Transportation Legal responsibility: Busting 7 Prevalent Myths

Transportation liability used to be simpleR to understand. Under traditional principles of U.S. federal transportation law, carriers were responsible for the freight until delivery. But today, with individual contracts negotiated between each shipper and carrier, it may not be clear who is responsible for transportation incidents such as cargo and property damage or injuries. As a result, plaintiff attorneys are increasingly moving up the supply chain—from carrier to broker, and possibly even shipper—for compensation.In addition, the Federal Motor Carrier Safety Administration’s (FMCSA) evolving Compliance, Safety, Accountability (CSA) program and Safety Measurement System (SMS) continue to confuse shippers. Do these safety programs ruszajwpodroz  impact shippers’ potential liability? What actions should they take as a result?All these developments are prompting shippers to pay closer attention to contract language and the details of shipper and carrier insurance policies. Learning the details of shipping liability isn’t just for lawyers anymore.Here are seven misconceptions some shippers hold about their liability status.

SOME shippers believe CSA 2010/SMS methodology is law and, therefore, they are required to use it to verify their carriers’ safety records.Evidence of this misunderstanding is showing up in the actions of transportation insurance companies. When assessing insurability, some companies are beginning to consider whether a shipper includes CSA score verification as part of its shipping procurement methodology.”Verifying CSA scores could be the difference between whether we will or will not insure the risk, particularly for cargo with high value or special handling requirements,” says Robert Optiz, worldwide inland marine manager for the Chubb Group of Insurance Companies, Warren, N.J.

But CSA 2010/SMS methodology is not the law, and has not been approved for the FMCSA to use for rulemaking, contends a group of transportation trade associations represented by attorney Henry Seaton, partner in Vienna, Va.-based transportation law firm Seaton & Husk, LP.Seaton represents petitioners in ASECTT et al. v. FMCSA, which seeks judicial affirmation that only the FMCSA is required to determine carrier safety. Shippers and brokers should rely on the agency’s ultimate safety fitness determination for a given carrier, says Seaton. And, under existing laws, shippers and brokers are not required to second-guess the agency’s ultimate decision (known as a safety rating) by monitoring SMS ratings. Under the laws of Congress, the Commerce Clause of the Constitution, and the doctrine of federal preemption, federal law trumps state law, Seaton asserts.

“Shippers should have no negligent selection liability under state law concepts when they choose a carrier the agency has determined is fit to operate on the nation’s roadways,” Seaton says.ASECTT et al. v. FMCSA came about after the agency published guidance to shippers, brokers, and insurers on May 16, 2012, suggesting that SMS methodology should be used in credentialing carriers, and that safety ratings were not a reliable benchmark. ASECTT (Alliance for Safe, Efficient and Competitive Truck Transportation) is joined by 19 other named plaintiffs in the suit.

The plaintiffs cite that the agency itself “already affirmed in a settlement of a prior suit, NASTC et al. v. FMCSA, that unless a motor carrier in the SMS has received an unsatisfactory safety rating pursuant to 49 CFR Part 385, or has otherwise been ordered by the FMCSA to discontinue operations, it is authorized to operate,” says Seaton.Petitioners’ opening briefs were recently filed in ASECTT et al. v. FMCSA, and two other logistics industry groups have filed supporting documents.In the meantime, the FMCSA’s actions have led to widespread misunderstanding about CSA 2010 and SMS methodology, Seaton notes. Many shippers erroneously believe that:

CSA became law in December 2010.

Shippers are required to use SMS methodology in credentialing carriers to avoid state law liability for negligent selection.
SMS percentile ranking is an accurate predictor of carrier safety performance.Shippers’ mistaken belief that they are required to use SMS ratings creates several vexing liability issues, Seaton says. Among the questions raised are:

How does a shipper use SMS methodology and maintain its best defense against negligent selection suits? Federal law trumps state law causes of action, and the settlement in NASTC v. FMCSA makes clear it is the agency’s job—not the shipper’s responsibility—to certify safety.If a shipper uses SMS methodology in credentialing carriers, how does it challenge the admissibility of any carrier score by the plaintiff’s bar in a lawsuit?Because SMS percentile rankings will always arbitrarily find that more than half of the carriers it scores exceed one or more enforcement thresholds, how does a shipper use the scores without losing capacity and carrier choice?Because carrier percentile rankings change monthly and scores can fluctuate wildly—particularly for small carriers based upon single paperwork violations—how does a shipper use SMS methodology and still establish stable, long-term relationships with dedicated service providers?

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