Transportation Newsletter - Winter 2014

WINTER 2014

TRANSPORTATIONNEWSLETTER

Cover ing legal and other developments affecting those in the transpor tation industry INSIDE THIS ISSUE The Elephants in the Room: Are a Third of Employees Disabled?

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Team Updates

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CSA 2014 Text Message Sender Liability

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Large Trucking Companies (and Yes,You Might Be One) Have Options Available Under the Employer Mandate

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Rethinking Your Risk Management Strategy: Is Your Tariff Enforceable?

We have long recommended that every motor carrier publish a tariff as a tool for managing its risk in handling freight for diverse and often unknown shippers and third party logistics providers. However, the recent decision of the United States Court of Appeals for the Fourth Circuit in ABB, Inc. v. CSX Transportation, Inc., 721 F.3d 135 (4th Cir. 2013), emphasizes that a carrier must not only maintain a tariff, it must ensure that it is incorporated into the relevant shipping contract.

In ABB, rail carrier CSX was hired by shipper ABB to transport an electrical transformer worth approximately $1.3 million via rail from St. Louis to Pittsburgh. The transformer was allegedly damaged in transit and ABB filed a claim for $550,000 against CSX. ABB had drafted the bill of lading, which provided that the shipper was “familiar with all the terms and conditions . . . set forth in the classification or tariff which governs the transportation of this shipment, and the said terms and conditions are hereby agreed to by the shipper.”

There was no real dispute that CSX maintained a tariff in the form of a price list that included terms and conditions limiting its liability for the damage to ABB’s transformer to $25,000 and also options for the shipper to request a higher level of liability. However, ABB claimed that it had no knowledge of the price list, that it did not see the price list on CSX’s website when it looked for it there, and that it would not have agreed to the continued on page 2 >>

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limitation of liability if it had known about it.

Of course, ABB had not requested a higher level of liability or paid the higher freight rates associated with such a request. The case, then, presented the classic case of a shipper benefiting from low freight rates but seeking to avoid the corresponding limitation of liability after a cargo loss has occurred.

The ABB case should have been an easy decision for the Fourth Circuit. CSX

maintained a tariff that effectively limited its liability for the freight loss, and the tariff was incorporated into the applicable contract: the bill of lading. Under well established legal principles, this should have been enough to make the tariff’s terms enforceable, regardless of whether ABB had actual knowledge of them. See, e.g., Sassy Doll Creations, Inc. v. Watkins Motor Lines, Inc., 331 F.3d 834 (11th Cir. 2003); Gulf Rice Ark., LLC v. Union Pac. R.R. Co., 376 F. Supp. 2d 715, 722 (S.D. Tex.

2005); EFS National Bank v. Averitt Express, Inc., 164 F.Supp.2d 994 (W.D. Tenn. 2001).

This is especially true where, as in ABB, the shipper itself drafts the bill of lading and includes terms that incorporate the carrier’s tariff. Siren, Inc. v. Estes Express Lines, 249 F.3d 1268, 1274 (11th Cir. 2001).

To read more about the need for carriers to enhance their risk management strategy going forward, visit: http://www. smithmoorelaw.com/TNLRethinking.

THE ELEPHANTS IN THE ROOM: ARE A THIRD OF EMPLOYEES DISABLED?

Title I of the ADA provides that employers 2

| Transportation Newsletter | Winter 2014

may not discriminate against any “qualified individual with a disability” in regard to any term or condition of employment. Unlike Title VII’s prohibition of race discrimination, the ADA goes further than the requirement of nondiscrimination. The ADA requires affirmative action by employers in the form of “reasonable accommodations.”

limiting impairment or being regarded as having a substantially limiting impairment, the ADA protects anyone who is perceived as disabled. 42 U.S.C. § 12102(2).

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ime Magazine’s November 18, 2013 cover entitled The Elephant in the Room depicting a shadow of Governor Chris Christie drew sharp criticism as biased and insensitive toward obesity.

Despite Executive Editor Michael Duffy’s somewhat coy explanation that Christie is indeed a “big Republican,” both as a political figure and physically, the New Jersey governor has received consistent criticism for his weight which has sparked a dialogue about whether obesity has become “normal,” even for those in the limelight. Governor Christie is not very different from one third of Americans, according to Centers for Disease Control and Prevention statistics showing that almost 36 percent of American adults are obese. In June 2013, the American Medical Association House of Delegates reclassified obesity as “a disease state.” As a result, employers now face increased challenges dealing with the potential that a third of all employees are disabled for purposes of the Americans with Disabilities Act. Moreover, because the ADA also protects employees who are merely “perceived as” disabled, biases against obese people are more dangerous than ever.

The Equal Employment Opportunity’s position has always permitted claims based on obesity, under certain circumstances.

The commission’s regulations state that, while body weight within a “normal” range is not generally considered an impairment, body weight that falls outside a normal range, whether above or below, or body weight that is the result of a physiological disorder (such as a thyroid condition) can be an impairment under the law. 29 C.F.R. Pt. 1630, App. § 1630.2(h). Although the EEOC has not issued much formal guidance on this issue, Section 902.2(c)(5) of its Compliance Manual states that while being overweight is not an impairment by itself, “severe obesity, which has been defined as body weight more than 100 percent over the norm, is clearly an impairment.”

Under the ADA, an employer is required to make reasonable accommodations if these accommodations will enable a qualified individual with a disability to successfully perform the job in question.

Additionally, because the term “disability” also includes a record of a substantially

To read more about ADA and EEOC regulations for employers, and ways motor carriers can protect themselves against the onslaught of disability claims, visit: http://www.smithmoorelaw.com/ TNLTheElephants

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...because the term “disability” also includes a record of a substantially limiting impairment or being regarded as having a substantially limiting impairment, the ADA protects anyone who is perceived as disabled.

WISHING YOU AND YOUR FAMILIES A SAFE, HAPPY, AND PROSPEROUS 2014 From your Smith Moore Leatherwood Transportation Team

ERIK ALBRIGHT

JON BERKELHAMMER

MIKE BOWERS

MANNING CONNORS

Greensboro, NC | 336.378.5368 erik.albright@smithmoorelaw.com

Greenville, SC | 336.378.5251* jon.berkelhammer@smithmoorelaw.com

Charleston, SC | 843.300.6633 mike.bowers@smithmoorelaw.com

Greensboro, NC | 336.378.5236 manning.connors@smithmoorelaw.com

RICK COUGHLIN

JULIE EARP

Greensboro, NC | 336.378.5471 rick.coughlin@smithmoorelaw.com

FREDRIC MARCINAK

Greenville, SC | 864.751.7691* fredric.marcinak@smithmoorelaw.com

Greensboro, NC | 336.378.5256 julie.earp@smithmoorelaw.com

TRACY MARION

Atlanta, Ga | 404.962.1046 tracy.marion@smithmoorelaw.com

ROB MOSELEY

BOB PERSONS

*TEAM LEADER* Atlanta, Ga | 404.962.1075 Greenville, SC | 864.751.7643* bob.persons@smithmoorelaw.com rob.moseley@smithmoorelaw.com

KURT ROZELSKY

Greenville, SC | 864.751.7624* kurt.rozelsky@smithmoorelaw.com

STEVE FARRAR

JAY HOLLAND

Greenville, SC | 864.751.7633* steve.farrar@smithmoorelaw.com

KEVIN MCCARRELL

Greenville, SC | 864.751.7652* kevin.mccarrell@smithmoorelaw.com

Wilmington, NC | 910.815.7165 jay.holland@smithmoorelaw.com

JACK RIORDAN

Greenville, SC | 864.751.7638* jack.riordan@smithmoorelaw.com

PETER RUTLEDGE

Greenville, SC | 864.751.7610* peter.rutledge@smithmoorelaw.com

KRISTEN NOWACKI

Greenville, SC | 864.751.7753* kristen.nowacki@smithmoorelaw.com

MARC TUCKER

JOSEPH ROHE

Greenville, SC | 864.751.7668* joseph.rohe@smithmoorelaw.com

* New Greenville Number

Raleigh, NC | 919.755.8713 marc.tucker@smithmoorelaw.com

Smith Moore Leatherwood LLP | Attorneys at Law |

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The Road Ahead TLA Chicago, IL Regional meeting, January 17-18th: Rob Moseley, Fredric Marcinak, and Freight Rookie Kristen Nowacki will be attending. Rob will be speaking on recent developments on Freight Claims.

SMC3’s Jump Start Conference, Atlanta, Ga, January 20-22nd: Rob will be presenting a Transportation Contract Law Workshop as part of this meeting.

See http://www.smc3jumpstart.com/agenda.htm to register.

Piedmont Triad Transportation Association’s Winter Workshop, Greensboro, NC, January 23rd: Rob will be presenting on “Current Trends in the Trucking Industry.”

Conference of Freight Counsel (lovingly referred to as “Freight Geeks”) San Francisco, CA, January 27-28th: Fredric Marcinak and Rob Moseley will be attending. San Francisco and Marcinak/ Moseley – a very blue city will have a couple of red dots.

Transportation Insurance Brokers Lipscomb & Pitts Client Lunch and Learn, Memphis, TN, February 4th: Rob will attend as a guest speaker.

SC Timber Producers Association Annual Meeting, Myrtle Beach, SC, February 7-9th: Rob will attend to speak about trucking trends.

2014 BB&T Capital Markets 29th Annual Transportation Conference, Miami FL, February12-13th. Rob will be roughing it in Miami.

Federation of Defense and Corporate Counsel Winter Meeting: Transportation Law Section, Marco Island, FL, March 2-7th: Steve Farrar and Kurt Rozelsky will be attending. Kurt has been named chair of the Trucking Committee.

ATRI Research Advisory Committee meeting, Atlanta, Ga, March 4-5th: Rob will be attending as a member of the Advisory Board.

North Carolina Petroleum & Convenience Marketers Southeast Petro-Food Marketing Expo, Myrtle Beach, SC, March 6-7th: Marc Tucker will be presenting.

Specialized Carriers & Riggers Association, Specialized Transportation Seminar, Houston, TX, March 18-21st: Fredric will be attending.

SMC3 Transportation Contract Law Workshop meeting, Peachtree City, GA, April 22-23rd: See http://www.smc3.com/ smc3/academy/courses-contractlaw.htm for updates.

Smith Moore Leatherwood Remembers Bob Franklin

Bob Franklin

The Smith Moore Leatherwood Transportation Team expresses its deepest condolences on the untimely passing of our good friend and transportation colleague, Bob Franklin. Members of our team served proudly with Bob in the ABA Commercial Transportation Committee, American College of Transportation Attorneys, DRI,

Federation of Defense and Corporate Counsel, Transportation Lawyers Association, Trucking Industry Defense Association and Trucking Boot Camps for many years. Bob was a true friend to the trucking community and to all of us. He will be missed by many.

* Please note: Effective Jan 21, 2014, Smith Moore Leatherwood’s new Greenville office address will be: 2 West Washington Street, Suite 1100 Greenville, SC 29601.

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Making Tracks Arkansas Trucking Conference September 25-27th: Kurt Rozelsky attended, where Smith Moore Leatherwood was a sponsor.

CIC Truckers II meeting, Phoenix, AZ, November 6-7th: Rob attended and spoke on truck insurance coverage issues and hot topics in the industry.

SCTA’s Board Retreat in Columbia, SC, October 1-2nd: Rob presented on current tort reform efforts and the next legislative agenda.

SCDTAA Annual Meeting, Savannah, GA, November 7-10th: Jack, a member of the Board of Directors for the SCDTAA and the head of the Trucking Litigation Committee, attended. Over 50 Judges attended the meeting.

SMC3’s Transportation Contract Law workshop in Chicago on October 2nd: Rob led this meeting.

ATA Management Conference and Exhibition, Orlando, FL, October 20-22nd: Rob attended and led theTop 10 Session in between fishing along side shopping centers and golf courses.

Rob passed the SC Concealed Weapon Permit class. Before that, Rob was just dangerous.

Inaugural Motor Carrier Insurance Educational Foundation Annual Meeting, Orlando, FL, October 23-24th: Rob presented on recent insurance, underwriting, and safety issues. Rob was named Honorary Member of the Foundation.

DOT Compliance Seminar, Salisbury, NC, November 6th: Jack Riordan and Marc Tucker spoke at the the seminar, hosted by Senn Dunn Insurance and Mayberry Safety Solutions.

Transportation Law Institute, Los Angeles, CA, November 8th: Kurt moderated a panel on Ethical Obligations to the Driver, the Company, and the Carrier.

TIDA Annual Meeting, Orlando, FL, November 13-15th: Marc Tucker and Kurt attended.

Quarterly Safety Meeting presented by Van Poston of Performance Safety Compliance, Florence, SC, December 3rd.

Fredric Marcinak attended and spoke at the meeting.

SCTA FMCSA workshop, Greenville, SC on Dec. 11th: Kristen Nowacki attended the workshop held in the Smith Moore Leatherood Greenville office.

Rob had the privilege of leading Elon University’s football team pregame devotions and inspired them to a victory over eventual Southern Conference Champion Furman University.

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 |

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CSA 2010 2011 2012 2013 2014?

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ears ago, the FMCSA was struggling with how to decide what carriers on which to perform audits. There were over 500,000 motor carriers in the United States, and the agency had limited resources in which to perform audits.

The FMCSA was only able to perform a full compliance review on a small fraction of the carriers each year. For that reason, the agency developed Safe Stat in 1991 as a tool to assist the agency in allocating resources. Over time, Safe Stat created a scoring system which was publicly available.

Towards the end of 2010, the agency rolled out CSA 2010. CSA was the creation of the FMCSA and was not issued under the Administrative Procedures Act or FMCSA’s rulemaking authority. It was not even issued as a guide, as the FMCSA interpreting its regulatory power. It was merely an internal tool utilized to allocate resources in investigating and regulating carriers.

Furthermore, the FMCSA is charged with regulating carriers and assigning carriers a safety rating. The current safety ratings assigned by FMCSA are satisfactory, unsatisfactory, conditional, and unrated.

49 CFR § 385. There has never been any request by FMCSA to convert CSA into a safety rating regulation.

However, the tendency since CSA was issued has been for FMCSA to encourage the use of CSA by brokers and shippers and others purchasing transportation as a score card for selecting carriers. There is currently a disclaimer on the CSA website stating that the alert symbol is not intended to imply a safety rating and that readers should not draw conclusions about a carrier’s overall safety condition simply because the data based on the displayed in the system. The disclaimer also reminds readers that unless a carrier has been placed out-of-service with an unsatisfactory safety rating, it is authorized to transport property on the nation’s highways.

However, the agency has been inconsistent in its comments on CSA. It has encouraged the use of a Safer Bus Mobile App to encourage users of the App to base bus transportation purchase decisions on scores contained on CSA. Also, the agency

published a “shipper and insurer briefing” which contained a slide that stated that a satisfactory safety rating does not mean a shipper should ignore other available data and that shippers should use CSA to assess a carrier’s safety record. Additionally, the slide indicated that satisfactory does not mean that a carrier is compliant and safe.

This would certainly appear to fly in the To read a detailed list of the flaws found in the CSA system, visit: http://www. smithmoorelaw.com/TNLCSA.

TEXT MESSAGE SENDER LIABILITY

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he dangers associated with sending/reading text messages while driving are well known. Anti-texting while driving statutes are ubiquitous and widely accepted as necessary to rectify the perils of driving while texting. Now, a New Jersey appellate court has extended responsibility for accidents arising from driving while texting to the next level by recognizing that the sender of a text message may be liable for damages if that person sends a message to a person known to be driving and that the text message will be read. The case is Kubert v. Best, No. A-1128-12T4 (N.J. Super., August 27, 2013). The plaintiffs, Mr. and Mrs. Kubert, were riding their motorcycle when they came around a corner and were struck by a pick-up.

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The evidence showed that on the day of the accident, Best and Colonna texted each other sixty-two times with an equal number originating with each. Id. at 6. At the time of the accident, Best had just left work and was driving home. At approximately 5:48:14 p.m. Colonna sent Best a text message that was received at 5:48:23 p.m.

Best then responded by sending a message at 5:48:58 that was received by Colonna at 5:49:07 p.m. At 5:49:15 p.m., 17 seconds after sending his last text message, Best

called 911 to report the subject accident.

Id. at 8. During this 17 second interval, the Court noted that Best would have stopped his vehicle, observed the injuries to the Kuberts, and dialed 911. Id. at 9. The Court deduced that Best collided with the Kuberts immediately after sending his text message at 5:48:58 p.m.

As in many jurisdictions, New Jersey prohibits texting while driving. Id. at 2. See also, N.J.S.A. § 39:4-97.3. At the trial court

level, the Kuberts’ claim against Colonna was dismissed on a motion for summary judgment; the trial court ruled that a remote texter does not have a legal duty to avoid sending text messages to one who is driving. Id. at 5.

To read more details and outcome of the case, visit: http://www.smithmoorelaw. com/TNLTextMessage.

LARGE TRUCKING COMPANIES (AND YES,YOU MIGHT BE ONE) HAVE OPTIONS AVAILABLE UNDER THE EMPLOYER MANDATE

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rivers on popular transportation blogs such as overdriveonline.com are sounding off on upcoming changes to their insurance under the Affordable Care Act (the “ACA”). While recent news coverage of the ACA has focused on enrollment issues with healthcare.gov in advance of 2014’s individual mandate, it is not too soon for large employers, including transportation companies, to begin thinking about their responsibilities under the employer mandate of the ACA. Although the effective date of the employer mandate has been delayed until January 1, 2015, notification requirements have already gone into effect, and drivers are generally appreciative of communications regarding their benefits in this time of uncertainty, even if the news is that the worker’s contribution may have to increase.

to offer this qualifying coverage and any one of its full time employees, defined by the ACA as working 30 or more hours per week or 130 hours per month, receives subsidized insurance through the exchange or marketplace, the employer may be liable for significant penalties.

As part of the employer mandate, starting in 2015 applicable large employers, defined by the ACA as those employing 50 or more full time equivalent employees (oftentimes still small businesses in laymen’s terms), must offer minimum essential coverage that is affordable and meets minimum value requirements. If the employer fails

The U.S. Department of the Treasury recommended in its July 2, 2013 announcement of the mandate delay that employers should treat 2014 as a transition period during which they should familiarize themselves with reporting requirements and maintain or expand health coverage for their employees. Although most

employers would like to be able to expand their current health insurance offering, it is not always possible given economic realities. Employers have very difficult choices to make in the upcoming year and a critical cost-benefit approach will be vital, being mindful of the associated regulatory risks. Many employers will find themselves deciding between three options.

To read the three options for employers under the Affordable Care Act, visit: h t t p : / / w w w. s m i t h m o o r e l a w. c o m / TNLLargeTrucking.

Smith Moore Leatherwood LLP | Attorneys at Law |

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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) 242-6440 F: (864) 240-2474 www.smithmoorelaw.com Attorneys at Law The Leatherwood Plaza 300 East McBee Avenue, Suite 500 Greenville, SC 29601

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