Transportation Newsletter - Summer 2013 by Smith Moore Leatherwood

SUMMER 2013

Attorneys at Law

TRANSPORTATION NEWSLETTER

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FMCSA Barges Into Safety Management: The Safety Management Cycle and How it Might Affect You tith ůiƩůe fanfare͕ &M S issued its SafetǇ Management ǇĐůe doĐuments ďaĐk in :anuarǇ. thiůe it’s not unusuaů for the &M S to ďe ĐonĐerned aďout safetǇ management͕ &M S ’s haďit of issuing Đomments and ruůes outside of the dministraƟǀe WroĐedures Đt has goƩen to ďe a reguůar eǀent as weůů. &M S issued a ƉaƉer for eaĐh of the ďasiĐs inĐůuding the former ďasiĐ on Đargo͕ now reďranded as ,aǌmat. aĐh of the ƉaƉers starts ďǇ idenƟfǇing a safetǇ management ĐǇĐůe framework. The safetǇ management ĐǇĐůe is deĮned as siǆ diīerent areas. The ĐǇĐůe ďegins with ;ϭͿ ƉoůiĐies and ƉroĐedures͕ ;ϮͿ is reĮned with roůes and resƉonsiďiůiƟes͕ ;ϯͿ is imƉůemented through ƋuaůiĮĐaƟon and hiring͕ ;ϰͿ training and ĐommuniĐaƟon͕ ;ϱͿ monitoring and traĐking͕ and ;ϲͿ meaningfuů aĐƟon. The &M S estaďůishes these safetǇ management ƉroĐesses as the goůd standard for safetǇ management ;again͕ without uƟůiǌing dministraƟǀe WroĐeduresͿ. The &M S Ɖuďůished these doĐuments without so muĐh as a disĐůaimer as to the intended eīeĐt of the safety management processes. The complete safety management processes are aǀailaďle at hƩp͗ͬͬcsa.fmcsa.dot.goǀͬaďoutͬSM ͺKǀerǀiew.aspǆ. s menƟoned preǀiously͕ the safety management cycle and safety management processes are applied to each of the ďasics eǆcept for accidents.1

Driver Fitness Basic Smith Moore Leatherwood’s TransƉortaƟon EewsůeƩer is Eow ǀaiůaďůe Knůine To reĐeiǀe the digitaů ediƟon͕ Ɖůease ǀisit www.smithmooreůaw.ĐomͬenewsůeƩer.

Thanks for joining in our susƚainaďiůiƚǇ Ğīorƚs.

The policies and procedures include reǀiewing driǀer ƋualiĮcaƟons twice annually͕ deǀeloping a document retenƟon and recordkeeping policy͕ and deǀeloping a wriƩen and progressiǀe disciplinary policy. thile in principle͕ these might ďe good things to consider͕ it’s almost certain that the personal injury aƩorneys who target trucking companies will use these to create a standard of care. This is proďlemaƟc for a numďer of reasons. &or eǆample͕ a wriƩen and progressiǀe disciplinary policy is inconsistent with the independent contractor model. /f a trucking company uƟliǌes independent contractors͕ it will haǀe to choose ďetween ǀiolaƟng the &M S ’s policy and its business model. 1. / guess it’s diĸcult to apply safety management processes to a basic that records crashes that are not the fault of the carrier.

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Step Ϯ of the safety management cycle is establishing roles and responsibiliƟes. /n this role͕ the document says that managers should be responsible for the regular eǀaluaƟon of the carrier’s driǀer 5. Monitoring wellness program. thile haǀing a driǀer and Tracking wellness program is certainly a laudable goal͕ once again͕ the &M S seems to be saying that all safe carriers will haǀe a driǀer wellness program. The third SMW deals with ƋualiĮcaƟon and hiring. hnder this SMW͕ the carrier is to reǀiew the driǀer applicaƟon for gaps in employment͕ freƋuent job changes͕ incomplete applicaƟons͕ and physical impairments. The &M S stops short of telling the trucking company how to aǀoid mericans tith isabiliƟes ct claims while it reǀiews physical impairments. The fourth SMW deals with training and communicaƟon. This secƟon deals with management’s top down communicaƟon of safety processes. Kne of the ͞suggesƟons͟ in this secƟon is to ensure that driǀer ƋualiĮcaƟon data͕ including MsZ results͕ inspecƟons͕ changes in credenƟals͕ and driǀerͲ reported ǀiolaƟons are communicated to managers͕ superǀisors and dispatchers. This seems to imply that the enƟre contents of a driǀer’s driǀer ƋualiĮcaƟon Įle would be known and comprehended by all of the company’s managers͕ superǀisors and dispatchers. This seems to be an unrealisƟc eǆpectaƟon. The ĮŌh SMW is for monitoring and tracking. Kn the driǀer Įtness issue͕ it is suggested that the driǀer’s MsZ be reǀiewed more oŌen than the regulatory mandated annual reǀiew if a driǀer has numerous ǀiolaƟons. Therefore͕ the &M S is suggesƟng that motor carrier needs to go beyond the regulaƟons so that checks͕ ͞in addiƟon to annual checks͕͟ are uƟliǌed.

6. Meaningful cƟon

START

Safety Management Cycle

1. Policies and Procedures

2. Roles and ResponsibiliƟes

4. Training and ommunicaƟon ϯ. YualiĮcaƟon and Hiring

&inally͕ the siǆth SMW is meaningful acƟon. The &M S encourages incenƟǀes and recogniƟon programs to reward and encourage driǀer Įtness. &or eǆample͕ there is a suggesƟon that there be recogniƟon for an employee not uƟliǌing sick days and physical Įtness goals haǀing been met. /s this really where the &M S belongs?Ϯ The &M S also encourages the implementaƟon of a disciplinary policy which would be inconsistent with independent contractor business models.

Unsafe Driving Basic The &M S creates the siǆ safety management processes and applies them to the unsafe driǀing basic as well. tith regard to policies͕ the document states that the carrier should deǀelop a policy penaliǌing driǀers for speeding eǀen if a citaƟon is not wriƩen. So &M S adǀocates penaliǌing driǀers for unproǀen allegaƟons. That will go oǀer well in the driǀer’s lawsuit against the company. In the roles and responsibiliƟes secƟon͕ the motor carrier should designate a carrier to collect and eǀaluate customer complaints and their safety implicaƟons. tith regard to

training and communicaƟon͕ the &M S suggests the carrier establish newsleƩers or meeƟngs to focus on safe driǀing. SpeciĮc seminar topics are referenced including ͞when to use Ňashers͖ how to handle road rage͖ the importance of keeping one’s eyes on the road ahead and scanning it͕ with no manual dialing or teǆƟng͕ and no use of inͲǀehicle deǀices that draw aƩenƟon away from the road͖ how to use maps and no use of radar detectors.͟ Therefore͕ a carrier that has not had seminars addressing each of these topics would be in ǀiolaƟon of the &M S ’s document. In the monitoring and tracking secƟon͕ there is a suggesƟon that a carrier use ͞how am I driǀing͟ placards on ͞eǀery truck.͟ In the meaningful acƟon secƟon͕ the &M S indicates that carriers should consider paying driǀers by the hour instead of by the load or mileage to encourage them not to speed. gain͕ this is inconsistent with the independent contractor model. nd so it goes for each of the basics. &or the porƟons of this arƟcle that address the rest of the basics͕ ǀisit www.smithmoorelaw.comͬ&M S .

2. then word of S was iniƟally on the streets͕ some driǀers interpreted the driǀer Įtness basic to mean physical Įtness. &M S has now issued a paper which seems to eƋuate driǀer Įtness with physical Įtness.

LIMITATIONS OF LIABILITY – CARRIERS NEED THEM (AND STAFFING COMPANIES TOO?) ǀery week͕ new opinions are issued that reinforce the importance of haǀing a good contract in place for managing the transportaƟon of freight. good contract is especially important when a cargo loss occurs. ecause the armack mendment imposes near strict liability on freight carriers͕ the importance of a contractual proǀision limiƟng carriers’ liability for cargo damage is ǀital. The recently decided case of Royal & Sun lliance Ins. PL ǀ. InternaƟonal Management Serǀices ompany͕ Inc.͕ ϳϬϯ &.ϯd 6Ϭ4 ;2d ir. 2Ϭ1ϯͿ͕ reinforces this point. thicon͕ Inc.͕ a pharmaceuƟcal company͕ contracted with hPS Supply hain SoluƟons͕ Inc. for hPS to arrange transportaƟon of thicon’s pharmaceuƟcal products. hPS was careful to secure a maǆimum liability to thicon of Ψ25Ϭ͕ϬϬϬ per shipment for thicon’s products. Howeǀer͕ the shipperͲbroker contract also stated that the liability of the freight carriers would ͞be goǀerned by the applicable agreement with such carriers.͟ hPS then contracted with its own subsidiary motor carrier͕ torldwide edicated Serǀices͕ Inc. to transport thicon’s goods. torldwide͕ in turn͕ contracted with InternaƟonal Management Serǀices ompany͕ Inc. ;͞IMS K͟Ϳ͕ a staĸng company͕ to proǀide driǀers for ǀarious torldwide deliǀeries. torldwide͕ as a subsidiary of hPS͕ beneĮted from hPS’ limitaƟon on liability in the shipperͲbroker contract. Howeǀer͕ IMS K did not contract for any limitaƟon of liability in its agreement with torldwide ;why would a staĸng company contract for a cargo released rate anyway?). Kn March 26͕ 2ϬϬϵ͕ thicon shipped goods from San ngelo͕ Teǆas to Tennessee. Worldwide transported the goods using a truck that was driǀen by two IMS K driǀers who were leased to

Worldwide. While the shipment was en route͕ an accident occurred͕ damaging thicon’s goods. thicon receiǀed payment from its insurer͕ who then sought to recoǀer from hPS͕ Worldwide͕ and IMS K. The istrict ourt held that hPS and Worldwide were liable to thicon͕ but that their liability was limited to Ψ25Ϭ͕ϬϬϬ under the shipper broker contract. Howeǀer͕ the ourt ruled that IMS K could not beneĮt from any limitaƟon of liability and that it was liable to thicon for the remaining Ψ5ϬϬ͕ϬϬϬ for the freight damaged.

Kn appeal͕ the Second ircuit aĸrmed the istrict ourt’s decision. The Second ircuit held that under the armack mendment and under federal common law a contractual proǀision limiƟng the parƟes liability does not automaƟcally eǆtend to subcontractors or other downstream parƟes unless the contract eǆpressly proǀides that it will. Thus͕ where soͲcalled ͞Himalaya clauses͟ eǆtend limitaƟons on liability to downstream parƟes͕ they will be enforced. ut the ourt will not read those clauses into contracts where they are not there. s the ourt noted͕ ͞we decline to hold the third parƟes to shipping contracts are automaƟc beneĮciaries of limitaƟons on liability that by their terms apply only to the parƟes to the contract.

Whether the Second ircuit’s broad holding will reach subcontractors or downstream parƟes͕ who͕ unlike IMS K͕ are carriers is unclear. The Supreme ourt has long held that a subcontracted carrier’s liability is limited to the same eǆtent as the original carrier’s is under the bill of lading or shipperͲcarrier contract. <ansas Southern Railway ǀ. arl͕ 22ϳ h.S. 6ϯϵ͕ 64ϴ ;1ϵ1ϯ)͖ Meǆican Light & Power o. Ltd. ǀ. Teǆas Meǆican Railway o.͕ ϯϯ1 h.S. ϳϯ1͕ ϳϯ4 ;1ϵ4ϳ)͖ Kregon Washington Railroad and EaǀigaƟon o. ǀ. Mc'inn͕ 25ϴ h.S. 4Ϭϵ͕ 41ϯ ;1ϵϵ2). The Second ircuit did not menƟon these cases͕ and it is unclear whether it considered them. Eonetheless͕ the Second ircuit’s holding and its reliance on the armack mendment suggest that it will apply its new rule reƋuiring a separate limitaƟon for a subcontractor to carriers as well. The lesson for freight carriers is that contracts maƩer͕ especially when negoƟaƟng with intermediaries rather than shippers. lthough many upstream contracts͕ such as shipperͲ broker agreements͕ freight forwarder agreements͕ and through bills of lading͕ contain Himalaya clauses allowing subcontractors to beneĮt from limitaƟons of liability͕ not all of them do. Howeǀer͕ a limitaƟon of liability contained in a contract between an intermediary and the carrier will be binding on the shipper under Eorfolk S. Ry. o. ǀ. <irby͕ 54ϯ h.S. 14 ;2ϬϬ4)͕ and related cases͕ so negoƟaƟng such a limitaƟon is ǀital for the freight carrier. So if your company is on the periphery of transportaƟon͕ such as a staĸng company͕ leasing eƋuipment͕ or serǀes a similar role͕ you might also beneĮt from limitaƟons of liability ;although armack’s liability scheme would not apply to you)͕ and if you are a carrier͕ you should certainly address limitaƟons in your contracts.

Summer 2013 Transportation Team Georgia | North Carolina | South Carolina

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Jon Berkelhammer

Mike Bowers

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Greensboro, NC

Charleston, SC

Greensboro, NC

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Jay Holland

Zandra Johnson

Jason Maertens

Greensboro, NC

Greenville, SC

Wilmington, NC

Greenville, SC

Team Leader

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Rob Moseley

Bob Persons

Greenville, SC

Atlanta, GA

Greenville, SC

Atlanta, GA

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Kurt Rozelsky

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Greenville, SC

Raleigh, NC

Thursday, June 27, 2013

Transportation Update Seminar

8:00 a.m. – 4:30 p.m. 'reensboro͕ E

e sure to join the Smith Moore Leatherwood TransportaƟon Team for a comprehensiǀe look at the issues facing the transportaƟon industry today. Please RSsP to michelle.lafataΛsmithmoorelaw.com if you plan to aƩend. onΖt forget to menƟon whether you intend to join us for the 'reensboro 'rasshopper game at ϳ͗ϬϬ the same night͊

The Road Ahead ͻ ͻ ͻ ͻ ͻ ͻ ͻ

Rob will speak on legal issues facing the trucking industry at the Truckload arriers Refrigerated iǀision at the &oǆwoods resort in onnecƟcut͕ :uly 1ϬthͲ12th. Should be a preƩy cool meeƟng. Marc Tucker and Rob Moseley will be aƩending the E T Management onference :uly 14thͲ16th in Isle of Palms͕ S . Rob will be presenƟng on issues aīecƟng trucking companies today. &rom :uly 25thͲ2ϳth͕ :ack will aƩend the S T Summer oard MeeƟng at the 'roǀe Park Inn in sheǀille͕ E . s hairman of the Trucking SubcommiƩee͕ :ack will lead a Trucking reakout Session during the meeƟng. zou will be able to conƟnue to Įnd Marc at the E T Safety ouncil͕ own ast hapter͕ meeƟngs in Wilson͕ E on a monthly basis. Steǀe &arrar and <urt Roǌelsky will be aƩending the &ederaƟon of efense and orporate ounsel ;& ) annual meeƟng in olorado Springs͕ K :uly 2ϴthͲ ugust ϯrd. The merican ollege of TransportaƟon Ʃorneys meets on ugust 2ϯrd in hicago. Rob͕ along with Steǀe Powers of TE͕ will be moderaƟng the meeƟng. Marc Tucker will also be aƩending the E T Safety ouncil onference in Myrtle each͕ S oǀer Labor ay weekend.

Making Tracks ͻ

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The Smith Moore Leatherwood TransportaƟon Team would like to recogniǌe ; aptain) oug Shackelford who reƟred earlier this year from the Eorth arolina State Highway Patrol Motor arrier nforcement dministraƟon SecƟon aŌer 25н years in law enforcement. Eot Ƌuite ready to enjoy reƟrement͕ oug Shackelford has started his own consulƟng business͕ Motor arrier Safety nalysis͕ proǀiding professional consulƟng serǀices to the transportaƟon industry. Rob Moseley aƩended his Įrst meeƟng of the TRI Research dǀisory ommiƩee pril 2ndͲϯrd in tlanta. The purpose of the meeƟng was to determine prioriƟes for transportaƟon research projects. Rob’s reƋuest for research on family ǀacaƟons in 15 passenger ǀans was disregarded. :ack Riordan spoke on legal and liƟgaƟon issues on pril ϯrd at the KT Workshop of Performance Safety ompliance in &lorence͕ S . In pril͕ Marc was in Pinehurst͕ E for the E T &oundaƟon golf ouƟng :ack aƩended the S State Transport Police 2Ϭ1ϯ ommercial Motor sehicle Safety &air at the State &armer’s Market in West olumbia on pril 5th. Marsh &leet SoluƟons members met in Krlando pril ϵthͲ11th. Rob spoke on hot topics for trucking company managers. &rom pril 1ϳthͲ1ϵth͕ :ack assisted in the coordinaƟon and management of the S efense Trial Ʃorneys’ ssociaƟon ;S T ) Trial cademy. Twenty ͞student͟ aƩorneys aƩended numerous lecture and breakout sessions with regard to the ǀarying stages of the trial process͕ then parƟcipated in a mock trial on the Įnal day at the &ederal istrict ourt in olumbia͕ S before state ircuit :udges and ǀolunteer jury panels. Rob and Robin Moseley surǀiǀed the wedding of their oldest daughter despite roaming bulls͕ copperheads͕ and the sound of nearby gunĮre all during the fesƟǀiƟes. <urt Roǌelsky was on the boot camp trail again with trucking boot camps in allas ;May ϳth)͕ hicago ;May ϴth)͕ Krlando ;:une 4th) and tlanta ;:une 5th). Kn May 11th͕ sporƟng his newly ĮƩed knee brace͕ :ack limped his way through the 5k ͞ hug E’ Run͟ in 'reenǀille. His most impressiǀe feat of the day was consuming and keeping down his 2 beers beforehand͕ which allowed a 4 minute Ɵme deducƟon for his team ;though they sƟll only Įnished third out of ϴ teams). There really is a race with eǀerything. Rob presented the &reight laims oot amp on May 15th͕ at T HeadƋuarters in rlington͕ s . Kn May 1ϴth͕ :ack’s wife͕ Leora͕ Įnished Įrst in her age group ;undisclosed) and 2nd oǀerall among women in the ͞Mud ndeaǀor͟ eǀent in nderson͕ S . While :ack may be the best athlete in the 'reenǀille oĸce͕ he might be the ĮŌh best athlete liǀing in his house. Rob led a panel on independent contractors at the : Symposium May 2ϬthͲ22th in irmingham. oug 'rawe from art Transit and Phil yrd from ulldog Hiway ǆpress tolerated Rob’s jokes and surǀiǀed the ordeal. Rob spoke on the trucking industry’s legal challenges for oƫngham and utler in hicago on :une 5th. Rob aƩended the S T nnual Management onference in Myrtle each͕ :une 6thͲϴth. &redric aƩended the onference of &reight ounsel meeƟng in :une 15thͲ1ϳth. Kn :une 1ϴth͕ :ack will serǀe as legal consultant at the Performance Safety ompliance Trucking Safety MeeƟng in &lorence͕ S . ondolences to <urt on the loss of his father͕ <en Roǌelsky͕ oatesǀille͕ P .

SUDDEN EMERGENCY DOCTRINE IS ALIVE AND WELL IN NORTH CAROLINA Mary E. Fulmore, Administrator of the Estate of Priscilla Ann Maultsby v. Gregory Howell and PFS Distribution Company, Inc., ___ N.C. App. ___, 741 S.E.2d 494 (2013). The Eorth arolina ourt of ppeals recently aĸrmed the applicability of the sudden emergency doctrine in the conteǆt of a commercial motor ǀehicle accident͕ notwithstanding eǀidence of ǀiolaƟons of &ederal Motor arrier Safety RegulaƟons by the commercial driǀer. The sudden emergency doctrine creates a less stringent negligence standard of care for an indiǀidual who͕ through no fault of his own͕ is suddenly and uneǆpectedly confronted with imminent danger to himself or others. n indiǀidual confronted with an emergency is not liable for an injury resulƟng from his acƟng as reasonable man might act in such an emergency. In order to aǀail oneself of the sudden emergency doctrine ;1) an emergency situaƟon must eǆist reƋuiring immediate acƟon to aǀoid injury͕ and ;2) the emergency must not haǀe been created by the negligence of the party seeking the protecƟon of the doctrine.

the owner of the tractor trailer alleging ǀarious negligence theories. The commercial driǀer was operaƟng his ǀehicle in a westerly direcƟon on a two lane E highway when he obserǀed another ǀehicle approaching his tractorͲ trailer in the wrong lane. &ulmore͕ ϳ41 S. .2d at 4ϵ6. In order to aǀoid a headͲon collision͕ the commercial driǀer ǀeered to the leŌ. Id. espite his eīorts͕ the tractorͲtrailer collided with the approaching ǀehicle. Id. Ōer the collision͕ the tractorͲtrailer ended up in the opposite (eastbound) lane where it then collided with another ǀehicle killing the driǀer͕ the plainƟī’s decedent. Id. In response to the plainƟī’s allegaƟons of negligence͕ the commercial driǀer asserted the sudden emergency doctrine and argued that the accident was not the result of any negligence on his part. The trial court granted the commercial driǀer’s moƟon for summary judgment on the basis of the sudden emergency doctrine. The PlainƟī appealed. Fulmore͕ ϳ41 S. .2d at 4ϵ5.

In Mary E. Fulmore, Administrator of the Estate of Priscilla Ann Maultsby v. Gregory ,ŽǁĞůů ĂŶĚ W&^ ŝƐƚƌŝďƵƟŽŶ ŽŵƉĂŶǇ͕ Inc., ͺͺͺ E. . pp. ͺͺͺ͕ ϳ41 S. .2d 4ϵ4͕ Kn appeal͕ in an eīort to establish ;2Ϭ1ϯ)͕ the plainƟī brought suit against negligence on the part of the commercial the driǀer of a commercial ǀehicle and driǀer and negate the sudden emergency defense͕ plainƟī argued and presented eǀidence that the commercial driǀer was operaƟng the tractorͲtrailer in ǀiolaƟon of the &ederal Motor arrier Safety dministraƟon’s hours of serǀice regulaƟons. Fulmore, ϳ41 S. .2d at 4ϵ6. The plainƟī further argued that the ǀiolaƟon of the safety regulaƟons consƟtutes negligence per se and that such negligence on the part of the commercial driǀer negates one of the necessary elements of the sudden emergency doctrine. Id. The Eorth arolina ourt of ppeals ruled that in the absence of eǀidence of actual faƟgue or that the hours of serǀice ǀiolaƟon was a cause of the accident͕ such a regulatory

ǀiolaƟon would not negate the sudden emergency doctrine. &ulmore͕ ϳ41 S. .2d at 4ϵϳ. In the alternaƟǀe͕ plainƟī argued that the commercial driǀer should haǀe reacted to the situaƟon in a diīerent way and ǀeered to the right as opposed to the leŌ. Id. The ourt of ppeals summarily rejected this argument as well and stated that such an argument is the eǆact “sort of hindsight which the doctrine of sudden emergency precludes.͟ Id. The ourt of ppeals noted that “plainƟī’s arguments are based upon eǆpert analysis aŌer the fact͖ ΀the commercial driǀer΁ had to react ͚instantaneously.’͟ Id. Similarly͕ the plainƟī argued that the commercial driǀer’s ǀarying ǀersions of how the accident happened created a ƋuesƟon of material fact͕ thereby defeaƟng the moƟon for summary judgment. Id. The ourt of ppeals also dismissed this argument and stated that notwithstanding slight ǀariaƟons in the language used to describe the accident or minor details͕ the material facts of how the accident occurred were consistent and did not create a ƋuesƟon of material fact. Id. The Eorth arolina ourt of ppeals aĸrmed the trial court’s granƟng summary judgment dismissing plainƟī’s claims as to the commercial driǀer͕ as well as his employer͕ the motor carrier. Fulmore, ϳ41 S. .2d at 4ϵϴ. The ruling in &ulmore is important to both commercial driǀers and motor carriers in that it not only reͲenforces the applicability of the sudden emergency doctrine as a ǀiable defense͕ but it does so in light of eǀidence of a ǀiolaƟon of the &ederal Motor arrier Safety RegulaƟons. ReƋuiring a party to present eǀidence of causaƟon͕ as opposed to the mere breach of a safety regulaƟon͕ places a more stringent burden on the party opposing the sudden emergency doctrine and what eǀidence is suĸcient to defeat this defense.

Traveling Intrastate?

Don’t Rule Out the Motor Carrier Overtime Exemption Paying oǀerƟme to driǀers for intrastate routes? You may be missing an opportunity to use the Motor arrier ǆempƟon (“M ͟). 2ϬϬ5 Kpinion LeƩer issued by the hS epartment of Labor Wage and Hour iǀision is someƟmes oǀerlooked and remains instrucƟǀe. oƩom line͗ it says that goods may traǀel interstate eǀen when driǀers don’t. nd͕ depending on the circumstances͕ this “pracƟcal conƟnuity of moǀement͟ of goods across state lines may be suĸcient to result in an oǀerƟme eǆempƟon for your driǀer͕ eǀen if your driǀer’s segment of the journey takes place enƟrely within the state. &irst͕ the basics. The M applies to driǀers͕ driǀer’s helpers͕ loaders͕ or mechanics whose duƟes aīect the safety of operaƟon of motor ǀehicle transportaƟon on public highways in interstate or foreign commerce. The epartment of Labor emphasiǌes that transportaƟon “inǀolǀed in the employee’s duƟes͟ must be in interstate commerce (across state lines) or connect with an intrastate terminal (rail͕ air͕ water or land) to “conƟnue an interstate journey of goods that has not come to rest at a Įnal desƟnaƟon.͟ The Motor arrier ǆempƟon does not apply to employees who are not engaged in “safety aīecƟng͟ acƟǀiƟes͕ such as dispatchers͕ oĸce personnel͕ employees who unload ǀehicles͕ or those who load but are not responsible for the proper loading of the ǀehicle. In :anuary 2ϬϬ5͕ the dministrator of the Wage and Hour iǀision issued an Kpinion LeƩer that helps to eǆplain how the M might apply to intrastate driǀers. n associated group of common carriers of petroleum products wrote to ask whether the M applied to driǀers who traǀel only intrastate. They carry shipments of gasoline͕ kerosene͕ home heaƟng oil͕ diesel fuel and ethanol that haǀe preǀiously moǀed across state lines

by pipeline͕ rail or ship. The driǀers pick up the petroleum products at ǀarious terminals or storage faciliƟes aŌer their preǀious moǀement and transport them oǀer the last leg of the deliǀery journey. The common carriers asked whether the driǀers were coǀered by the M for this intrastate moǀement. In some cases the outͲofͲstate producerͬ shipper had designated the shipment to Įll the order of a speciĮcally named customer. Kther shipments were the result of standing orders or historical demand that the producer/shipper knew it could eǆpect in the other state. The producer/shipper did not name a Įnal desƟnaƟon at the Ɵme of shipment͕ but it had no “Įǆed and persisƟng transportaƟon intent͟ for the good to stop moǀing at the storage facility. onseƋuently͕ when the common carrier’s driǀer took the petroleum products the last (intrastate) leg of the interstate journey͕ the M applied. The epartment has proǀided these seǀen factors to use to determine whether a producer / shipper has a “Įǆed and persisƟng transportaƟon intent͟ that the merchandise conƟnue in interstate commerce at the Ɵme it was sent to the storage facility͗ 1. ǀen if the shipper does not know the ulƟmate desƟnaƟon of speciĮc shipments͕ it bases its determinaƟon of the total ǀolume to be shipped through the storage facility on projecƟons of customer demand that haǀe a factual basis͕ rather than a mere plan to solicit sales from the storage facility. This may include historical sales in the State͕ actual present orders͕ and releǀant market surǀeys of need. 2. Eo processing or substanƟal product modiĮcaƟon occurs a the warehouse (repackaging is okay)

ϯ. The products remain subject to the shipper’s control while in the warehouse 4. Modern tracking systems allow tracking and documentaƟon of most͕ if not all͕ of the shipments coming in and out of the warehouse. 5. The shipper pays the transportaƟon costs (eǀen if it repays the warehouse or distribuƟon center) 6. The warehouse is owned by the shipper (not reƋuired) ϳ. The shipments moǀe through the warehouse pursuant to a storage in transit proǀision. The fact that the shipper may not know the speciĮc Įnal desƟnaƟon at the Ɵme the shipment leaǀes its outͲofͲstate origin will not defeat the M if the ǀolume of the shipment is based on historical sales Įgures͕ no substanƟǀe processing occurs at the storage facility͕ the shipper stays in control of the goods͕ and the shipper pays for the transportaƟon costs incurred to get the product to its Įnal desƟnaƟon. Take away? ǀen if your driǀers traǀel intrastate and themselǀes do not cross state lines͕ the goods they are carrying might. If you can show that your driǀers are parƟcipaƟng in the interstate journey of the goods they are carrying͕ they͕ too͕ might be characteriǌed as “interstate͟ driǀers for purposes of the Motor arrier ǆempƟon from KǀerƟme.

Transportation Industry Team We represent both large and small trucking companies as insureds on behalf of numerous naƟonal insurance companies and as selfͲinsureds. In addiƟon͕ the Įrm has serǀed for many years as outside 'eneral ounsel for a naƟonally recogniǌed commercial ǀehicle insurer and is eǆperienced in all aspects of transportaƟon law including issues inǀolǀing federal and state statutes and regulaƟons promulgated by the former Interstate ommerce ommission (I )͕ the successor Surface TransportaƟon oard͕ the epartment of TransportaƟon and the Public Serǀice ommission. s part of the array of transportaƟon serǀices proǀided to Įrm clients͕ an aŌerͲhours emergency response team is standing by to serǀice clients with urgent needs following a catastrophic accident.

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