Q&A Forum
As a service to members and visitors from the transportation community, TLC has established the "Q&A Forum" to provide answers to commonly asked questions about loss & damage claims, freight charges, carrier liability, bills of lading, transportation contracts, registration and licensing of motor carriers, freight forwarders, brokers and other related transportation and logistics matters.
Questions that are submitted to the forum are reviewed by our transportation attorneys and other experts, and we try to make sure that all questions are promptly answered.
Examples of recent questions and answers include the following topics:
The Q & A Forum also maintains a library of valuable information from past Q&A's and you may be able to find your answer here. Access to the Archives is restricted to members only.
Question:
I am the claims mitigator for a 3rd party logistics company. We are a TLC member. We purchase your books each year and they are a great help to me. I have a couple of questions I would appreciate your help with.
We had a situation where a shipper was loading his product into a trailer of an LTL carrier. The one piece was a little top heavy and started to fall. The driver of the carrier reached up to prevent it from falling and helped load it into the trailer. He left without any problems.
Later, the shipper died and now the driver is suing the company that the shipper worked for saying he hurt his back and can’t work anymore.
First, who assumes liability for a driver who gets hurt while helping to load a truck? Do we as the 3rd party have any exposure there? Does the shipper have liability to the driver? As a broker, is there something we should include in our contracts with the carriers to protect us and the shippers from having this happen to them?
We appreciate your input in this matter and look forward to your response.
Answer:
If the driver was injured in the course of his employment he would be covered by Worker’s Compensation (which means he can’t sue his employer).
However, in the “loading/unloading” situation, he could have a separate cause of action in negligence against the shipper, if the shipper was in some way negligent and that negligence caused or contributed to his injury. That, of course, is a factual issue to be determined at trial. Typically these cases involve unsafe loading docks, faulty equipment such as forklifts, and large items falling over during loading or unloading.
In the situation that you describe, I don't see how a 3rd party or broker could be considered negligent. The recent cases holding brokers liable generally involve highway accidents and claims of “negligent hiring”, e.g., where the broker fails to exercise due diligence in selecting and checking out the carrier’s safety record.
Freight Claims – Waiver of Right for 3rd Party to Track Shipments
Question:
We have a customer that has waived their right to allow a 3rd party to track their shipments by contract. They have also waived their rights to refunds for late deliveries.
Below is the exact language in their contract.
9. Customer agrees to waive the Money Back Guarantee (Guaranteed Service Refund) provision as outlined in the UPS Service Guide for all UPS Ground services during the life of the Agreement.
10. Guaranteed Service Refunds (GSR): Customer agrees to the tracking limitations described in the current UPS Rate and Service Guide and Tariff/Terms and Conditions of Service in effect at the time of shipping. Customer also agrees that the use of a Third Party to track UPS shipments in strictly prohibited and constitutes a breach of the agreement.
This language would appear to prevent us (a third party) from tracking shipments under the Guaranteed Service Refunds (“GSR”) clause (wherein the company waived the right to refunds for late deliveries). I am not sure if they can say this language, even though it is under the GSR clause, also prevents a third party from tracking any shipments period, no matter the reason.
Can the language the carrier included in their contract regarding guaranteed service refunds prevent us from tracking the shipments so we know which ones need to be filed for a loss or damage claim? Under the Carmack Amendment, does our customer have the right to allow us to track their shipments just for their lost or damaged shipments?
Answer:
I can’t see any reason why the “waivers” that you describe would prevent filing a claim for loss or damage to shipments (other than delay claims)
I would take the position that the restriction is limited to use for the purposes of a “Guaranteed Service Refund”.
Question:
Our company has experienced difficulties with transportation brokers filing bankruptcy, resulting in our dealing with the resulting legalities of the bankruptcy estate in addition to subcontracted carriers looking for payment. As we continue to grow our business, our percent of managed transportation is growing and we are looking at ways to protect ourselves against financial risk. Part of this surrounds expanding our business with asset only agreements. However, based on our growth, and current system limitations, the need for brokerages will still exist.
In support of this, our CFO has requested that we insert into our transportation agreement the requirement of a “letter of credit” (“LOC”), up to an agreed upon amount (around roughly 30 days agreed upon business - ie. $50K - $100K). I anticipate a less than favorable response to this. However as an alternative, I have had some general conversations with various brokers specific to the concept of requesting them to issue a “performance bond” in our company’s name (again, around the amounts listed above)
The feedback has been lukewarm. However, the bond concept seems to provide for more of a negotiating opportunity than the LOC. My questions are - (A) does the concept of a “performance bond” in our company’s name seem like a reasonable strategy to protect our company’s risk; and (B) are there any other strategies, or contractual language that may accomplish the same?
Answer:
As you know, the Federal Motor Carrier Safety Administration (“FMCSA”) requires brokers to have on file a surety bond in the amount of $10,000. Unfortunately, this is usually insufficient when a broker goes out of business or otherwise fails to pay the carriers.
We often recommend to our clients that they require in their contracts that the broker obtain a supplementary surety bond - at least $50,000 or $100,000. These are available from various sources including:
Avalon Risk Management, Inc.
84 Wharf Street
Salem, MA 01970
Phone: (978)740-5677
FAX: (978)740-6627
www.avalonrisk.com
Transportation Intermediaries Association (TIA)
3601 Eisenhower Ave., Ste. 110
Alexandria, VA 22304
www.tianet.org
Brokers – Operating as a Dispatcher
Question:
I am a driver for a local precast concrete company, as the company has only 3 drivers of its own, and the rest of the work is subbed out to owner-operators. It has recently been brought to our attention that our dispatcher, who is a salaried employee of the company, may have obtained a broker’s license, and is still acting as dispatcher. The other drivers and myself feel this is a severe conflict of interest and need to know is there any law against such practice, and if so, how may we proceed to improve our situation?
Answer:
From your description of the facts is quite possible that this might be a conflict of interest, and it may actually be illegal. Federal Motor Carrier Safety Administration (“FMCSA”) regulations governing brokers at 49 CFR Part 371 contain the following language:
Sec. 371.9 Rebating and compensation.
(a) A broker shall not charge or receive compensation from a motor carrier for brokerage service where:
(1) The broker owns or has a material beneficial interest in the shipment or
(2) The broker is able to exercise control over the shipment because the broker owns the shipper, the shipper owns the broker, or there is common ownership of the two.
(b) A broker shall not give or offer to give anything of value to any shipper, consignor or consignee (or their officers or employees) except inexpensive advertising items given for promotional purposes.
Freight Claims – When Does 9-Month Limit to File Apply?
Question:
I am a member of your organization and tried to find an answer to this question from your previous Q&As and publications, but I could not.
We are handling an interstate cargo claim for our insured, a carrier who transported three used automobiles. They damaged one of the autos resulting in $7,000 in repairs. We denied the claim because the claim was not made and received by our insured within 9 months of delivery. The claimant’s lawyers are threatening to sue.
The autos were delivered to one consignee. There was no bill of lading issued and though each auto had a condition page showing the condition of each auto at pick up and then at delivery, there were no contract terms of any sort on any of these three pages. In addition, our insured has no tariff.
We believe our position in denying this claim is correct concerning our application of the 9-month filing limitation. It is our position that the 9-month filing limit for cargo claims is the “standard” in the industry and has been for some time. Barring a written and agreed upon time limit greater than nine months, this 9-month period is the standard time limit accepted in the industry by all involved in the movement of freight ... whether they be carriers or shippers. We further believe this time limitation to be the acceptable standard whether or not a bill of lading is issued by the carrier or if the bill of lading is silent about the time period in which to file a cargo claim. We further believe our position is supported by L&S Bearing Company v. Randex International, 913 F.Supp. 1544 (S.D. Fla. 1995). Here, as we understand it, the judge accepted the 9-month time limitation as the industry standard for filing a cargo claim even though there were no bill of lading terms.
Of course, the claimant’s lawyers do not believe our position to be adequate enough to win in a court of law.
Please advise of your thoughts.
Answer:
Time limits for filing claims and bringing lawsuits are contractual, i.e. there must be a contract (bill of lading, etc.) for them to be enforceable. The Carmack Amendment, 49 U.S.C. 14706 only says that a carrier may not by contract or otherwise provide for LESS than 9 months for the filing of a claim or 2 years for the commencement of a lawsuit.
To the extent that there may be some authority for a court to apply a 9-month time limit that is not explicitly set forth in a contract of carriage or bill of lading, there would have to be other factors involved such as a course of dealing over a period of time during which the claimant had received numerous bills of lading with the time limit.
The L&S Bearing case that you cite is distinguishable on its facts and does not support your position.
