Federal Motor Carrier Safety Administration Shuts Down Company

The FMCSA recently reported that they shut down an Ohio trucking company for violating agency regulations. The regulations that were allegedly violated revolved around safety issues. This comes in a string of company shutdowns that the agency has announced in a relatively short period of time.

The shutdown of the company came after the agency performed a spot check of the company’s trucks. Allegedly, the company’s fleet of trucks were operating in violation of out-of-service orders and a total of 43 safety violations. Many of the issues involved braking system issues, defective brake parts, and other equipment problems.

Legal Authority to Shut Down Companies

The FMCSA is authorized to inspect and shut down trucking companies and their fleets through a regulation. That important regulation is found in 49 C.F.R § 386.72, known as the Imminent Hazard regulation. This regulation has its origin in 49 U.S. Code § 521 and other safety statutes related to trucking companies.

This all-important regulation has the power to wreak havoc on a company and its finances. The agency is authorized to shut down a company when in their judgment the company is an imminent hazard because continued operation of the company would be substantially likely to cause:

  • death;
  • serious illness;
  • severe personal injury; or
  • substantial endangerment to health, property, or the environment.

So anytime the FMCSA inspects a company and finds that operation of that trucking company could result in one of these things, they will likely shut the company down. And in addition to these factors, the FMCSA can also shut a company down when the agency feels like transportation of hazardous material poses an imminent hazard to the public.

At this juncture, a company shut down is just the beginning. In addition to being shut down, your company will face fines that will need to be paid before beginning work again, and a company executive could even face criminal penalties. Of course, a company can challenge this agency action, and that may be the best option for a company, but it will be a legal battle.

Plan for Future

In this situation, the best defense is staying prepared and taking action, if necessary. This means that your company needs a plan and scheme to stay in compliance with federal safety regulations. This can be a daunting task given the number and complexity of regulations that every trucking company faces, but it is absolutely necessary if you want your company to stay on the road.

One of the most important steps you can take to plan for the future and take action is to have a partner with valuable legal, regulatory experience. At Anderson and Yamada, P.C. we are the legal partner that your company deserves and needs to make a plan for the future. Our experience is invaluable when it comes to ensuring that your company stays on the right side of federal regulations and that your company stays on the road. Contact us for all your trucking company’s legal needs.

The Carmack Amendment and Default Judgment

The are many aspects to the Carmack Amendment that we address on this blog, but one important aspect to any Carmack Amendment case is showing up to defend a case. If a company is properly served with a Carmack Amendment claim and fails to show up and defend it, that company runs the risk of losing the case on a default judgment.

A default judgment is a mechanism within the Federal Rules of Civil Procedure that allows a claimant to win a judgment when the other side does not show up. Fed. Rule Civ. Proc. 55. As long as the claimant in a case can meet certain requirements after filing a lawsuit, the court is required to issue a default judgment and the claimant will win the case.

Because it is a claim based on federal law filed in the federal court system, these rules about default judgment also apply to Carmack Amendment claims. And this is what happened in a recently decided federal case from the U.S. District in New Jersey, Moroccanoil, Inc. v. JMG Freight Group, LLC, No. 14-5608 (D.N.J. 2015).

Facts and Background

The fact pattern of this case is like so many that are based on the Carmack Amendment. The plaintiff accused the defendant of losing or stealing the cargo it had contracted to transport. After alleging that, the filing company showed that they dropped cargo in good condition, and that products never got to their intended destination. Once the claimant meets these basic elements of a Carmack Amendment claim, the burden shifts to the court to determine whether a default judgment is warranted.

Before the court, in this case, could enter a default judgment on the Carmack Amendment claim, it had to establish four things:

  1. that the court has jurisdiction over both the claimant and the defendant;
  2. that the defendant was properly served under the rules;
  3. that the complaint sufficiently establishes a cause of action; and
  4. that the plaintiff has adequately pleaded damages.

These are the four basic requirements that a court must run through before granting a default judgment.

There are other aspects to a default judgment under the federal rules, but these are the basics. Of course having a default judgment is not always as good as a typical judgment. Unfortunately, if a company or individual does not have the means or interest in defending an action in federal court, many times that means that they might not have the means to pay for a judgment. But that should not deter anyone from seeking out a default judgment because there are creative ways to collect on a judgment.

There are many different aspects to the Carmack Amendment, the federal rules, and federal case law that require the experience and professional ability of trucking industry attorneys. At Anderson and Yamada, P.C., we are a trucking industry law firm that can meet each of your company’s needs. If you are responsible for a trucking company, contact us. We look forward to going over your truck law needs and becoming a partner for your future.

Court of Appeals Addresses Carmack Amendment

An informative case concerning those interested in the Carmack Amendment was recently decided. The case, Exel, Inc. v. Southern Refrigerated Transport, Inc., No. 14-3953 (6th Cir. 2015), involved three different parties – a broker, shipper, and carrier.

This decision is one in a series that have been recently decided around the issue of carrier liability of interstate shipments. Although this fact pattern is more complicated than most, it still involves a common situation where shipped goods were lost and the involved parties argue over whether their ambiguous contracts somehow limit or establish a liability amount.

The case contains a number of lessons that anybody in the trucking industry can learn. One of the most important lessons is that no matter how clear terms seem to parties prior to shipping, it is best to have those terms on paper in a way that complies with Carmack Amendment.  Seemingly, this is a lesson that is taught in every Carmack Amendment case, not just this one.

Background and Important Facts

The broker in this case arranged for the shipment of pharmaceuticals allegedly valued at over $8 million with a well known carrier. Prior to shipping, the companies entered in a Master Transportation Services Agreement (MTSA). That agreement set out the terms of the shipping contract, and had an ambiguous term of RVNX $2.40. In addition to this term and the MTSA, the parties also executed bills of lading, but the bills of lading did not limit liability.

At some point during the transportation, the goods were stolen. After the goods were stolen, the companies disputed about how much the carrier should be liable. The carrier argued that the term RVNX $2.40 meant “replacement value not to exceed $2.40 per pound” or a little more than $50,000 in this case. But the shipper claimed a loss of more than $8 million with the stolen goods.

Court Explains Role of Carmack Amendment

This case was interesting because the shipper assigned all of its claims to their broker, and the suit proceeded with the broker standing in the place of the shipper against the carrier. In the suit the broker sued on various state claims, and in the alternative for the Carmack Amendment to apply. The carrier fired back in the suit arguing that only the Carmack Amendment applied, and that their liability was limited under the MTSA and the term of RVNX $2.40.

In their opinion, the court put all of the parties in their proper place under the plain meaning of the Carmack Amendment. The court rule that the state claims were preempted by the Carmack Amendment, and did away with those claims. But the court also ruled against the carrier stating that a simple mention of RVNX $2.40 in a MTSA did not effectively limit liability under the Carmack Amendment. As we have consistently stated on this blog, there are specific steps that must be taken to actually and legally reduce liability under the Carmack Amendment.  In essence the court said that “an agreement between a carrier and broker that does not establish the shipper’s assent cannot set the carrier’s liability.”

This case illustrates how valuable it is for your company to have an intelligent legal partner helping you with your shipping business. At Anderson and Yamada, P.C. we work with trucking companies every day to ensure that all of their legal needs are met. Contact us so we can begin our relationship with your company too.

Trucking Industry Gets Some Predictability With Bill Passage

Washington D.C. seems to contain a political environment where little if anything gets done anymore. As a refreshing change from this culture, the trucking industry should benefit from the recent passage of a six-year highway bill. The final vote in the house on the bill was 363 to 64 in favor.

While there were some positive aspects to the bill, the trucking industry did not get everything that they wanted. The amendment process lasted for two days and the house voted out several initiatives sought after by the trucking industry. The bill fell short of the spending that the White House originally asked for in their budget. Now the bill goes to the U.S. Senate for approval before it heads to the White House for a signature of approval or veto.

Positive Changes for Trucking Industry

Among the changes being heralded by the industry are the improvements that roads will see because of increased spending. This should increase safety and efficiency in the areas where money is spent. In total the bill calls for $325 billion in spending over a six-year period.

Additionally, an amendment was passed that deals with state wage and labor laws. As this blog has discussed in the past, there has been a rash of litigation going after trucking companies for violating state labor laws related to wages, breaks, and other provisions. The position of companies in this fights has been that the Federal Aviation Administration Authorization Act preempts states from regulating truck drivers and trucking company’s wages.

Instead of continuing the fight over this dispute with state, the industry pushed for Congress to clarify the issue. The amendment will keep states from applying state labor laws to truckers or their companies when they are subject to the Federal Department of Transportation hours of service rules. This was particularly welcome news to trucking companies doing business in California and other states within the 9th Circuit Court of Appeals’ jurisdiction.

Failed Initiatives

The bill passage was not a complete victory for trucking companies. One amendment that sought to increase the possible load weights of trucks traveling on interstate highways was defeated. So while some states allow for 90,000 pound loads with a sixth axle, that will not be the case for the entire country. Critics of the non-passage argue that failing to include this in the bill will hurt American competitiveness.

Other measure that failed to reach a majority vote included doing away with FMCSA’s CSA scores. That system puts gives trucking companies of a certain size a grade that potential customers can look up and decide whether they want to use the company for business.  An amendment to do away with a future graduated CDL program was also voted down.

Trucking Law Firm for the Future

At Anderson and Yamada, P.C. we track and follow all the important developments in the trucking industry. You can rest assured that we can give the counsel and advice that your company deserves when it comes to the laws, regulations, and rules that impact the trucking industry. Contact us about your trucking law needs.

New FMCSA Regulations to Take Effect

There are a number of regulations recently proposed by the Federal Motor Carrier Safety Administration that will soon take effect. As the trucking industry is well aware, the FMCSA continues to propose, publish, and enforce regulations that have a major impact on how business is done.

The primary regulation making headlines that will soon be in effect is the FMCSA mandate that all interstate trucks have an Electronic Logging Device. These devices are meant to reduce the large amount of paperwork that is already being done by truck drivers and companies, and instead allow drivers to report their duty hours through an electronic device that is hardwired to their truck’s motor.

Known as the ELD Mandate, the rule will give companies two years to comply with its provisions. This rule was first proposed in 2014, and stems from the passage of MAP-21 in 2012 that was supposed to lead the trucking industry into the 21st century through progress mandated by the FMCSA and other agencies.

According to reports, the ELD Mandate will not require a specific type of ELD, as long as whatever ELD is used complies with the specifics of the rule. The FMCSA has confirmed that this can even mean certain cell phones and tablets can be used as long as there is a hard-wired connection to the truck’s motor.

Driver Coercion Rule                              

Another rule the FMCSA wants to publish on the same timeline as the ELD Mandate is the Driver Coercion Rule. This rule was first proposed in 2014 as well, and it would prohibit motor carriers, chippers, receivers, or other transportation intermediaries from covering a driver to brake safety regulations.

The Driver Coercion Rule is unlike anything that the FMCSA has attempted to regulate before. It is not yet clear what types of behavior would constitute coercion under the proposed rule, and as an industry that necessarily works off of deadlines, mandated shipping times, and other constraints, any final rule could be loaded with problems. The final rule was submitted to the Office of Management and Budget on July 2015, and it has been there ever since.

Industry Learning to Deal With Regulations

The trucking industry continues to be inundated with regulations. Learning how to comply with those regulations is key for any company to survive. Federal agencies in Washington, D.C. have the power to shut a company down and really impact the bottom line when they feel like a regulation is not being followed. That is why it is so important for any trucking company to have a legal partner that understands and apply all the state and federal regulations that the industry faces.

At Anderson and Yamada, P.C. our practice is dedicated to serving the needs of the trucking industry. Over several decades we have worked with industry companies to provide them with their legal needs, and we look forward to doing so with your company. If you are a trucking company, contact us. We look forward to working with and serving you.