does it?

Most people who have read my articles know that I have written on several occasions regarding the Carmack Amendment and strict liability in cargo claims. And while carriers are normally on the receiving end of Carmack amendment claims, carriers can fight fire with fire, take the initiative, and get a declaration from the court as to their rights under Carmack. A recent federal case out of the Northern District of California illustrates how this can be accomplished.

United Van lines, LLC v. Deming, 2017 U.S. Dist. LEXIS 116308

In this case, defendants Scott and Sarah Deming filed a motion to dismiss the complaint of plaintiff United Van Lines LLC. Mr. Deming’s employer, Capella Education Company, entered into a contractual relationship with Plus Relocation Services. In turn, Plus Relocation Services contracted with United for motor carrier services through a “transportation services agreement”. Mr. Deming’s employer essentially contracted with the relocation company to have their employee’s goods transported from one state to another. As part of the transaction, the transportation services company entered into a contract with the carrier to limit their liability to the lesser of $100,000 or five dollars per pound of the shipment.

The Deming’s goods were damaged en-route to their destination, and the shippers made a claim against United Van lines for a little over $48,000. The carrier responded that the maximum amount of liability based on the bill of lading was $5330.00. Then, in an interesting twist on how cargo claims usually proceed, the carrier took their case to court to ask the court to declare that the bill of lading should rule the relationship between the parties, and that the bill of lading properly limited the carriers liability in the case.

Here are some excerpts from the court’s recitation of the facts in this matter which provide greater detail of this case and should be appreciated by all Motor Carriers:

“Scott Deming’s employer, Capella Education Company, entered into a contractual relationship with Plus Relocation Services. In turn, Plus Relocation Services contracted with United for motor carrier services through a “Transportation Services Agreement.” The agreement … states that “Carrier’s maximum liability for loss or damage to any and all Items in a shipment shall be the lesser of $5.00 per pound times the actual weight of the shipment or $100,000,” and that “[t]here shall be no charge for Carrier to assume this level of liability.” However, the agreement provides that “Shipper may increase the level of Carrier’s maximum liability set forth above by declaring such additional amount on the Bill of Lading and paying charges for such additional amount equal to $.65 per $100.00 declared above Carrier’s maximum liability level.”

“United and the Demings also executed a Household Goods Bill of Lading contract for the move. That contract similarly provides that, “[i]f any article is lost, destroyed, or damaged while in your mover’s custody, your mover’s liability is limited to the actual weight of the lost, destroyed, or damaged article multiplied by $5.00 per pound per article.”” “It goes on to provide that, “[u]nder the Released Level of Liability, your shipment will be transported based on a value of $5.00 per pound multiplied by the actual weight of the shipment.”” “Finally, the Bill of Lading states the following: “Your signature is REQUIRED here: I acknowledge that for my shipment, I will receive the Released Level of Liability of $5.00 per pound per article.” The Demings shipped 1,066 pounds of household goods at $5.00 per pound and did not declare any household goods as “Item-by-Item” or “Extraordinary Value Items.

“During transportation, the Demings’ household goods suffered water and mold damage”. “The Demings have demanded that United pay the full replacement value in the amount of $48,002.64.” “In response, United offered the Demings $5,330, which it contends is its maximum contractual liability under both the Transportation Services Agreement and Bill of Lading”.

Seeking Declaratory Judgment:

United’s complaint asserted a single count seeking declaratory judgment that the Demings are not entitled to recover the full replacement value of the damaged goods.The Demings then asked the court in their motion to dismiss United’s complaint, on the ground that United has not pled the existence of any contract properly limiting its liability under the Carmack Amendment. The motion was denied and United Van Lines will have its day in court to decide whether it is entitled to a declaratory judgment that its liability limitations were effective under the Carmack Amendment.

So How can a Carrier limit its liability in a cargo claim and still comply with Carmack?

Here’s some Carmack 101:

The Carmack Amendment “subjects a motor carrier transporting cargo in interstate commerce to absolute liability for ‘actual loss or injury to property.'” Hughes Aircraft Co. v. N. Am. Van Lines, Inc., 970 F.2d 609, 611-12 (9th Cir. 1992) (citing Missouri Pacific R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 137, 84 S. Ct. 1142, 12 L. Ed. 2d 194 (1964)); see also, 49 U.S.C. § 14706(a)(1). “[A] carrier’s maximum liability for household goods that are lost, damaged, destroyed, or otherwise not delivered to the final destination is an amount equal to the replacement value of such goods, subject to a maximum amount equal to the declared value of the shipment and to rules issued by the Surface Transportation Board and applicable tariffs.” 49 U.S.C. § 14706(f)(2).

But liability can be limited:

However, “[a] carrier . . . may petition the Board to modify, eliminate, or establish rates for the transportation of household goods under which the liability of the carrier for that property is limited to a value established by written declaration of the shipper or by a written agreement.” Id. § 14706(f)(1). But “[t]he released rates established by the Board . . . shall not apply to the transportation of household goods by a carrier unless the liability of the carrier for the full value of such household goods . . . is waived, in writing, by the shipper.” Id. § 14706(f)(3)

Here’s how a Motor Carrier can limit their liability :

“Before a carrier’s attempt to limit its liability will be effective, the carrier must:

(1) maintain a tariff in compliance with the requirements of the Interstate Commerce Commission;

(2) give the shipper a reasonable opportunity to choose between two or more levels of liability;

(3) obtain the shipper’s agreement as to his choice of carrier liability limit; and;

(4) issue a bill of lading prior to moving the shipment that reflects any such agreement.”

See Hughes, 970 F.2d at 611-12. “The carrier has the burden of proving that it has complied with these requirements.” But remember, there is no standard bill of lading reflecting compliance with the provisions of the Carmack Amendment. Each Motor Carrier has to figure this out for themselves – or with the help of a knowledgeable Transportation Attorney.

In this case the Carrier (United Van Lines) went to Federal Court asking for a declaration that its agreement complied with the law for limiting liability.

Kudos to counsel for United Van lines. A friend and colleague of mine, Attorney Julie Maurer, represents United Van Lines in this matter and I want to congratulate her for demonstrating a clever and aggressive way to protect her Motor Carrier client from a cargo claim. Nice work Julie: you’ve given us all something to learn and think about.

We here at Transportation Attorneys are happy to discuss Cargo Claims and how you can protect your trucking company against them.

The ELD Mandate Is Fast Approaching – Are You Ready for 12-18-17?

by gspencermynko

The FMCSA ELD Mandate is upon us. It requires ELDs for all interstate CMV drivers subject to logging in 49 CFR Part 395. The ELD rule:

Requires ELD use by commercial drivers who are required to prepare hours-of-service (HOS) records of duty status (RODS).
Sets ELD performance and design standards, and requires ELDs to be certified and registered with FMCSA.
Establishes what supporting documents drivers and carriers are required to keep.
Prohibits harassment of drivers based on ELD data or connected technology (such as fleet management system). The rule also provides recourse for drivers who believe they have been harassed.

Note: A CMV according to 49 CFR 390.5 weighs 10,001 lbs. or more, is placarded Hazmat, or has more than 8-15 passengers.

ELD Exemptions

Because the ELD Rule applies to drivers who have to log, there are exceptions for drivers who don’t log, and for those who don’t log very often. Drivers who use the timecard exception are not required to keep records of duty status (RODS) or use ELDs. Additionally, the following drivers are not required to use ELDs; however, they are still bound by the RODS requirements in 49 CFR 395 and must prepare logs on paper, using an Automatic On-Board Recording Device (AOBRD), or with a logging software program when required:

Drivers who use paper RODS for not more than 8 days out of every 30-day period (Intermittent Drivers).
100 air-mile radius drivers and Non-CDL 150 air-mile drivers
Drivers who conduct drive-away-tow-away operations, where the vehicle being driven is the commodity being delivered.
Drivers of vehicles manufactured before 2000.
Drivers who are required to keep RODS not more than 8 days within any 30-day period.
Drivers who conduct drive-away-tow-away operations, where the vehicle being driven is the commodity being delivered, or the vehicle being transported is a motor home or a recreation vehicle trailer with one or more sets of wheels on the surface of the roadway.
Drivers of vehicles manufactured before the model year 2000. (As reflected on the vehicle registration) – Note: this includes trucks with engines manufactured before 2000.

 

Whether a driver is exempt or whether your company can claim an exemption from the use of ELDs requires a clear understanding of the law, and a detailed analysis of your particular factual situation. For example, other issues which may determine whether your company is exempt or not includes:

Whether the operation is strictly intrastate.
Whether you are hauling recreational vehicles.
Whether you are using a rental unit.
Whether all drivers qualify for short haul logging exceptions.
Whether all drivers qualify for agricultural exemption all day.
Whether the vehicles are operated for utility service.
Whether the vehicles operated are for pipeline welding.
Oil or gas operations.
Construction operations.
Hyrail, school bus, or for-hire passenger operation.
Government versus government contracted operations.

ELD Roadside Inspections

The rule says ELDs will need to provide roadside inspectors with either an electronic display or a print out for enforcement officials. ELDs will also need to be equipped with one of two types of transfer methods to get the log data to the office or electronically.

This will include the use of telematics, such as wireless web transfer or wireless email, or local transfer via use of a USB port, or Bluetooth Technology/devices. Remember, not having an ELD installed and in use by December 18, 2017 could result in and out of service order. If you are caught without using a proper ELD device, you will have 10 hours to get compliant. You will be subject to a 10 hour out of service order, and you will have to get compliant with in that period of time if you want to keep on trucking. Also note, that despite all of the last-minute lobbying to prevent the ELD mandate from going forward, it is highly likely that the ELD mandate will proceed as scheduled. Challenges to the ELD mandate have been appealed through the courts, and the United States Supreme Court has decided not to hear any appeals on this matter. In other words, the courts have upheld Congress’ ability to set this new law in motion.

Supporting Documents

The retention of supporting documents that can be used for log auditing has been required for over 30 years, but there are use – and even what they are – was never clearly defined. Now there is an entirely new section of the rules devoted to supporting documents, including an actual definition of what they are:

Documents, in any medium, generated a received by a carrier in the normal course of business that can be used – as produced or with additional identifying information – to verify the accuracy of logs.
Limited to five types of documents.
No more than eight per day needed.
Supporting documents must be submitted within 13 days.

The biggest change from the current standards is that the list of documents is shorter, but they have to be retained in a way that allows the documents to be matched to an individual driver’s record of duty (paper or electronic log).

Harassment/Coercion

To deter companies from using ELDs to harass drivers or coerce them into doing something illegal, the ELD rule includes the following provisions:

“Harassment” is defined as the use of Yadi data in a way that knowingly result in a driver violating the HOS rules for driving while ill or fatigued.
Civil Penalties up to $14,502.00
Procedures for filing complaints
Access to ELD data.
“Mute” function on ELD system

Audits

The use of ELDs, like any system that uses and stores electronic data, makes it fairly simple for an investigator to audit the data. Because ELDs show when the driver was driving, the number of supporting documents the investigator will need is reduced. As long as the system meets ELD requirements, the investigator simply needs to request the data which allows for “automatic” auditing. The system will flag any days where the driver was operating over a limit. This makes it easier for the auditor to focus on violations.

Furthermore, any edits will immediately catch an auditor’s attention. An excessive number of audits will raise red flags to the auditor.

Also note that as of December 18, 2017, “Ghost driver” accounts will no longer be allowed (such as for road testing or maintenance movements) . All accounts will have to be assigned to a live person.

ELDs and Litigation

All motor carriers know all too well that they are targets for lawsuits, Labor board complaints, and EDD audits, to name a few. ELDs will make it very easy to determine log falsification, hours of service violation, wage and hour violations, etc.

ELD data will be easily discoverable by plaintiffs’ attorneys and the government. As such, it will be critically important for the data you record to imply and prove that you are a safe and compliant company. If your company is allowing or tolerating hours of service violations, and something terrible happens out on the road, your company could be seriously liable and seriously in trouble