FALL 2014
TRANSPORTATIONNEWSLETTER
Cover ing legal and other developments affecting those in the transpor tation industry
INSIDE THIS ISSUE NY Judge Takes a Bite Out of the Graves Amendment . . . . . . . . . . . . . . . . . Team Updates
02 . . . . . . . . . . . . . . . . 03
THE PROPOSED REGULATIONS ON SANITARY TRANSPORTATION OF FOOD: FOOD TRUCK WARS?
Why does my Dry Van Driver Need a Tank Endorsement? . . . . . . . . . . . . . . . 06 Third Circuit Rejects Attempt to Convert Carmack Preemption . . . . . . . . .
06
Trucking Company’s Termination of Alcoholic Driver Not a Violation of the Americans with Disabilities Act . . . . . . . . . . . . . . . 07
The Transportation Newsletter is available online!
To view the complete online version of the Transportation Newsletter, visit http://www.smithmoorelaw. com/TNLFall2014.
O
n February 5, 2014 the Food and Drug Administration issued its new proposed regulations for the sanitary transportation of food. These regulations would be incorporated into the 21 CFR at §1.9 et seq. The regulations begin by defining the parties to transportation of food products in a manner substantially different than transportation terms. For example, “carrier” is defined as a person who “owns, leases, or is otherwise ultimately responsible for the use of a motor vehicle… to transport food.” (Proposed §1.904). This definition abandons the well-accepted definitions of carrier in other parts of the transportation law.
Additionally, “shipper” is defined as a “person who initiates the shipment of food by motor vehicle … “ (Proposed §1.904). This also abandons the well-accepted definition of shipper and leaves open whether the regulations are intended to address brokers as shippers. Finally, a “receiver” is any person who “receives food after transportation.” (Proposed §1.904) Thus, we have abandoned well-accepted definitions of consignees. So what do the new regulations require of these vaguely defined parties? continued on page 2 >>
continued from page 1 >>
A. Section 1.906 – Vehicles and Transportation Equipment. The new regulations require equipment to be maintained in sanitary conditions and to be stored in a manner to prevent the vehicle from being contaminated in a manner which would result in food products becoming “filthy, putrid, decomposed, or otherwise fit for food, or being rendered injurious to health.” (Proposed §1.906). This phrase to describe the prohibitions is used throughout the regulation. For simplicity, the standard will hereby be denominated FPDOFF. See also Hobbes, Leviathan (1651) (nasty, brutish and short). Okay, fair enough, trailers containing food should be maintained and stored in a sanitary manner.
B. Section 1.908 – Operational Requirements. Here is where it gets interesting. As a threshold manner, all food transportation operations must be conducted to prevent food from becoming FPDOFF.There is also a requirement that all food shipments be assigned to “competent supervisory personnel.” Competence is nowhere defined in these regulations and can prove interesting. As the operational directives get more specific, the shipper is required to specify to the carrier in writing all necessary sanitary requirements. (Proposed §1.908(b)(1). Is this in the form of a bill of lading that is only seen by the driver minutes before the doors are closed? It certainly seems as though prior notice, if not in the form of a contract, at least in the form of a pre-shipment load confirmation, should be required. The shipper is not the only one providing the data. A carrier that provides a bulk
vehicle (which is also not defined as tanker under the transportation regulations) must provide data of the three previous cargoes transported in the vehicle. (Proposed §1.908(d)(4)). Also, that bulk vehicle carrier must also provide information regarding the most recent cleaning of that vehicle. This may affect the way trailer washout operations are conducted in that the requirements may be interpreted to require that even the temperature of the water used to wash out the trailer be recorded. Finally, the carrier must certify to the receiver that it has maintained the conditions of transportation (from the load confirmation) throughout the shipment. (Proposed §1.908(d)(2)). To read more about the proposed regulations for the sanitary transportation of food, visit http://www.smithmoorelaw. com/TNLFood.
SMITH MOORE LEATHERWOOD FALL 2014
TRANSPORTATION TEAM Erik Albright
Mike Bowers
Manning Connors
Greensboro, NC | 336.378.5368 erik.albright@smithmoorelaw.com
Charleston, SC | 843.300.6633 mike.bowers@smithmoorelaw.com
Greensboro, NC | 336.378.5236 manning.connors@smithmoorelaw.com
Julie Earp
STEVE FARRAR
Jay Holland
Greensboro, NC | 336.378.5256 julie.earp@smithmoorelaw.com
Greenville, SC | 864.751.7633 steve.farrar@smithmoorelaw.com
Wilmington, NC | 910.815.7165 jay.holland@smithmoorelaw.com
Rick Coughlin Greensboro, NC | 336.378.5471 rick.coughlin@smithmoorelaw.com
Fredric Marcinak
Greenville, SC | 864.751.7691 fredric.marcinak@smithmoorelaw.com
NY Judge Takes a Bite Out of the Graves Amendment A federal court in the Western District of New York recently held that a tractortrailer lessor can be held vicariously liable for the negligence of a lessee, even when that lessor is completely free of any wrongdoing. Stratton v. Wallace, 11-CV74-A HKS, 2014 WL 3809479 (W.D.N.Y. Aug. 1, 2014). In 2009, Julie Stratton (“Stratton”) hit a deer while traveling on Interstate 90 in New York. While presumably waiting for assistance in her disabled vehicle, a tractor-trailer driven by Thomas Wallace (“Wallace”) allegedly struck Stratton’s car. Stratton died as a result of the collision and, thereafter, her husband filed a lawsuit against Wallace; Wallace’s employer, Millis Transfer, Inc. (“Millis”); the owner and lessor of the truck, Great River Leasing, LLC (“Great River”); and the parent 2
| Transportation Newsletter | Fall 2014
company of both Millis and Great River, Midwest Holding Group, Inc. (“Midwest Holding”). Subsequently, the parties filed cross-motions for summary judgment regarding whether Great River is shielded from vicarious liability under the Graves Amendment, a federal statute which provides that a negligence-free lessor or rental company cannot be held responsible for the negligence of a lessee or renter.
The Graves Amendment reads as follows:
(a) In General. - An owner of a motor vehicle that rents or leases the vehicle to a person (or an affiliate of the owner) shall not be liable under the law of any State or political subdivision thereof, by reason of being the owner of the vehicle (or an affiliate of the owner), for harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the period of the rental or lease, if – (1) the owner (or an affiliate of the owner) is engaged in the trade or business of renting or leasing motor vehicles; and (2) there is no negligence or criminal wrongdoing on the part of the owner (or an affiliate of the owner). To read more about the Graves Amendment and this case, visit http:// www.smithmoorelaw.com/TNLGraves.
Kevin McCarrell
KristEn Nowacki
Greenville, SC | 864.751.7652 kevin.mccarrell@smithmoorelaw.com
Greenville, SC | 864.751.7753 kristen.nowacki@smithmoorelaw.com
Mary Ramsay
Jack Riordan
Greenville, SC | 864.751.7638 Charleston, SC | 843.300.6659 mary.ramsay@smithmoorelaw.com jack.riordan@smithmoorelaw.com
Rob Moseley
*TEAM LEADER* Greenville, SC | 864.751.7643 rob.moseley@smithmoorelaw.com
Bob Persons Atlanta, Ga | 404.962.1075 bob.persons@smithmoorelaw.com
Joseph Rohe
Kurt Rozelsky
Greenville, SC | 864.751.7668 joseph.rohe@smithmoorelaw.com
Greenville, SC | 864.751.7624 kurt.rozelsky@smithmoorelaw.com
Peter Rutledge
Marc Tucker
Heather White
Greenville, SC | 864.751.7610 peter.rutledge@smithmoorelaw.com
Raleigh, NC | 919.755.8713 marc.tucker@smithmoorelaw.com
Charlotte, NC | 704.384.2635 heather.white@smithmoorelaw.com
Smith Moore Leatherwood LLP | Attorneys at Law |
3
The Road Ahead •
Making Tracks
Rob Moseley plans to attend the Fall Meeting of the National Truck and Heavy Equipment Claims Council in Savannah the first week of October.
•
Marc Tucker will attend the meeting of the NC Trucking Association Board of Directors in October.
•
Rob will have the attendees of the Cottingham and Butler Captive meetings shaking in their shoes the week of October 13th in Dubuque and Nashville as he discusses scary developments in the law affecting motor carriers.
•
Rob will be back with Cottingham and Butler for a captive meeting on November 5th in San Antonio.
•
Marc will be attending the NC League of Transportation and Logistics meeting on November 6th at the NC Center for Global Logistics Conference Center.
•
Rob will be presenting to the 2nd Annual Motor Carrier Educational Foundation Conference in Orlando on October 17th. Rob will be carrying the ball on insurance coverage cases, CSA, and independent contractors.
•
•
•
Nov 17-18th marks the SMC3 Contract Law Seminar in Chicago. Marc and Rob will be attending. Rob will be teaching on the latest developments in integration clauses and force majeure! If that is your cup of tea, register at http://www.smc3.com/smc3/academy/workshops-tcl.htm. Enter “Moseley” in the discount box for a reduction in the registration fee. Of course, that is evidence that you know him.
•
Rob Moseley trekked off to Park City, Utah, for the TCA Refrigerated Carriers Meeting to discuss employment and contractor issues on July 9-11th.
•
Marc Tucker attended the NCTA Annual Conference as a member of the Board of Directors on July 13-16th.
•
Fredric Marcinak attended DRI Appellate Advocacy Conference in Chicago July 16-17th.
•
Jack Riordan attended the SC Defense Trial Attorneys’ Association (SCDTAA) Summer Meeting in Asheville, NC at the end of July. Jack is a Board Member of SCDTAA and past Chairman of the Trucking Substantive Law Committee.
•
Kurt Rozelsky spoke on the practical effects of CSA and limiting its use at trial at the FDCC Annual Meeting, July 28-August 1st at The Greenbrier, White Sulphur Springs, WV.
•
Rob and Fredric attended the SCTA’s Safety Training Workshop conducted by the SCTA, FMCSA and the SC State Transport Police in the firm’s Greenville office on August 13th.
Rob plans to attend the SCTA Board meeting in Columbia on December 3rd.
Jack Riordan will attend the SCDTAA Annual Meeting in Pinehurst, NC in early November.
Congratulations to the following Transportation Team Members listed in The Best Lawyers in America© 2015
•
Rob attended the annual meeting of the American College of Transportation Attorneys in Chicago on August 22nd. He is in the second year of his term as Vice Chair. He spoke on recent regulatory developments affecting truckers.
•
Kurt attended the Arkansas Trucking Seminar September 17-19th in Fayetteville, AR.
•
TCA just couldn’t get enough of Rob, as he presented on independent contractor issues at the Independent Contractor/Open Deck Meetings in Chicago, September 4-5th.
•
Rob spoke on issues arising from federal and state motor carrier filings at the Progressive Commercial Lines meeting in Cleveland on September 10th.
•
Jack was selected as part of Greenville Business Magazine’s 2014 Legal Elite for Criminal Defense. Peter Rutledge was named Greenville Business Magazine’s 2014 Legal Elite in Labor & Employment Law.
The Transportation Team is pleased to announce that the following team members have been selected by their peers for inclusion in The Best Lawyers in America© 2015, the oldest and most respected peer-review publication in the legal profession (Copyright 2013 by Woodward/White, Inc., of Aiken, SC): •
•
•
4
Erik Albright, Greensboro, NC Commercial Litigation, Personal Injury Litigation (Defendants)
•
Mike Bowers, Charleston, SC Commercial Litigation Rick Coughlin, Greensboro, NC Litigation, Personal Injury Litigation (Defendants)
| Transportation Newsletter | Fall 2014
•
Steve Farrar, Greenville, SC Bet-the-Company Litigation, Commercial Litigation, Legal Malpractice Law (Defendants), Construction Litigation, Professional Malpractice Law (Defendants) Julie Earp, Greensboro, NC Employment Law (Management), Labor and Employment Litigation
•
Rob Moseley, Greenville, SC Insurance Law, Personal Injury Litigation (Defendants)
CSA Website Enhancements The Federal Motor Carrier Safety Administration (FMCSA)
•
•
Jack Riordan, Greenville, SC Personal Injury Litigation (Defendants)
has recently updated the CSA website to include a reference to any fines a motor carrier has paid over the previous six years, among other changes. To view a recording of the FMCSA webinar explaining other changes to the site, visit
Kurt M. Rozelsky, Greenville, SC Personal Injury Litigation (Defendants), Product Liability Litigation (Defendants)
https://connectdot.connectsolutions.com/p3bulktil1s. Visit https://csa.fmcsa.dot.gov/ to view the updated website.
Be sure to join our LinkedIn CMV Towing Law Group We invite our readers to join our members-only “Commercial Motor Vehicle (CMV) Towing Law” LinkedIn Group. The CMV Towing Law Group is for transportation professionals and attorneys to discuss towing laws and issues, and to keep abreast of the latest developments. Smith Moore Leatherwood LLP | Attorneys at Law |
5
Why does my dry van driver need a tank endorsement?
B
ecause “tank vehicle” is being interpreted to include any commercial vehicle transporting tanks with a rated capacity of 119 gallons or more and an aggregate capacity of more than 1,000 gallons. Specifically, 49 C.F.R. part 383.5 defines “tank vehicle” as “any commercial motor vehicle that is designed to transport any liquid or gaseous materials within a tank or tanks having an individual rated capacity of more than 119 gallons and an aggregate rated capacity of 1,000 gallons or more that is either permanently or temporarily attached to the vehicle or the chassis.” Common sense might dictate that the language “permanently or temporarily attached to the vehicle or the chassis” would exempt dry van drivers transporting cargo containing tanks larger than 119 gallons; however, FMCSA has ruled that tanks blocked or braced with other cargo are included in the definition, interpreting part 383.5 to include portable tanks and intermediate or intermodal bulk containers
(IBCs), which represent a rapidly growing market. To this end, a Notice of Proposed Rulemaking (NOPR) was filed last fall that would clarify the definition, providing that “tank vehicle”: (1) Means any commercial motor vehicle transporting, or designed to transport, any liquid or gaseous material within: (i) A tank that is either permanently or temporarily attached or secured to the vehicle or chassis and has a rated capacity of 1,000 gallons or more; or (ii) Multiple tanks either permanently or temporarily attached or secured, when the aggregate rated capacity of those tanks is 1,000 gallons or more, as determined by adding the capacity of each individual tank with a capacity of more than 119 gallons. This NOPR was prompted by a Petition for Rulemaking filed by the American Trucking Association (ATA). Several of the
issues raised by the petition included the applicability to IBCs, the transportation of IBCs manifested as empty or residue, and the transportation of empty storage tanks on flatbed vehicles. To read more about tank vehicles and the NOPR, visit http://www.smithmoorelaw. com/TNLTank.
Third Circuit Rejects Attempt to CONVERT Carmack Preemption shipments were lost or stolen by UPS or its employees during an eight-week period in early 2012. The missing goods were allegedly worth approximately $150,000.
T
he courts have long held that the Carmack Amendment, 49 U.S.C. § 14706, preempts all claims for loss, damage, or destruction to freight shipped through interstate commerce. The breadth of that preemption was reemphasized in the recent case of Certain Underwriters at Interest at Lloyd’s of London vs. United Parcel 6
| Transportation Newsletter | Fall 2014
Service of America, Inc., --- F.3d ---, 2014 WL 3906951 (3rd Cir. Aug. 12, 2014). In this case, the shipper, First State Depository LLC, shipped multiple loads of coins and special metals with United Parcel Service of America, Inc. (“UPS”). It was alleged in the case that 27 of the
Lloyd’s, as subrogee of First State, filed suit against UPS in Federal Court, alleging claims for breach of contract, negligence, negligent supervision, and conversion. The conversion claim was based on the allegation that UPS or its employees stole the goods. The District Court dismissed Lloyd’s claims, holding that they were preempted by the Carmack Amendment. On appeal, Lloyd’s contended that its conversion claim was not preempted by
the Carmack Amendment based on an exception to the Carmack Amendment’s normal broad preemption scope for “true conversion.” The Third Circuit Court of Appeals rejected this argument. After reviewing the Carmack Amendment’s history, purpose, and longstanding case law interpreting the “Amendments preemptive force as exceedingly broad— broad enough to embrace all losses resulting from any failure to discharge a carrier’s duty as to any part of the agreed transportation.” (citing Georgia, Florida and Alabama Railway v. Blish Milling Co., 241 U.S. 190, 196 (1916)), the Court held that conversion claims are preempted by the Carmack Amendment. In so holding, the Court noted that this is “the only result that is consistent with the Amendment’s goal of uniformity in its broad, preemptive terms.” In addressing Lloyd’s argument, the Court noted that past cases hold that there is an exception to a carrier’s ability to limit its liability under the Carmack Amendment where its actions involve “intentional destruction or conduct in the nature of theft.” (citing American Cyanamid Co. v. New Penn Motor Express, Inc., 979 F.2d 310, 315-316 (3rd Cir 1992)). The Court also noted that in applying this exception some courts have exhibited some confusion as to what it is an exception to: the preemptive scope of the Carmack Amendment, or the Amendment’s liability limiting provisions. While many courts have concluded that the true conversion exception merely overcomes any limits on liability, others have held that a claim for true conversion under state law survives Carmack Amendment preemption.
TRUCKING COMPANY’S TERMINATION OF ALCOHOLIC DRIVER NOT A VIOLATION OF THE AMERICANS WITH DISABILITIES ACT
I
n most instances, certainly after the 2008 amendments to the Americans With Disabilities Act, a current diagnosis of alcoholism constitutes a “disability” under the Act. Employers who become aware that an employee is dependent on alcohol should tread carefully to avoid discriminating against the employee because of the alcoholism, and it is possible that reasonable accommodations are required. Recently, however, the Eleventh Circuit Court of Appeals issued an opinion that points up an important aspect of the Act—that only one who is a qualified individual with a disability is protected from discrimination. In the trucking industry, because Department of Transportation Regulations mandate that a person is not qualified to drive a commercial motor vehicle if he has a “current clinical diagnosis of alcoholism,” alcoholic truck drivers may not be qualified individuals with disabilities. 49 C.F.R. § 391.41(b)(4). In Jarvela v. Crete Carrier Corp., 754 F.3d 1283, 1287 (11th Cir. 2014), the Court considered whether the termination of a driver who sought reinstatement immediately after completing outpatient
treatment for alcoholism violated the Act. Crete employed Jarvela as a commercial truck driver from around November 2003 until April 2010. Jarvela developed a problem with alcohol abuse. In March 2010 he sought treatment. His personal physician diagnosed him as suffering from alcoholism and referred him to an intensive outpatient treatment program. Jarvela then notified Crete of his need for FMLA leave, and Crete approved leave from March 18, 2010, until June 6, 2010. Jarvela completed his treatment program on April 20, 2010, and immediately sought to return to work—a month and a half after his original diagnosis of alcoholism. But Crete’s vice president for safety decided that Jarvela no longer met the qualifications to be a commercial truck driver for Crete. Crete then terminated Jarvela’s employment. Crete has a policy that prohibits it from employing anyone who has had a diagnosis of alcoholism within the past five years. Crete maintains that this safety-based rule is a business necessity. Jarvela asserted that he was a “qualified individual” under the ADA. Crete rebutted this contention, instead arguing that Jarvela was not a qualified individual under the ADA because he was not qualified to be a commercial truck driver for Crete under either DOT regulations or Crete’s company policy. Jarvela v. Crete Carrier Corp., 754 F.3d 1283, 1286 (11th Cir. 2014). To read more about the case, visit http:// www.smithmoorelaw.com/TNLADA.
To read more on this case, visit http:// www.smithmoorelaw.com/TNLCarmack.
Smith Moore Leatherwood LLP | Attorneys at Law |
7
TRANSPORTATION INDUSTRY TEAM We represent both large and small trucking companies as insureds on behalf of numerous national insurance companies and as self-insureds. In addition, the firm has served for many years as outside General Counsel for a nationally recognized commercial vehicle insurer and is experienced in all aspects of transportation law including issues involving federal and state statutes and regulations promulgated by the former Interstate Commerce Commission (ICC), the successor Surface Transportation Board, the Department of Transportation and the Public Service Commission. As part of the array of transportation services provided to firm clients, an after-hours emergency response team is standing by to service clients with urgent needs following a catastrophic accident.
GEORGIA | NORTH CAROLINA | SOUTH CAROLINA Smith Moore Leatherwood LLP | Attorneys at Law | www.smithmoorelaw.com
T: (864) 751-7600 F: (864) 751-7800 www.smithmoorelaw.com Attorneys at Law 2 West Washington Street, Suite 1100 Greenville, SC 29601
Smith Moore Leatherwood LLP