SPRING 2014
TRANSPORTATIONNEWSLETTER
Cover ing legal and other developments affecting those in the transpor tation industry
INSIDE THIS ISSUE When An Apple Is An Orange: A Forklift Is Deemed To Be A Motor Vehicle For Purposes Of Uninsured Motorist Coverage
02
Team Updates
03
Court Expands Right To Pursue Recovery Of Freight Charges From The Government
06
FMCSA Extends Paper Medical Examiner’s Certificate Requirement — Again
06
Protect Your Corporation’s Liability Shield By Maintaining Corporate Formalities
07
We are moving our newsletter online!
Future issues of this newsletter will be sent in electronic format unless you opt-in to receive a hardcopy by mail. We would greatly appreciate you visiting http://survey.smithmoorelaw. com/n/TNLVersion.aspx to indicate your preference and/or to update your email address.
NATIONAL CDL DRUG AND ALCOHOL CLEARINGHOUSE On February 12, 2014 the FMCSA announced a proposed rule to establish a national drug and alcohol clearinghouse for all commercial drivers as mandated by the Moving Ahead for Progress in the 21st Century Act (“MAP-21”). The proposed rule, published in the Federal Register on February 20, would amend 49 C.F.R. part 382 to create a national database for controlled substance and alcohol test result information for CDL holders and establish guidelines for reporting, accessing, maintaining, updating, removing and releasing information from the database. The rule will apply to persons and employers operating CMVs in commerce in the United States that are subject to the CDL requirements of 49 C.F.R. part 383 or the equivalent CDL requirements for Canadian and Mexican drivers. Moreover, motor carriers employing owner-operators would be required to treat those drivers as employees for the purposes of querying and reporting information to the database. Though mandated by MAP-21, the request for this type of nationally-accessible clearinghouse was made as early as 2001 by NTSB following the New Orleans Bus Crash investigation. Therein, an impaired driver managed to find his way behind the wheel of a CMV despite the fact that he had previously failed drug tests during a former employment. Twenty-two (22) people lost their lives as a result. The proposed rule is intended to continued on page 2 >>
continued from page 1 >>
prevent such an occurrence as, according to FMCSA, employers do not currently have the necessary tools to identify CDL holders with adverse drug and alcohol histories as the current rule depends upon driver transparency and honesty. The rule would significantly diminish or eliminate the problem of a driver
failing to inform a prospective employer about a past positive test result, whether occurring while employed or during a preemployment screening process. In such a situation, a driver could simply wait out the period required for the drugs or alcohol to leave his or her system and apply for employment without the employer having
any knowledge of the prior failed test result. To read more about the two major provisions of the proposed rule and how it would affect commercial drivers, visit: http:// www.smithmoorelaw.com/TNLClearing.
WHEN AN APPLE IS AN ORANGE: A FORKLIFT IS DEEMED TO BE A MOTOR VEHICLE FOR PURPOSES OF UNINSURED MOTORIST COVERAGE Boyett v. Redland Ins. Co., 741 F.3d 604 (5th Cir. Jan. 27, 2014)
A
forklift is a motor vehicle for purposes of Louisiana underinsured motorist (“UM”) coverage according to the United States Court of Appeals for the Fifth Circuit. In the recent case of Boyett v. Redland Ins. Co., 741 F.3d 604 (5th Cir. 2014), the Fifth Circuit ruled that a forklift meets the Louisiana statutory definition of motor vehicle and, as such, under Louisiana law, is subject to that state’s inclusion of UM coverage in auto liability policies absent an express waiver. The plaintiff, Clyde Boyett (“Boyett”), was employed by Boeuf River Ventures (“Boeuf River”) as a truck driver. Id. at 605. Boeuf River maintained insurance on its tractor-trailers under a commercial lines policy that provided “auto” liability
coverage through the defendant, Redland Insurance Co. (“Redland”). Id. “Louisiana statutory law provides for UM coverage for the purpose of providing full recovery for automobile accident victims who suffer damages caused by a tortfeasor who is not covered by adequate liability insurance. Thus, UM coverage will be read into any automobile liability policy unless validly rejected.” Id. at 608 (internal citations omitted). The Redland policy contained no provision relating to UM coverage and there was no waiver, by Boeuf River, of UM coverage. Id. at 605. The underlying accident occurred when Boyett was hauling a load of lumber for delivery to Carolina Lumber & Brick, Ltd. in North Carolina. Id. at 605. During
unloading, an employee of Carolina Lumber used a forklift to unload the lumber when some of the lumber fell, striking and severely injuring Boyett. Id. As a result of this accident, Boyett underwent surgery and the lower portion of his right leg was amputated. Id. Boyett, and his wife, filed suit against Redland in the United States District Court for the Western District of Louisiana alleging that the forklift was an uninsured motor vehicle under Louisiana law and that Boyett was entitled to statutory UM benefits under the Redland’s auto policy. Id. at 605-06. The district court dismissed Boyett’s claim concluding that, although the Louisiana UM statute applied to the subject accident, the forklift did not meet the statutory definition of a motor vehicle. Id. Boyett timely appealed the district court’s decision to the Fifth Circuit. Id. To read more about the case and its implications for jurisdictions with mandatory UM coverage, visit: http://www.smithmoorelaw.com/ TNLForklift.
2
| Transportation Newsletter | Spring 2014
SMITH MOORE LEATHERWOOD SPRING 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
RICK COUGHLIN Greensboro, NC | 336.378.5471 rick.coughlin@smithmoorelaw.com
JULIE EARP Greensboro, NC | 336.378.5256 julie.earp@smithmoorelaw.com
JAY HOLLAND Wilmington, NC | 910.815.7165 jay.holland@smithmoorelaw.com
FREDRIC MARCINAK
KEVIN MCCARRELL
KRISTEN NOWACKI
Greenville, SC | 864.751.7691 fredric.marcinak@smithmoorelaw.com
Greenville, SC | 864.751.7652 kevin.mccarrell@smithmoorelaw.com
Greenville, SC | 864.751.7753 kristen.nowacki@smithmoorelaw.com
BOB PERSONS Atlanta, Ga | 404.962.1075 bob.persons@smithmoorelaw.com
ROB MOSELEY
*TEAM LEADER* Greenville, SC | 864.751.7643 rob.moseley@smithmoorelaw.com
JACK RIORDAN
JOSEPH ROHE
Greenville, SC | 864.751.7638 jack.riordan@smithmoorelaw.com
Greenville, SC | 864.751.7668 joseph.rohe@smithmoorelaw.com
KURT ROZELSKY
PETER RUTLEDGE
MARC TUCKER
Greenville, SC | 864.751.7624 kurt.rozelsky@smithmoorelaw.com
Greenville, SC | 864.751.7610 peter.rutledge@smithmoorelaw.com
Raleigh, NC | 919.755.8713 marc.tucker@smithmoorelaw.com
Smith Moore Leatherwood LLP | Attorneys at Law |
3
The Road Ahead
The Transportation Intermediaries Association Meeting will take place in Tucson, Arizona on April 9th-12th. Rob will be speaking on a panel related to Broker Liability. •
•
Rob will be presenting another in the series of SMC3 Transportation Contract Law Workshop meetings in Peachtree City, GA, April 22nd-23rd. See http://www.smc3. com/ smc3/academy/courses-contractlaw.htm to register. Type “Moseley” in the discount box for a price break. Fredric and Rob will be attending the Transportation Lawyers Association meeting in St. Petersburg, FL, April 30th-May 3rd. Rob is leading the Freight Claims Committee. Fredric is speaking on Freight Claims as part of the general session. This is not the first time someone chose Fredric over Rob.
•
The SC Trucking Association is putting together a Trucking Law Meeting May 9th in Columbia, SC. Rob has been asked (or so he says) to present on legal issues relating to brokerage operations.
•
Several members of the Transportation Team will be at the Truckload Carriers Association Safety Meeting in St. Louis, MO, May 18th-20th. The group will be taking part in a Mock Trial along with Roberts Perryman.
Tucson, Arizona
•
Rob will present on CSA and other issues at the Savannah Chapter of the GMTA Safety Council on June 5th.
•
Rob will attend the Annual Conference and Meeting of the Board of Directors of the SCTA June 5th-8th at Hilton Head, SC.
•
Hilton Head will also be the site of the Georgia Motor Truck Association June 15th-17th, where Rob will be speaking on the hot issues facing trucking management.
•
Marc and Kurt will be in Las Vegas, NV, June 19th and 20th for the DRI Trucking Law seminar. Kurt will be presenting on Rehabilitating Witnesses After Deposition Disasters. If you see Marc, be sure to wish him a Happy Birthday. If you see Kurt, well, you’re on your own there.
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. 4
| Transportation Newsletter | Spring 2014
Making Tracks •
Rob Moseley, Fredric Marcinak, and Freight Knob Kristen Nowacki attended the TLA Chicago, IL Regional meeting, January 17th-18th (for the unversed, a knob is a freshman at The Citadel, although be assured that Kristen has rebuffed any attempts at hazing). Rob wowed the audience with his interpretation of recent developments on Freight Claims.
•
Rob attended the meeting of the ATRI Research Advisory Committee in Atlanta, Ga, March 4th-5th. His ideas for new research projects are generally filed in the comic relief category.
•
Marc was a member of a panel discussion on “Disaster Planning Panel: What You Can do to Save your Company – from an Environmental, Legal and Insurance Perspective” at the North Carolina Petroleum & Convenience Marketers Southeast Petro-Food Marketing Expo, Myrtle Beach, SC, March 5th.
•
Rob presented a Transportation Contract Law Workshop at the SMC3’s Jump Start Conference, held in Atlanta, Ga, on January 20th-22nd.
•
Rob participated in a panel at the Piedmont Triad Transportation Association’s Winter Workshop, in Greensboro, NC, on January 23rd.
•
Rob attended the TIDA Cargo Claims Workshop in Phoenix on March 19th. Rob led discussions on COGSA v. Carmack and material deviation claims.
Fredric Marcinak and Rob attended the Conference of Freight Counsel meeting in San Francisco, CA, January 27th28th.
•
On February 4th, Rob spoke on CSA and other developments at the Lipscomb & Pitts Client Lunch and Learn, Memphis, TN.
Kurt and Rob presented on the perils of CSA at the Georgia Motor Truck Association Safety Meeting in Atlanta on March 27th. This was a dinner meeting, but CSA leaves most trucking folks without an appetite.
•
The SC Timber Producers Association agreed to house and feed the entire Moseley clan at its Annual Meeting in Myrtle Beach, SC, February 7th-9th. In exchange, Rob presented to the group on the issues facing those involved in transporting logs. Sound like SCTPA came out on the short end of that deal.
March 31st marked another Truckpac Golf Tournament in Myrtle Beach. After Rob was banned from the prior host course, the event was moved to a Pete Dye course at Barefoot Landing. With yet another ban imminent, the group is scouting for other options, such as the “Play all day for $7.00 prior to 6 PM” miniature golf location nearby.
•
Jack Riordan, Peter Rutledge, Kristen Nowacki, and Rob attended the 2014 edition of Truckfest, presented by the SCTA in Columbia, April 4th & 5th, 2014. The group met with Legislators, Law Enforcement and Motor Carriers before being asked to leave. As it turns out, Peter thought he was attending “Merlefest” (yes, this is a real thing, see www. merlefest.org) and got a little too excited about the program for the comfort of security.
•
•
•
•
On February 12th-13th, Rob attended the 2014 BB&T Capital Markets 29th Annual Transportation Conference, Miami FL, where most of the publicly traded transportation companies were present to discuss their business plans.
•
Steve Farrar and Kurt Rozelsky attended the Federation of Defense and Corporate Counsel Winter Meeting in Marco Island, FL, March 2nd-7th. Kurt led the Transportation Law Section, while Steve presided over numerous meetings as Secretary/Treasurer of the FDCC.
Smith Moore Leatherwood LLP | Attorneys at Law |
5
COURT EXPANDS RIGHT TO PURSUE RECOVERY OF FREIGHT CHARGES FROM THE GOVERNMENT
S
ince deregulation, the trucking world has seen an explosion in the number of brokers and other intermediaries involved in the movement of freight. Nearly all motor carriers now receive a large volume of freight from brokers, and, in fact, shippers often require carriers to book shipments through brokers or to run freight bills through third parties for payment. One result is that carriers extend credit to brokers who have uncertain cash flows and few assets. MAP 21 helped by increasing the bond that brokers must obtain to receive federal authority. But frequently carriers continue to face instances of non-payment of freight charges by brokers. When this occurs, carriers usually look to the shipper or beneficial owner of the freight for payment of freight charges, relying on the principles set forth in 49 U.S.C. § 13706
and in cases such as Oak Harbor Freight Lines, Inc. v. Sears Roebuck & Co., 513 F.3d 949 (9th Cir. 2008). However, where the United States Government is the shipper, recovery has typically been more difficult to obtain. A new decision from the United States Court of Appeals for the Federal Circuit may change that. During 2008 and 2009, Estes Express Lines (“Estes”), transported freight for the Marine Corps Community Services (“MCCS”), a non-appropriated funds agency of the federal government. Many of MCCS’ shipments were arranged on behalf of MCCS by a freight broker, Salem Logistics (“Salem”). Estes and Salem did not have a written contract, and Estes handled all shipments under its tariff. Salem arranged the shipments pursuant to a contract with MCCS (“the Shipper-Broker contract”). Under this contract, Salem agreed to provide MCCS with certain transportation and freight management services, including coordinating the pick-up, transport and delivery of vendor products to various MCCS or Marine Corps Exchange (“MCX”) locations around the country.
Specifically, upon being contacted by a vendor who received an order from MCCS or MCX, Salem would select a carrier to move the merchandise from the vendor to the MCCS/MCX destination (in other words, inbound shipments). The contract provided that Salem would pay the carriers directly and then invoice MCCS. Salem further agreed not to represent itself as an agent or representative of MCCS. As is common with LTL carriers, each shipment handled by Estes was identified by a bill of lading, a freight bill, and a delivery receipt. All bills of lading listed a MCCS or MCX destination as the “consignee,” and most bills of lading identified the third party vendor (not MCCS) as the “shipper.” In some instances, goods were moved from a Navy Exchange location to an MCX location, or from one MCX location to another, in which case a government entity was listed as the “shipper.” To read more about the new decision and the subsequent impact on freight carriers, visit: http://www.smithmoorelaw.com/ TNLRecovery.
FMCSA EXTENDS PAPER MEDICAL EXAMINER’S CERTIFICATE REQUIREMENT — AGAIN
I
n 2008, the Federal Motor Carrier Safety Administration (“FMCSA”) promulgated a rule that was intended to improve compliance with the requirement that certain commercial driver’s license (“CDL”) holders obtain medical certification and to prevent fraud related to the medical certification process. First, the rule requires that a CDL holder selfcertify to his or her State Driver Licensing Agency (“SDLA”) that he or she engages in one of four types of commercial motor vehicle operation: non-excepted interstate, excepted interstate, excepted intrastate, and non-excepted intrastate. 49 C.F.R. § 383.71(b)(1), (g). A driver operating in non-excepted interstate commerce must
6
| Transportation Newsletter | Spring 2014
additionally provide his or her medical examiner’s certificate to the issuing SDLA. Id. at § 383.71(h). The SDLA, in turn, is required to post the driver’s selfcertification type and the information from the medical examiner’s certificate to the driver’s record contained in an online database which merges stateissued driver’s license records with the medical certification information—the Commercial Driver’s License Information System (“CDLIS”). Id. at § 383.73(o). This information must include data such as the medical examiner’s name, telephone number, and license/ certificate number; the date of the issuance of the medical certificate; the expiration date of the certificate; whether a medical variance on the certificate exists; and the medical certification status. Id. The rule required states to implement the new system by January 30, 2012; however, several SDLAs notified the FMCSA prior to that date that the agencies would not ready in time. Summary of Medical Certification Requirements as Part of the Commercial Driver’s License (CDL); Extension of Certificate Retention Requirements, 76 Fed. Reg. 70661, 70662 (Nov. 15, 2011) (amending 49 C.F.R. § 391). In response, the FMCSA issued a rule requiring CDL holders to continue to carry the paper copy of the medical examiner’s certificate with him or her until January 30, 2014. Id. In addition, motor carriers were required to retain a copy of the certificate in the driver qualification file. Id. The FMCSA did not, however, change the January 30, 2012 compliance date requiring SDLAs to begin collecting and posting information to the CDLIS. Id. To read more about the rule and its requirements for CDL holders, visit: http:// www.smithmoorelaw.com/TNLMedical.
PROTECT YOUR CORPORATION’S LIABILITY SHIELD BY MAINTAINING CORPORATE FORMALITIES
I
t is a fundamental principle of corporate law in the United States that a shareholder ordinarily is not liable for the acts of the corporation or its employees, officers, and directors. However, courts will disregard the corporate form and hold shareholders liable for the acts of the corporation when the corporate form has been abused or used for wrongful purposes. This is known as “piercing the corporate veil.” When the corporate veil is pierced, the corporation and its shareholders are treated as the same person. This same concept has been applied by courts to hold a parent corporation liable for the acts of a subsidiary corporation and to hold one corporation liable for the acts of a sister corporation (i.e., a corporation under common ownership with the first corporation). The good news is that these outcomes may be avoided by ensuring that the corporation and its owners maintain the corporate formalities required by law and that the operations and transactions of the corporation are kept completely separate from the personal affairs of the individual shareholders. “Corporate formalities” refer to the corporate actions and other steps that shareholders, directors, and officers must take in order to enjoy the corporate liability shield provided by each state’s corporate laws. The requirements for corporate formalities vary from state to state, but the following list contains general guidelines that should be followed in all instances. •
Shareholders’ Meetings – The shareholders of the corporation should meet at least once each year (or act by written consent in lieu
•
of a meeting) to elect the board of directors for the coming fiscal year. The secretary of the corporation should take minutes of the meeting and include them in the corporation’s minute book. Board Meetings – The corporation’s board of directors should meet regularly to discuss the business of the corporation and to vote on major decisions of the corporation. At a minimum, the board of directors must meet once a year (or act by written consent in lieu of a meeting) to elect officers of the corporation for the coming fiscal year. All major decisions of the corporation (e.g., stock issuances, dividends, loans, leases, purchases of real property, etc.) should be adopted in a board resolution in accordance with the procedure set forth in the bylaws of the corporation. Minutes should be recorded for all meetings of the directors and included in the corporation’s minute book.
To read the full list of general guidelines that should be followed in all instances of corporate formalities, visit: http://www. smithmoorelaw.com/TNLProtect.
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