Past President/Ancien président Elizabeth Fashler Borden Ladner Gervais LLP Centennial Place, East Tower 1900, 520 - 3 Ave S.W. Calgary, AB T2P 0R3 (403) 232-9559 efashler@blg.com
Directors/Administrateurs
Mathew Crowe
Alexander Holburn Beaudin + Lang LLP 2700, 700 West Georgia St. Vancouver, BC V7Y 1B8 (604) 484 - 1736 mcrowe@ahbl.ca
Julia Loney McMillan LLP
TD Canada Trust Tower, Suite 1700 421 7th Avenue S.W. Calgary, AB T2P 4K9 (403) 531-4717 julia.loney@mcmillan.ca
Bennet Misskey MLT Aikins LLP 1500 Hill Centre I 1874 Scarth Street Regina, SK S4P 4E9 (306) 347-8467 bmisskey@mltaikins.com
Andrea Fernandes Gardiner Roberts LLP Bay Adelaide Centre - East Tower 22 Adelaide Street W., Ste 3600 Toronto, ON M5H 4E3 (416) 203-9501 afernandes@grllp.com
Pascale de Meyer Canadian National Railway Company 935, Rue de la Gauchetière Ouest Montréal, QC H3B 2M9
Sarah Shiels
Shiels Marine Legal Services Inc. 242 Main St Yarmouth, NS B5A 1C9 (902) 881-2810 sarah@cslegal.ca
Non-Resident Director
Christopher M. Kelly 6805 Carnegie Blvd, Suite 200 Charlotte, NC 28211 (704) 227-1940 ckelly@gwblawfirm.com
PLEASE submit material by email in time to meet these deadlines to TLA Incoming Editor, Roger Watts, rwatts@lindsayllp.ca You can also call or email either editor with questions.
The Transportation Lawyer (ISSN 1533 6018) is published five times per year (Feb., April, July, Oct. and Dec.) It is published by the Transportation Lawyers Association. POSTMASTER: Send address change to The Transportation Lawyer, 111 West Jackson Blvd., Ste. 1412, Chicago, IL 60604, email: TLA -info@kellencompany.com.
AprilContents
Articles and Case Notes
How to Obtain an Injunction to Protect Canadian Aquaculture Operations: Practical
the
Lawyer
Canada’s Proposed Regulations on Marine Emergency Services and Pollution Response: A Critique by Concerned Transportation Lawyers –Seamus Ryder, Katherine Shaughnessy-Chapman, and Robin Squires
The Supreme Court Directs a More Robust Review of Regulations: What it Means for the Transportation Industry – Jean-Simon Schoenholz, Christopher A. Guerreiro, Florence Méthot, and Miteau Butskhrikidze
Membership Section
TLA Mission Statement
The Transportation Lawyers Association (“TLA”) is an independent bar association, comprised of in-house, government and private practice attorneys. Its members assist providers and commercial users of domestic and international logistics and transportation services, in all modes. TLA is dedicated to keeping its members ahead of the constant changes in the specialized legal environment governing all aspects of the supply chain and passenger travel. With commitment to excellence in continuing legal education, and a long tradition of collegiality and exchange of ideas, TLA is a collaborative resource for lawyers seeking to maximize the quality of the legal services they provide and enhance their professional lives.
Association Business
T L A President’s Message
Alas, all good things must come to an end. I am deeply honored to have served as President of the Transportation Lawyers Association this past year. As my term closes out, I am filled with gratitude and pride for the incredible work and dedication that our members bring to our esteemed organization.
First and foremost, I would like to extend my heartfelt thanks to conference co-chairs Hillary Arrow Booth and Brad Bertkau and Boot Camp chair Marc Blubaugh for their exceptional efforts in organizing the Chicago Regional Conference and Boot Camp held in January. The programming and speakers for these events were outstanding, and both the Boot Camp and the Conference were well attended. Thank you also to co-chairs Alex Karcher and Jeff Simmons for putting on an equally successful Transportation Law Institute in Pittsburgh last Fall. Your hard work has not gone unnoticed, and we are immensely grateful for your contributions to these successful events.
Looking ahead, I am excited to preview the upcoming TLA Annual Conference, which will be held at the beautiful Westin Rancho Mirage in Greater Palm Springs, California. This event promises to be a highlight of the year, offering valuable opportunities for professional growth, networking, and collaboration. The educational committee, co-chaired by Rob Reeb and Ashley Winsky, and comprised of Mark Barber, Alex Celio, Shawn Emerson, Emileigh Hubbard, Fred Marcinak, Eric Palombo, and Robin Squires, offers outstanding speaker panels and cuttingedge topics. Thank you all for your hard work on what I am sure will be a stellar program. Social activities planned for the conference include a welcome reception, a Thursday night outing to Shots in the Night (an outdoor golf entertainment experience), and the annual black-tie-optional banquet on Friday evening. Among other events are the Saturday morning fun run, optional small-group dine-arounds on Wednesday and Saturday, and the ever-popular nightly networking suite. I encourage all members to attend and take full advantage of the enriching experiences that await us in Rancho Mirage.
and Social Media Committee for their unwavering dedication and exceptional efforts in developing TLA's new website and increasing our social media presence. Your tireless work and commitment to excellence have resulted in a platform that truly reflects the mission and vision of our organization. Your collaborative spirit and technical expertise have not only enhanced our online presence but have also created a user-friendly experience for our community. Thank you for your hard work, perseverance, and for going above and beyond to make this project a success.
Membership is the lifeblood of any organization, and TLA is no exception. Fritz Damm and Joelle Nelson, thank you for your stellar work spearheading the Recruiting and Membership Committee; your commitment to growing this organization has not gone unnoticed. Thank you also to the numerous chairs, co-chairs, and vice chairs of TLA’s various other committees. You have enriched the benefits of TLA membership through your contributions to meetings, committee programming, webinars, TTL articles, and conference presentations.
As I wrap up my year as President, I would also like to take this opportunity to acknowledge and thank my fellow TLA officers for their unwavering commitment and hard work over the past year. Louis Amato-Gauci, you have gone above and beyond in your role as President Elect, and I am deeply thankful for your friendship and for your assistance, dedication, and commitment to this organization. I look forward to the great things you will achieve in your upcoming year as President of TLA. Patrick Foppe, Roger Watts, and Kristen Johnson, your dedication to the organization has been truly inspiring, and I am honored to work alongside such talented and passionate individuals. And I extend a very special thank you to Past President Eric Benton and Voting Past Presidents Dirk Beckwith, Hillary Arrow Booth, Sam Hallman, Kathleen Jeffries, and Greg Summy. Your advice and counsel over the past year have been invaluable.
With respect to future TLA conferences (which are posted on our website), I would note that the Chicago Regional and Boot Camp will be moving to the Fairmont Millennium Park in 2026. We are excited to return to the Fairmont, which has undergone recent upgrades and promises an elegant setting. Special thanks to Bill Taylor for assisting in these efforts.
I am also pleased to provide an update on the status of our new website. Although originally scheduled to go live at the end of 2024, an anticipated software change has delayed its unveiling; we are now optimistic that it will be ready by this summer. I would like to express my sincere thanks to Billy Davis and the members of the Technology
Lastly, thanks are in order to our management company, Kellen, for their hard work behind the scenes in making our meetings and conferences successful and keeping our finances in line. Erin Erickson, Missy Green, Macy Murray, and others there have put in countless hours to help make this organization a success.
Thank you all for your continued support and dedication to the Transportation Lawyers Association. Together, we will continue to achieve great things and uphold the highest standards of excellence in our profession.
I look forward to seeing you in Rancho Mirage!
Katherine T. Garber
President’sCTLAMessage
CTLA members are looking forward to the upcoming TLA Annual Conference in Rancho Mirage! This event is always a great opportunity to network with our sister organization’s members and to learn about recent and upcoming developments south of the border. Our Past President, Elizabeth Fashler, is finalizing the details for our CTLA Mid-Year Meeting, taking place during the Annual Conference. The Mid-Year Meeting will once again feature a roundtable format, allowing for some of our leading subjectmatter specialists to moderate discussions with attendees on current trends in the transport and logistics industry in Canada.
Planning for the 2025 CTLA Annual Educational Conference and AGM in beautiful Victoria, British Columbia, on September 18 to 20, 2025 is in full swing! We are looking forward to gathering with members and listening to engaging speakers on a variety of industry-focused topics, including recent merger and acquisition trends, employment law developments, and a discussion on risk management. Our young lawyers’ committee is also putting together a panel showcasing some of our newest Canadian talent! The
conference will be held at The Inn at Laurel Point in Victoria’s inner harbor area. Registration details and agenda will be released in the coming months. Be sure to save the date!
Lastly, I’m pleased to share our Canadian content for this edition to The Transportation Lawyer! It features a great article from our board of directors representative for the Atlantic Provinces director, Sarah Shiels, on practical tips for obtaining an injuction in the transportation-intensive aquaculture industries. Additionally, our Director of Communications, Seamus Ryder, has co-authored an engaging article discussing proposed new marine safety and pollution regulations alongside Past President Robin Squires of Toronto and Katherine Shaughnessy Chapman of Montreal. Last but not least, we have a case note on a recent, impactful Supreme Court of Canada decision co-authored by Jean-Jean-Simon Schoenholz, Christopher A. Guerreiro, Florence Méthot, and Miteau Butskhrikidze from Norton Rose Fulbright’s Ottawa, Toronto, and Quebec City offices.
I look forward to seeing everyone in Rancho Mirage, and in Victoria later this year!
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Jaclyne Reive
Association Business
Editor’sTLAColumn
As my tenure as Editor of The Transportation Lawyer comes to a close, I find myself reflecting on the past year with deep gratitude. The content in these pages has consistently been outstanding, thanks to the incredible work of our contributors. Each issue has showcased the expertise, insight, and dedication of our TLA members, covering topics at the forefront of transportation law. I have learned so much in this role—far more than I ever anticipated—and I am immensely grateful to all of you who shared your knowledge, perspectives, and hard work.
Of course, none of this would have been possible without the support of many people behind the scenes. I want to extend my sincerest thanks to my colleagues on the Executive Committee ladder— Kathy Garber, Louis Amato-Gauci, Roger Watts, and Kristen Johnson. Their leadership and guidance have been invaluable, and their support has made this experience all the more rewarding.
I also want to give a special shoutout to my assistant, Whitney Logan, who has been instrumental in keeping everything organized. Whether it was tracking down articles, sending out reminders to authors, or helping refine drafts, Whitney’s efforts ensured that each issue came together seamlessly. Thank you, Whitney—I owe you more than a few cups of coffee for your patience and attention to detail!
AI’s role in legal practice is rapidly expanding, bringing both opportunities and challenges. In Implementing and Ethically Navigating AI in Legal Practice, Billy Davis and I provide a practical framework for responsible AI use while upholding core ethical duties. We examine key risks, including confidentiality concerns and AI-generated errors, and analyze recent guidance from the ABA and state bars. With AI reshaping legal workflows, our article helps attorneys harness its benefits while avoiding ethical pitfalls.
Johann Annisette, Ian Breneman, and Michael Furyk bring us “Enforcing Arbitration Clauses on Land and Sea,” examining recent Canadian case law and arbitration’s expanding role in transportation disputes. Their insights into compelling arbitration agreements—even for non-signatories—offer valuable takeaways for practitioners.
And then there’s ChatGPT. I must admit, when I first took on this role, I didn’t realize how much of a lifesaver AI could be. From brainstorming ideas to helping tighten up my writing, ChatGPT has been a surprisingly reliable assistant. (Though, unlike Whitney, it never once reminded me when an article was overdue!) I can only hope that Roger Watts, the incoming Editor, finds it as useful—though, Roger, I suspect you’ll handle this role with ease, even without an AI sidekick.
Now, onto this issue’s stellar content.
Clark Monroe and David Dunbar analyze the Supreme Court’s ruling in Mallory v. Norfolk Southern Railway Co. and its profound impact on personal jurisdiction. Their article, “Legal Implications of Mallory and Proactive Strategies in Response,” provides key insights into venue selection and jurisdictional defenses—essential reading for anyone defending transportation litigation.
Eric Zalud’s “Logistics on the Offensive: Using Contractual and Common Law Rights as a Sword” highlights how logistics companies proactively take proactive legal action using well-drafted contracts. From non-compete clauses to double brokering protections, this article provides practical strategies to stay ahead of potential legal disputes.
Cameron Roberts , Jay Acayan , and Woongchan Yum explore the evolving landscape of sustainability in “Navigating the Carbon Frontier: Lessons from the EU’s CBAM Model and Implications for the U.S. Under Trump 2.0.” With regulatory shifts on the horizon, this article unpacks how CBAM policies could reshape global trade and the transportation industry.
Peter Quinter’s “The Future of International Trade Under the Trump Administration” gives a dive into the latest trade policy developments, including new tariffs, enforcement priorities, and supply chain challenges. His analysis is a must-read for anyone navigating the rapidly changing complexities of international trade.
Finally, Jol Silversmith, Jeremy Handschuh, and Andrew Danas provide a committee report on behalf of the Antitrust and Unfair Trade Practices Committee. Their comprehensive review covers key litigation, regulatory actions, and legislative changes impacting the transportation and logistics industries.
As I sign off as Editor, I want to extend my best wishes to Roger Watts as he takes over the helm. Roger, you’re stepping into an incredible role, and I know you’ll continue to uphold the high standards of The Transportation Lawyer.
Thank you all for your contributions, support, and making this such a rewarding experience. I look forward to staying engaged in TLA—and reading future issues of TTL with the same excitement and appreciation I’ve had as Editor.
See you all in Rancho Mirage!
Patrick E. Foppe
Editor’sCTLAColumn
From the Canadian Desk: Tariffs, Annexation, and the Transportation Lawyer’s Guide to Survival
There’s an old saying in Canada: If you don’t like the weather, wait five minutes. The same could be said of our regulatory landscape, which appears to shift just as quickly—and sometimes with equally unpredictable results. While the latest political rumblings south of the border suggest that the United States may be considering either annexation or another round of trade disputes (both, let’s face it, would be on brand), transportation lawyers on both sides must remain vigilant. Cooperation and collaboration have never been more crucial—both to our respective clients and to the industry as a whole.
This issue of The Transportation Lawyer brings you three critical pieces that demonstrate just how much we need each other in these uncertain times.
First, Sarah Shiels and Michael Kennedy provide a practical guide on how to obtain an injunction to protect Canadian aquaculture operations. While some may dismiss this as niche knowledge, those of us who enjoy a well-prepared Atlantic salmon (preferably without the taste of litigation) will recognize the importance of ensuring smooth and uninterrupted operations in the sector. Their insights offer valuable lessons for any transportation lawyer dealing with regulatory interference—or, more bluntly, anyone trying to keep their clients out of court while ensuring their fish (or freight) reach their intended destinations.
Katherine Shaughnessy-Chapman, Robin Squires, and I take a critical look at Canada’s proposed regulations on marine emergency services and pollution response. While ostensibly designed to enhance environmental protection, these new regulations may create as many hazards as they purport to prevent. We wade through the murky waters of regulatory overreach, examining the consequences for transportation operators, insurers, and legal practitioners alike.
Finally, Jean-Simon Schoenholz and his colleagues at Norton Rose Fulbright Canada LLP dissect a recent Supreme Court ruling that mandates a more rigorous review of regulations. What does this mean for the transportation industry? More paperwork, certainly. More litigation, almost inevitably. But potentially, a much-needed check on regulatory excess. Their analysis provides critical guidance on how transportation lawyers can navigate this new landscape—and perhaps even wield these new judicial standards to their clients’ advantage.
Next, in a topic near and dear to my heart, my co-authors
So whether you’re fighting for aquaculture operations, grappling with environmental regulations, or deciphering the latest judicial pronouncements, one thing is clear: Canadian and American transportation lawyers have more in common than ever. Whether it’s tariffs, regulations, or an impending annexation (we assume the paperwork on that is still pending), working together remains our best strategy for survival. And if that fails, well—there’s always another injunction to be filed.
Website: www.ctla.ca
TTL Call for Articles
We are looking for more featured articles and case notes for upcoming issues. Submitting an article to the TTL provides a unique opportunity to gain nationwide recognition, showcase your expertise, and contribute to a well-respected industry publication. The submission deadline for the next publication is May 5, 2025
Please direct any questions and submissions to TTL Incoming Editor, Roger Watts, rwatts@lindsayllp.ca
Seamus Ryder
Association Business
TLA Secretary/Treasurer’s Report
Spring is here, and we are going to have a great one together in Rancho Mirage, California, this April. If you are one of the 245 registered attendees at the Chicago Regional who survived another January in Chicago—I commend your bravery! You should reward yourself with a much more temperate time at the 2025 Annual Conference. As we look forward to the warmer months, I am happy to bring you the Secretary/Treasurer’s Report for the period covering December 2024 through February 2025.
Kristen M.J. Johnson
Revenue
and Expenses
Chicago Regional Conference Success
We had a hugely successful Chicago Regional Conference, held at the Radisson Blu Aqua Hotel. The event was expertly planned by Marc Blubaugh, Hillary Arrow Booth, and Brad Bertkau. It featured an exceptional lineup of CLE programming, plenty of networking time, and social gatherings. I was so impressed at the many new voices speaking—it’s clear that the New and Young Lawyers Committee has been hard at work plugging our newer and younger (but no less wise) lawyers into the TLA speaking circuit. The ethics panel was possibly the most enthralling ethics panel we’ve had to date—Understanding the Ethics of Generative AI—where Megan Baker, Billy Davis, and Sophia Rago had the rapt and energetic attention of the audience as we debated the topic.
The Chicago Regional revenue is currently projecting a surplus of at least $12,000. Final registration was well above projections, and a fantastic indicator of the event's success.
Looking ahead to 2026, the Chicago Regional will shift to the Fairmont in Chicago beginning next year. Bill Taylor and Louis Amato-Gauci worked diligently in negotiating a five-year contract for this exciting move. The Executive Committee has approved the transition, and we look forward to being back at the Fairmont.
A special thanks to all attendees, sponsors, and contributors for making the Chicago Regional an outstanding success.
Financial Overview
Our FY25 financial position through December 30, 2024, is summarized below:
Looking Ahead to Rancho Mirage
We are eagerly anticipating the 2025 Annual Conference, which will be held April 30 – May 3, 2025, at the stunning Westin Rancho Mirage Golf Resort & Spa in Rancho Mirage, California. This promises to be a wonderful opportunity for networking, continuing education, and reconnecting with colleagues. Be sure to mark your calendars and join us for an impactful and engaging event.
Membership and Community
Thank you to all who have renewed membership, and a special big thank you to those who have helped build our membership base. We have 816 new members as of December 2024! Even with this momentum, membership dues are down by $17,069, which is short of our budgeted target. Joelle Nelson and Fritz Damm continue the tireless effort of managing the Recruiting Committee and supporting each of you in your membership.
Thank you for your continued support and involvement in the TLA community.
Wishing everyone a wonderful spring season filled with growth, success, and meaningful connections. I look forward to seeing many of you in Rancho Mirage and continuing to build upon our vibrant TLA community.
April 30 - May 3, 2025
Westin Rancho Mirage Golf Resort & Spa Rancho Mirage, CA
2025 Annual Conference & CTLA Midyear Meeting
Calendar of Events & Continuing Legal Education Program
Westin Rancho Mirage Golf Resort & Spa, Rancho Mirage, California April 30 – May 3, 2025
8:30 a.m. – 9:30 a.m. Maritime Law Through the Lens of the Devastating March 2024 Allision of the M/V DALI with Baltimore’s Francis Scott Key Bridge
This event caused the tragic death of six construction workers on the bridge, the closing of the Baltimore port for 11 weeks, and a tangled web of federal investigations and lawsuits that will last for many years. This panel will explore how to navigate the interaction of admiralty and transportation law from fundamentals to current developments, including: where does admiralty law and jurisdiction begin and shoreside transportation law end; the preservation of evidence before suit; an introduction to the Limitation of Liability Act and General Average; and Federal investigations of maritime incidents.
Moderator: Otis Felder, Partner, Wilson Elser, Los Angeles, CA
Panelists: Benjamin Allen, Partner, Holland & Knight, Washington, D.C.
Patrick J. Hudson, Ph.D., P.E., Senior Managing Consultant, Engineering Systems, Inc. (ESI), Irvine, CA
9:30 a.m. – 10:30 a.m. Express Federal Preemption in Multiple Modes
Since at least the early 1990s, when Congress passed the Federal Aviation Administration Authorization Act of 1994, most carriers or transportation intermediaries have had available to them one or more powerful sources of express statutory preemption. This panel will include a brief reminder of how the current statutory preemption picture evolved and how express preemption differs from implied; provide the panelists’ take on some of the best uses of express preemption statutes in contracts and litigation; compare and contrast the fairly similar preemption available to airlines, motor carriers, and intermediaries with the preemption available to railroads; and consider some strategic questions about prudence and tension in the use of preemption.
Moderator: Beata Shapiro, Partner, Wilson Elser, Boston, MA
Fred Miller, Associate General Counsel, Government Affairs Liaison, Association of American Railroads, Washington, D.C.
Ken Sansom, Partner, Spotswood Sansom & Sansbury, LLC, Birmingham, AL
10:30 a.m. – 10:45 a.m. Break
10:45 a.m. – 11:30 a.m.
Securing Precious Cargo:
Navigating Claims for High-Value Cargo and Strategies for Mitigating Risk
In this panel, we will explore the risks inherent in transporting high-value cargo such as pharmaceuticals, artwork, antiques, and other high-value items. Featuring panelists with a variety of expertise, we will explore how to manage risk through the perspective of the shipper, motor carrier, and intermediary, and discuss considerations for all stages of transportation including contracts, in-transit concerns, and claims.
Moderator: Chris Merrick, Shareholder, Flaster Greenburg, Philadelphia, PA
Panelists: Fredric Marcinak, Partner, Moseley Marcinek Law Group LLC, Greenville, SC
Christopher Grassi, Associate Director, Regional Logistics, Merck, Sharp & Dohme LLC, West Point, PA
Allen Motter, Vice President Legal & Risk, ArcBest Corp, Medina, OH
Association Business
11:30 a.m. – 12:15 p.m.
Competition/Anti-Trust: What You Need to Know about Doing Business in Mexico, the United States, and Canada
From 30,000 feet, our panelists will each share the top three (or four) things they want you to know about competition and anti-trust laws for the transportation industry in their home country.
Moderator: Robin Squires, Partner, BLG, LLP, Toronto, Ontario, Canada
Panelists: Brian Lipson, Partner, McCarthy Tetrault, Quebec City, Quebec, Canada
Andrew Danas, Partner, Grove, Jaskiewicz & Colbert, Washington, D.C.
Ramon Concha, Partner, Cacheaux, Cavazos & Newton, San Antonio & México City
12:30 p.m. – 1:30 p.m. TLA Business Meeting Luncheon
2:00 p.m. – 4:00 p.m. CTLA Executive and Directors Meeting (date/time to be confirmed)
2:00 p.m. – 4:00 p.m. Committee Meetings
2:00 p.m. – 3:00 p.m.
3:00 p.m. – 4:00 p.m.
6:00 p.m. – 9:00 p.m. Evening Activity – Shots in the Night
Friday, May 2, 2025
7:30 a.m. – 8:30 a.m. Continental Breakfast
8:30 a.m. – 12:30 p.m. EDUCATIONAL PROGRAM II
8:30 a.m. – 9:30 a.m. Driving Labor and Employment Compliance: Navigating Recent Developments under the Trump Administration, FLSA Classification Issues, Arbitration Agreements, and Employees Crossing International Borders
This panel will review the recent labor and employment developments under the Trump administration including an update on non-compete issues, changes at the NLRB, and the elimination of DEI and affirmative action requirements and the implications for federal contractors. The panel will also review FLSA Classification issues with respect to freight brokers, dispatchers and other non-asset based transportation workers, arbitration agreements in employment relationships, and challenges for employees crossing the US-Mexico and US-Canada border.
Panelists: Shannon Butler, Vice President, Human Resources, Montgomery Transport, LLC, Birmingham, AL
Lindsey Boyd, Assistant Corporate Counsel, Total Quality Logistics, Cincinnati, OH
9:30 a.m. – 10:30 a.m.
FMCSA Regulations: Status and Strategies
The FMCSA has announced new regulations are on the way, from revamping the safety rating process to tightening up control over carrier registrations and transfers of authority. At the same time, the Supreme Court took a wrecking ball to the regulatory state by ending Chevron deference and extending the right to a jury trial to certain administrative enforcement actions. Panelists who deal extensively with matters before the FMCSA will discuss these topics and highlight how transportation companies can best position themselves to be in compliance with all applicable regulations.
Moderator: Fredric Marcinak, Partner, Moseley Marcinek Law Group LLC, Greenville, SC
Panelists: Elle Slattery, Partner, Taylor Nelson, Winter Haven, FL
Jeffery E. Cox, Partner, Law Office of Seaton & Husk, LP, Vienna, VA
10:30 a.m. – 10:45 a.m. Break
10:45 a.m. – 11:45 a.m. Navigating Emerging Technologies – Complying with Attorneys’ Ethics in the Era of Artificial Intelligence
The 2025 ethics panel will focus on the intersection of the Rules of Professional Conduct and the everevolving field of artificial intelligence and cybersecurity. The panel will discuss developing issues confronting attorneys as they navigate the use of emerging technologies and compliance with the Rules of Professional Conduct. This presentation will include reference to specific Rules of Professional Conduct that are implicated by modern technology and must be considered by the modern practitioner.
Moderator: Eric C. Palombo, Shareholder, Flaster Greenberg PC, Conshohocken, PA
Panelists: Cari L. Sheehan, Assistant General Counsel, Taft Stettinius & Hollister, LLP, Indianapolis, IN
Gene Fishel, Counsel, Troutman Pepper Locke, Richmond, VA
11:45 a.m. – 12:45 p.m. Latest Developments in Insurance Law
This panel will review developments in key areas of transportation insurance law including state laws on minimum financial responsibility, modifications to the “Who is an Insured” provision, wrestling with policy limits demands, the meaning of “non-owned auto,” named driver exclusions, primary/excess disputes between insurers, employee exclusions and the scope of the MCS-90 endorsement.
Moderator: Laurence J. Rabinovich, Partner, Barclay Damon, New York, NY
Panelists: Melody Demasi, Associate, Baker Donelson, Atlanta, GA
Paul A. Korfmacher, Vice President, Business Insurance-Transportation, Marsh McLennan Agency, Independence, OH
12:45 p.m. – 2:00 p.m. Lunch (on your own)
12:45 p.m. – 2:00 p.m. Past President’s Lunch
2:00 p.m. – 4:00 p.m. Committee Meetings
2:00 p.m. – 3:00 p.m.
3:00 p.m. – 4:00 p.m.
6:30 p.m. – 7:30 p.m. Cocktail Reception
7:30 p.m. – 10:00 p.m. Annual Banquet (black tie optional)
Saturday, May 3, 2025
6:30 a.m. - 7:30 a.m. Fun Run/Walk
7:30 a.m. – 8:30 a.m. Continental Breakfast
8:30 a.m. – 12:30 p.m. EDUCATIONAL PROGRAM III
8:30 a.m. – 9:30 a.m. Multi-Modal Lightning Round: Covering Recent Issues in Road, Ocean, Rail, and Air Transportation
This 2024-2025 lightning round will address recent court decisions and industry observations in a variety of transportation modes, including road, rail, maritime, and aviation. Comprised of panelists with expertise in each mode of transport, the panel will highlight new and emerging topics effecting the transportation industry.
Moderator: Emileigh Hubbard, Shareholder, Henry, Oddo, Austin Fletcher, PC, Dallas, T X
Panelists: Daniel Sonneborn, Director, Preti Flaherty, Boston, MA
Eric Palombo, Shareholder, Flaster Greenberg PC, Conshohocken, PA
Nia White, Associate Attorney, Gentry Locke, Richmond, Virginia
Stephen Uthoff, President, The Uthoff Law Corporation, Long Beach, CA
Association Business
9:30 a.m. – 10:30 a.m. In God We Trust: Mass Casualty Road Accidents Caused by Acts of God
This panel will discuss a three-step approach to handling mass casualties. Rapid response to a mass casualty/ mass property destruction event is imperative in today’s transportation dependent society. From preserving the evidence and analyzing the data, including recognizing how the data tells the story that is necessary right through closing argument, large losses of high magnitude require an organized approach. Recognizing the strength of tackling these losses as a team, the panel, led by defense counsel and industry leading experts, will discuss their methods, techniques and creative approaches, illustrating prior cases, through a three-part view:
1) The essentiality of a rapid response, with the right experts and an early eye toward identifying liability and damages,
2) The potential for creative, and Avant Garde approaches, to early resolution and file handling, and
3) The opportunity to leverage a wider landscape of defensive strategies—including legal defenses, thirdparty practice, and risk transfer—to reduce exposure and increase resolution avenues.
Moderator: Kevin Foley, Partner, Reminger Attorneys, Columbus, OH
Tina Taylor Thomas, Partner, Chamblee Ryan, P.C., Houston, TX
Jim Hrycay, Engineer and Owner, Hrycay Consulting Engineers, Inc., Oldcastle, Ontario, Canada
10:30 a.m. – 10:45 a.m. Break
10:45 a.m. – 11:45 a.m. Fraud in the Supply Chain: How Does the Industry Respond?
Fraud in the transportation industry takes on many forms, including “Fuel Fraud,” which involves the manipulation or theft related to fuel usage, purchasing, or distribution; “Cargo Theft,” whereby goods are stolen in transit; “Employee Fraud,” e.g., skimming, overbilling, or misuse of company assets; “Insurance Fraud,” including falsification or exaggeration of claims related to accidents, cargo damage, or liability; “Cyber Fraud,” involving cyberattacks targeting transportation systems, logistics data, or customer information; “Procurement and Vendor Fraud,” e.g., collusion between vendors and employees; “Customs and Documentation Fraud,” including the manipulation of customs and shipping documents to evade taxes or tariffs; “Financial and Payment Fraud,” i.e., fraudulent billing activities affecting payments between shippers, carriers, and brokers; “Freight Forwarding Fraud,” e.g., misleading customers about shipment routes, overcharging for services, or using low-cost carriers; “False Reporting or Data Manipulation,” including the misreporting of mileage, emissions, or cargo weight to avoid fees and/or improve financial performance. This panel will survey the various fraudulent activities in the transportation space, especially cyber fraud, and the elements of the more common scenarios followed by a discussion of the legal claims arising out of the fraud, and what the industry is doing in response.
Moderator: William Pentecost, Partner, Cipriani & Werner, P.C., Pittsburgh, PA
Panelists: Henry J. Sienkiewicz, M.S., Adjunct Lecturer, Georgetown University School of Continuing Studies, Washington, DC
William Hickman, M.P.P., President and CEO, CSI Corporate Security and Investigations, Monaca, PA
Will Polaski, General Counsel, PLS Logistics Services, Cranberry Township, PA
Craig Helmreich, President, Helmreich Law LLC, Fishers, IN
11:45 a.m. – 12:45 p.m. AV Accidents – Who’s Responsible and Who Pays?
Several recent high-profile U.S. AV collisions are a turning point for determining how the existing legal system worked (or failed) to achieve justice and ensure accountability. This session will include: human factors and accident reconstruction videos/analysis; an AV lawsuit legal theory primer; panelist/attendee Judges (and/or audience polls) to decide who is responsible and who should pay on actual cases; safety lessons learned; what laws must change to equitably compensate crash victims; government liability (shared mobility); and exploring international legal liability AV frameworks.
Moderators: Matthew W. Daus, Esq., Partner, Windels Marx, New York, NY
Panelists: Alan Steinberg, Esq., California Department of Transportation, Sacramento, CA
Dr. John Campbell, Ph.D., Exponent, Human Factors Scientist, Bellevue, WA
12:45 p.m. – 2:00 p.m. Lunch (on your own)
2:00 p.m. – 5:00 p.m. Poolside Fun and Games
6:30 p.m. – 7:30 p.m. Closing Reception
7:30 p.m. – 10:00 p.m. Dine-Arounds
TLA Membership Report
Please join us in CONGRATULATING Fritz R. Damm on his recent retirement. Thankfully, Fritz continues to dedicate his unwavering support and much-needed energy into the Membership Committee and TLA is all the better for it. He has cultivated incredible relationships over the years, which has served as the foundation upon which TLA builds its membership. We are so grateful Fritz continues to lead in this important role – even in retirement – thank you Fritz!
The Membership Committee continues to serve as a dedicated roadmap and guide for the organization’s mission, membership, and membership activities. The Committee is focused on enhancing membership, but also devoted to leading initiatives to improve, broaden, and increase the base of the TLA membership. Further, we are committed to diversity and continue to strive to identify member needs, developing services to meet those needs as well as streamline member processes.
TLA continues to attract global and leading transportation members with a wide variety of backgrounds and experiences. The Committee understands the critical importance of keeping members engaged and involved by working with the executive committee, but also the membership at large to showcase new members and reinforce the overall mission of the organization.
The Committee remains open to fresh and exciting ideas that ensure the vitality of the organization. Please do not hesitate to reach out as the Committee is here to serve you and your valuable insights and perspectives will only elevate our collective and continued success. If you know someone who would enjoy becoming a member, please invite them or provide their contact information to Fritz R. Damm (sfritzlaw@outlook.com) or Joelle G. Nelson (Joelle.Nelson@lewisbrisbois.com).
As of February 2024, TLA has a total of 784 active members. Our social media initiatives have been fruitful and we are seeing increased interest in the organization across all practice groups, including but not limited to student membership. This further highlights and reinforces our continued investment in technology and our effort to fast-forward into the future.
We wish to welcome all the new members who joined TLA in 2024 and early 2025!
New Members
• Andrew Agati, Taft Stettinius & Hollister LLP
• Terri Ahrens, US Foods
• Graham Askew, FEDEX Corporation
• Kyle Baicker-McKee, The Lynch Law Group LLC
• Megan Baker, Chartwell Law
• Rory Barnable, Barnable Law P.C.
• Michael Barnes, Hunter, Maclean, Exley & Dunn P.C.
• Gregg Willich, Evans Transportation Services, Inc.
• Jonathan Wilson, Arrive Logistics
• Danielle Wolfenden, Traffic Tech Inc.
• Lauren Wood, UB Greensfelder LLP
• Dave Zahniser, Whitten Law Office LLC
Membership is a team effort and we continue to need your help! Your reward you ask – the honor of becoming a Line 8 Recipient! We are thrilled to report that 56 TLA members actively invited new members to join TLA in 2024. We wish to recognize and thank each of them.
• Louis Amato-Gauci
• JP Anthony
• Eric Baker
• Mark Barber
• Matthew Barrette
• Stevan Baxter
• Dirk Beckwith
• Eric Benton
• Patrick Bobo
• Frank Botta
• Scott Carey
• Curtis Cornett
• Clint Cox
• Byron Countryman
• Fritz Damm
• Edgar M. Elliott
• Rui Fernandes
• Kathleen Flett
• Patrick Foppe
• Kathy Garber
• Jeremy Hanschuh
• Gordon Hearn
• Matt Hefflefinger
• Craig Helmreich
• Jeff Jurca
• Miles Kavaller
• Chris Kelly
• Paul Kozacky
• Michael Kroul
• Andrew Light
• Megan MacCallum
• Julie Maurer
• Joelle Nelson
• Bill Pentecost
• John T. Pion
• Lori Posluns
• Peter Quinter
• Rob Reeb
• Jaclyne Reive
• Jameson B. Rice
• Melissa Richardson
• Jeff Simmons
• Chad M. Sizemore
• Larry D. Smith
• Steve Stanaszak
• Robin Squires
• JW Taylor
• William D. Taylor
• Donald Vogel
• Carole McAfee Wallace
• Lauren West
• Dick Westley
• Dale Weppner
• Christopher Whitten
• John F. Wilcox, Jr.
• Ashley W. Winsky
• Todd Wolfe
• Eric Zalud
Antitrust and Unfair Trade Practices Committee Report
This report summarizes selected court decisions and filings; agency actions; and legislative developments in 2024, which involved antitrust, unfair competition, or deceptive trade practices issues within the transportation and logistics industries. It updates the TLA Antitrust and Unfair Trade Practices Committee report published in April 2024 that reviewed developments in 2023.
As a result of the 2024 Presidential election, the year marked last full year of the Biden Administration. Antitrust enforcement was a key focus of Biden Administration, making 2024 a very active year for legal issues involving transportation and logistics. This was especially so with respect to industry mergers and federal government actions seeking to prohibit perceived anticompetitive practices and private-sector lawsuits involving potentially deceptive practices. New regulations were adopted governing merger procedures; unreasonable refusals to deal by ocean carriers; detention and demurrage practices and invoicing in ocean shipping; and non-competes. Continuing the Biden Administration’s focus on increasing competition in supply chain logistics and perceived competitive abuses of concentrated power by tech companies, federal
government agencies such as the Federal Trade Commission aggressively sought to prohibit the use of non-compete agreements and to challenge the activities of companies such as Amazon.com for allegedly tying the use of its logistics fulfillment services to favorable product placements on its online retail platform.
Some of these government efforts were more successful than others. For example, while the federal government successfully opposed airline mergers and the FTC lawsuit against Amazon survived a motion to dismiss, certain proposed rules –for example the FTC’s ban on non-compete agreements – were stopped in court and are unlikely to be revived after the November 2024 election of President Trump.
As is often the case, many privatesector court cases in 2024 involved not only basic claims under the federal antitrust laws such as the Sherman and Clayton Acts1 but also many broader competition law claims, including those under the Lanham Act;2 the Computer Fraud and Abuse Act;3 various state implementations of the Uniform Deceptive Trade Practices Act; the Uniform Trade Secrets Act; and state unfair competition and consumer protection laws. One area of particular interest in 2024 was a series of cases involving state law deceptive
* KMA Zuckert LLP (Washington, D.C.) - Co-Chair, Antitrust and Unfair Trade Practices Committee ** Mitchell-Handschuh Law Group, LLC (Atlanta, GA) - Co-Chair, Antitrust and Unfair Trade Practices Committee *** Grove, Jaskiewicz & Cobert LLP (Washington, D.C.) - Co-Chair, Antitrust and Unfair Trade Practices Committee
trade practices claims against motor carriers and household goods movers that were preempted under the Carmack Amendment because the claims also related to the loss and damage of shipped goods.
Finally, late in 2024, the Attorney General of the State of Nebraska filed a state law antitrust lawsuit against Class 8 truck manufacturers alleging an unlawful collaboration to adopt CARB Clean Truck Partnership standards and reduce the production of internal combustion vehicles in favor of electric vehicles. It remains to be seen whether this litigation is a harbinger of future lawsuits that may be brought in 2025 under the new Trump Administration.
The selective and non-comprehensive summaries provided below focus on the issues that involved antitrust and unfair competition law or deceptive trade practices. As such, other issues discussed or addressed in the cases or dispositive to their resolution may not be addressed.
Litigation
Aviation
• In November 2024, a panel of federal appeal judges affirmed that the “Northeast Alliance” between American Airlines and JetBlue Airways, for coordination in Boston and New York, violated the Sherman Act.4 A private lawsuit remains pending, which alleges that the alliance caused consumers to pay
Jol Silversmith*
Andrew Danas***
Jeremy Handschuh**
supra-competitive prices for air transportation.5
• The DOJ also challenged the proposed merger of JetBlue and Spirit Airlines; a ruling blocking the combination under the Clayton Act was issued in January 2024, leading to the merger’s abandonment.6 The plaintiffs in a private lawsuit have requested attorney fees, asserting that they were effectively the prevailing party.7
• A provider of fuel and other services asserted that an airport illegally excluded it by acquiring other operators and providing the services itself; the court concluded that the defendants were immune from antitrust claims.8
• The Fifth Circuit has preliminarily enjoined the enforcement of regulations adopted in April 2024 which would require air carriers and agents to provide enhanced disclosures about ancillary fees when booking air transportation.9
• US Airways, which prevailed in an antitrust claim against Sabre, regarding ticket distribution; its successor, American, received only a nominal $1 in damages, but requested more than $139 million in costs. The parties subsequently entered into a settlement.10
• A shuttle for airline crew alleged that the Port Authority of New York and New Jersey favored a competitor; the court held that the defendants had state action immunity, and that antitrust injury had not been shown.11
• A complaint which alleges that certain air carriers conspired to allocate slot assignments at U.S. airports was refiled after previously twice having been dismissed on procedural grounds. The defendants have again moved to dismiss.12
• An air carrier in the Northern Mariana Islands has alleged that a competitor conspired with the territorial government to violate the Sherman Act and
charge below-market prices for air transportation.13
• A startup provider of inflight connectivity products for business aircraft alleged that the dominant company in that market abused its monopoly to prevent new entry, in violation of the Sherman Act and other laws.14
Rail
• A declaratory judgment action between two railroads to enforce the haulage terms of a 1988 agreement constituted a merger condition, not a contractual dispute, and was thus held by a federal district court to be subject to the exclusive and primary jurisdiction of the Surface Transportation Board.15
• The Fourth Circuit affirmed a district court ruling that CSX could not use the “continuing violation” rule to bring an antitrust case based on rate changes made nine years earlier by Norfolk Southern.16
• In a case alleging fuel surcharge price-fixing by railroads, the court held that certain documents regarding interline movements would not be considered, because they were excluded by 49 U.S.C. § 10706.17
Trucking
• The FTC and Florida filed a lawsuit against a company which promised investors passive income from purchasing trucks, to be operated on their behalf, a scheme which they allege to have been fraudulent.18
• On November 19, 2024, the Nebraska Attorney General and two combustion fuel trade associations filed a state court lawsuit against the Truck & Engine Manufacturers Association and individual truck manufacturers alleging an unlawful collaboration to adopt California Air Resource Board (CARB) standards to reduce the production of internal combustion vehicles in favor of electric vehicles.19
Ocean
• In 2022, DOJ criminally charged the operators of a transmigrant agency,
who allegedly fixed prices for cars and other cargo shipped to Central America. In October 2024, one defendant, Sandra Guerra Medina, pleaded guilty.20
• On July 5, 2024 the United States Court of Appeals for the D.C. Circuit set aside and remanded a decision of the Federal Maritime Commission (“FMC”) finding that an ocean carrier had violated the FMC’s interpretive rule governing practices of carriers when charging and collecting detention and demurrage charges. The Court held that the FMC’s decision was arbitrary and capricious in finding that the carrier had engaged in an unreasonable practice when it charged detention and demurrage fees on days when equipment could not be returned because a port was closed. The Court stated that the FMC could not treat the port closure as a bright line test but needed to consider the overall facts and circumstances of the carrier’s practices and charges.21
Inland Waterways
• A company which planned to build a transfer terminal to allow oil to be transported on inland waterways alleges that a pipeline operator and other competitors blocked the project in violation of the antitrust laws.22
Bus
• A tour bus company alleged that competitors conspired to limit its access to attractions in New York City. The case was dismissed on the basis of res judicata, because similar claims were litigated previously.23
• A separate-but-related case was filed in a New York state court in 2019 by the competing tour companies. In May 2024, the New York Court of Appeals held that Go Taxi could bring allegations under state antitrust law as counterclaims.24
Household Goods
• Since they were found to also relate to claims for lost or damaged goods,
the Carmack Amendment was held to preempt state-law claims against a household goods moving company and its agent based on fraudulent inducement of contract and state consumer protection law claims when the carrier doubled the priced quoted for the goods and then refused to deliver the shipment.25
• A shipper’s claims for violations of the Ohio Consumer Sales Practices Act, the Ohio Deceptive Trade Practices Act, negligent misrepresentation, conversion, and fraud against a household goods moving company that charged prices higher than quoted; failed to provide promised equipment; and delivered damaged property were preempted under the Carmack Amendment.26
• Plaintiff’s state law claims for fraudulent misrepresentations and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act against movers who renegotiated the contact move rate and demanded additional charges after the move had commenced and then delayed delivery were dismissed as preempted under the Carmack Amendment because they were based on a contract related to the plaintiff’s claims for damaged goods.27
E-Commerce and Related Fulfillment Services
• A federal district court denied Amazon’s motion to dismiss claims brought by the FTC and nineteen states and territories that allege that Amazon has violated Section 5(a) of the FTC Act; Section 2 of the Sherman Act, and state antitrust and consumer protection laws by engaging in anticompetitive practices, including coercing sellers to use Amazon’s fulfillment services. The court did dismiss several state law claims, without prejudice.28
• A federal district court dismissed with prejudice claims by individual consumers that Amazon violated Sections 1 and 2 of the Sherman
Act by forcing third-party sellers to purchase Amazon’s shipping and fulfillment services by tying the service and leveraging its power over product placement on Amazon’s online retail marketplace. The court found that even though the plaintiffs alleged that they paid higher prices, they did not allege that their injuries flowed from the tying arrangement in the shipping market or that they paid more for shipping or experienced an antitrust injury in the shipping market.29
Administrative Department of Transportation
• In December 2023, Alaska Airlines announced plans to acquire Hawaiian Airlines; the transaction closed in September 2024 after DOJ stated no objections, and the federal DOT (which had a limited role, based on its oversight of the carriers’ authority) imposed minimal conditions.30 Additionally, a private lawsuit challenging the transaction was dismissed on procedural grounds.31
• In February 2023, International Airlines Group (parent of British Airways and Iberia) announced plans to acquire Air Europa. The transaction was abandoned in August 2024 based on European Commission objections, but the DOJ also issued a statement in support of the EC.
• In December 2024, Korean Air closed its acquisition of Asiana, originally announced in November 2020, after DOJ (without publicity) stated no objections to the transaction. DOJ previously had indicated concerns, but concessions already had been required by other regulators. The review of an additional international air carrier merger remains pending at DOJ: ANA’s acquisition of NCA, originally announced in March 2023.
• In October 2024, DOT and DOJ issued a joint Request for Information seeking comments on competition in air transportation, identifying an array
of subjects, ranging from air carrier consolidation to aircraft manufacturing to labor issues. DOJ Docket No. ATR-2024-0001.
• DOT continues to consider whether the antitrust immunity previously granted to Delta Air Lines and Aeromexico in 2016 should be terminated, and an application filed by Allegiant and VivaAerobus in 2021 should be denied, because Mexico has not honored its commitments under the Open Skies treaty with the United States.32
• In September 2023, Airlines for America and JetBlue Airways filed complaints at DOT pursuant to the International Air Transportation Fair Competitive Practices Act alleging that they had been denied fair access to Schipol Airport in Amsterdam. JetBlue later withdrew its complaint, but the A4A complaint remains pending.33
• In April 2024, DOT adopted regulations imposing new refund requirements for delayed and cancelled flights.34 DOT also issued a final rule requiring air carriers and ticket agents to clearly disclose passenger-specific or itineraryspecific ancillary service fees for passenger air transportation.35 DOT also solicited comments on new requirements that air carriers ensure parents and children are assigned adjacent seats.36
• The FAA Reauthorization Act of 2024 (Pub. L. 118-63) directed GAO to study competition and consolidation among air carriers (§ 514) and directed DOT to brief Congress on what measures it and FAA could take to enhance competition at New York airports (§ 764).
Surface Transportation Board
• In October 2024, the STB approved the acquisition of the Meridian & Bigbee Railroad’s “Western Line” in Alabama by CSX Transportation Inc., and the acquisition of its “Eastern Line” in Alabama by Canadian Pacific Kansas City Limited.37
Federal Maritime Commission
• The FMC issued a “Demurrage and Detention Billing Requirements” final rule on February 26, 2024, 89 Fed. Reg. 14330, which took effect on May 28, 2024. The Commission subsequently denied a petition by the Ocean Carrier Equipment Management Association requesting that the FMC delay the effective date of the rule.38
• The FMC affirmed an earlier administrative decision that restrictions by ocean common carriers on the chassis providers that could be used by motor carrier partners violated the Ocean Shipping Reform Act of 2022.39
• In July 2024, the FMC issued a policy statement which clarified its powers to investigate coordination agreements filed with the agency by ocean common carriers, including to gather evidence and hold hearings, prior to seeking injunctive relief in court .40
• The FMC allowed the “Gemini” cooperation agreement between Maersk A/S and Hapag-Lloyd Aktiengesellschaft to enter effect, even while noting concerns about its competitive implications, and the limited window for the review of filed agreements. FMC Agreement No. 201429.
• Pursuant to the Ocean Shipping Reform Act of 2022, on July 23, 2024 the FMC published its final rule, Definition of Unreasonable Refusal to Deal or Negotiate with Respect to Vessel Space Accommodations Provided by an Ocean Common Carrier. 41
Federal Trade Commission
• The Federal Trade Commission (FTC) published a final rule providing that it is an unfair method of competition under Section 5 of the FTC Act for persons to enter into non-compete clauses in most circumstances.42 A federal district court in Texas entered a national injunction against
implementation of the rule before it could take effect, on September 4, 2024. An appeal to the Fifth Circuit is pending.43 The FTC is also appealing to the Eleventh Circuit a decision by a Florida federal district court that suggested that the rule likely exceeded the agency’s authority but only barred enforcement as to the parties.44 A third challenge to the rule was dropped when a federal district court refused to bar enforcement of the rule.45
• On November 12, 2024 the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice published a final rule and Statement of Basis and Purpose to amend the Premerger Notification Rules that implement the Hart-ScottRodino Antitrust Improvement Act, including the Premerger Notification and Report Form for Certain Mergers and Acquisitions and related instructions.46
• In December 2024, the FTC, along with DOJ, announced that it was withdrawing its 2000-vintage guidelines for collaboration among guidelines, stating that it was no longer reliable because of subsequent court decisions, revisions to the underlying safe harbor guidelines, and new analytical methodology.47
Consumer Financial Protection Bureau
• On December 23, 2024 the Consumer Financial Protection Bureau filed suit against Walmart Inc. and Branch Messenger, Inc. in the federal district court for Montana, alleging that Walmart and Branch, a financial technology company which offered deposit account services, engaged in unfair acts or practices in violation of the Consumer Financial Protection Act of 2010 with respect to opening and administering bank accounts on behalf of and to pay drivers performing last mile delivery services pursuant to the Walmart Spark Drivers program.48
Additional Subject Areas Lanham Act; Trademarks; False Advertising;
Libel
• A federal court adopted a magistrate judge’s recommendation to grant a transportation and logistics company a default judgment and injunctive relief against a competing carrier for federal and common law trademark infringement and common law unfair competition but denied default judgment for injury to business reputation or trademark. The case was re-referred to the magistrate for further proceedings to determine an award of damages, costs, and attorneys’ fees.49
• A court dismissed a company’s Lanham Act and state law false advertising claims against defendant warehouse and logistics company with which it had entered into a warehouse and fulfillment agreement. The plaintiff, which sold a variety of products to consumers, claimed it was injured because the defendant was unable to meet its needs and did not have the state-of-theart facilities, advanced technology, and fulfilment center capacity that it advertised and represented it had. The court held that while a competitor that is forced out of business due to a defendant’s false advertising may have a claim within the “zone of interest” for false advertising under the Lanham Act, a business misled by a supplier does not have such a claim.50
• The United States Court of Appeals for the Sixth Circuit affirmed a lower court ruling that a carrier failed to assert claims for statutory disparagement under the Tennessee Consumer Protection Act and false advertising under the Lanham Act against a consultancy based on statements the consultancy made to the carriers contracted service providers.51
• A passenger’s causes of action for false advertising in violation of the California Consumers Legal
Remedies Act; California False Advertising Law; and California Unfair Competition Law against an airline claiming that it was “a carbon neutral airline” were not preempted by the Airline Deregulation Act because the claims were not sufficiently related to rates, routes, or services.52
• A court refused to dismiss claims under the District of Columbia Consumer Protection Procedures Act (CPPA) asserted by a ride-share passenger injured in an auto accident. The court found that the plaintiff’s allegations that the ride-share company advertised itself as being a competitor of Uber and Lyft suggested that it was governed by the same laws, but that the defendant’s failure to disclose or obscured that it neither provided nor required its drivers to maintain rideshare insurance policies or that it failed to maintain insurance policies of its own to cover its drivers, fell within the scope of practices prohibited by the CPPA.53
• The Carmack Amendment did not pre-empt a libel claim against a carrier based on communications between the carrier with the seller and/or eBay because the claim did not arise from a loss of goods themselves but would be dismissed without prejudice because there was no federal anchor claim that would give supplemental federal court jurisdiction.54
Hidden-City Ticketing
• While describing its practices as being “stinky” and a “somewhat dubious business model,” a federal
Endnotes
1 15 U.S.C. §§ 1-38; 15 U.S.C. §§ 12-27.
2 15 U.S.C. §§ 1051, et. seq.
3 18 U.S.C. § 1030, et. seq.
court granted summary judgement to an internet-based travel logistics company that assisted its customers in using “hidden-city ticketing” to purchase less expensive airline tickets against an airline’s claims for breach of contract, breach of its conditions of carriage, and tortious interference with its conditions of carriage. The court found that the airline “waited a little too long to extinguish the stench.” The Court did grant the airline’s claim for copyright infringement but held that granting summary judgment on the airline’s claims for trademark infringement and unfair competition was improper due to the defendant’s possible laches defense.55
Computer Fraud and Abuse Act
• On July 18, 2024, a jury in the U.S. District Court in Delaware found that Booking.com had violated the Computer Fraud and Abuse Act (CFAA) by automatically “screen scraping” data belonging to Ryanair to obtain data that was allegedly then used by defendant online travel agents to allow their users to book Ryanair flights at higher prices. The jury awarded Ryanair $5,000. It also ruled against Booking.com on its counter-claims that Ryanair had engaged in unfair competition; tortious interference with business relations; or deceptive trade practices. 56
Deceptive Trade Practices and Consumer Protection Acts
• A passenger who, while seated at an airplane window, witnessed the suicide of an employee of the defendant ground and handling services
4 United States v. American Airlines Group, 1st Cir. No. 23-1802.
5 Berger v. JetBlue Airways Corp., E.D.N.Y. No. 22-CV-7374.
6 United States v. JetBlue Airways Corp., D.Mass. No. 23-10511.
company failed to state a claim for a violation of the Texas Deceptive Trade Practices Act.57
• A plaintiff’s Texas Deceptive Trade Practices claims for lost and undelivered packages were held to be preempted by the Carmack Amendment; the Airline Deregulation Act; and the Federal Aviation Administration Authorization Act of 1994.58
• Plaintiff independent contractor truck driver allegations that the defendant had committed unfair and deceptive trade practices in allegedly orchestrating an insurance scheme that denied workers compensation to the driver when he was injured while riding with another independent contractor failed to state a claim as a matter of law because plaintiff was not an independent contractor or subcontractor of defendant.59
• A federal court denied Amazon’s motion to dismiss a putative class action by drivers for Amazon.com and Amazon Logistics for unfair and deceptive practices under the Washington Consumer Protection Act for the alleged failure of Amazon Flex to honor its promise that workers would receive 100 percent of tips that customers added for tipeligible deliveries. Although in 2021 Amazon had agreed to a settlement with the Federal Trade Commission to pay more than $61.7 million to settle FTC charges related to the practices, the court found that while the drivers were not entitled to a double recovery, they could assert additional claims under the WPCA.60
8 Coral Aviation Group v. Muller, E.D. Penn. No. 23-CV-1838.
9 Airlines for America v. DOT, 5th Cir. No. 24-60231.
10 US Airways, Inc. v. Sabre Holdings Corp., S.D.N.Y. No. 11-CV-2725.
11 Amigo Shuttle, Inc. v. Port Authority, 2024 U.S. Dist. LEXIS 198687, 2024 WL 4628330 (Mar. 26, 2024), additional decision 2024 U.S. Dist. LEXIS 227256; 2024 WL 5107240 (S.D. N.Y. Dec. 13, 2024) (22-CV-10361-PKC).
12 Endres v. Air Canada, D.D.C. No. 24-CV-883.
13 Star Marianas Air, Inc. v. Southern Airways Express, LLC, N.M.I. No. 24-CV-0010.
14 SmartSky Networks, Inc. v. GoGo, Inc., W.D.N.C. No. 24-CV-1087.
15 Union Pac. R.R. v. Kan. City S. Ry. Co., 2024 U.S. Dist. LEXIS 29303; 2024 WL 711617 (W.D. MO., Feb. 21, 2024)(No. 4:23-CV-00593-DGK).
16 CSX Transportation, Inc. v. Norfolk Southern Railway Company, 4th Cir. No. 23-1537. 114 F.4th 260.
17 In re Rail Freight Surcharge Litigation, D.D.C. No. 11-CV-1049, MDL No. 1869.
18 FTC v. Rivx Automation Corp., S.D.Fla. No. 24-CV-23152.
19 State of Nebraska, Energy Marketers of America, and Renewable Fuels Nebraska v. Daimler Truck North America, International Motors, Inc. F/K/A/ Navistar, Inc., PACCAR, Inc., Volvo Group North America, and Truck & Engine Manufacturers Association (D.Ct. Lincoln County Nebraska)(Case No. D15CI2400005070).
20 United States v. Martinez, S.D.Tex. 22-CR-0560.
23 Go New York Tours, Inc. v. Gray Line N.Y. Tours, Inc ., S.D.N.Y. No. 23-CV-4256.
24 Taxi Tours, Inc. v. Go New York Tours, Inc.
25 Zierke v. Am. Van Lines, Inc., 2024 U.S. Dist. LEXIS 41519; 2024 WL 982587 (D.CO. Feb. 16, 2024)( Civil Action No. 23-cv-00475-DDD-JPO), adopted and dismissed by, without prejudice. 2024 U.S. Dist. LEXIS 41522 (D. Colo., Mar. 4, 2024).
26 McCarthy v. Krupp Moving & Storage II, LLC , 2024 U.S. Dist. LEXIS 124031; 2024 WL 3413255 (S.D. Ohio July 15, 2024)(Case No. 1:24-CV-79).
27 Scheuer v. Rado Express Logistics, Inc ., 2024 U.S. Dist. LEXIS 56220; __ F.Supp.3d __(N.D. Ill. March 28, 2024)(Case No. 23-CV-00531).
28 FTC, v. Amazon.Com, Inc ., 2024 U.S. Dist. Lexis 185792; 2024 WL 4448815 (W.D. Wash. September 30, 2024)(Case No. 2:23-CV-01495-JHC).
29 Hogan v. Amazon.com, Inc ., 2024 U.S. Dist. LEXIS 44574; 2024 WL 1091671 (W.D. Wash. March 13, 2024)(Case No. 2:21-cv-00996-JHC).
60 Miller v. Amazon.com, Inc ., 2024 U.S. Dist. LEXIS 192850 (W.D. Wash., Oct. 23, 2024)(Case No. 21-CV-204-BJR).
Legal Implications of Mallory v. Norfolk Southern Railway Co. and Proactive Strategies in Response: Proactive case handling in an ever-evolving personal jurisdiction landscape
Introduction
Transportation defense attorneys across the country face unique challenges when defending trucking cases. To effectively represent their clients, defense attorneys should consider using proactive strategies that may require innovative thinking and proactive measures. This is true now more than ever after a 2023 United States Supreme Court opinion that potentially alters the personal jurisdiction landscape.
Generally, it is well-known that a plaintiff is considered the “master” of his or her complaint.1 A plaintiff’s choice of forum for the location where a lawsuit is filed, assuming jurisdiction is proper, is left undisturbed.2 Now, the Supreme Court’s decision in Mallory v. Norfolk Southern Railway Co., 600 U.S. 122 (2023) adds yet another consideration for plaintiffs’ attorneys in selecting a venue in which to file suit. Already, trucking defense attorneys know that there are some venues that are less favorable than others, and may often find themselves wishing, “Why couldn’t this matter be litigated in a different venue?” This could potentially be exacerbated now with plaintiffs having the option to sue
a trucking company in any state where the company is registered to do business, regardless of the state where an accident occurred. Oftentimes, state lines could make the difference between volatile versus conservative juries, plaintiff-leaning versus defense leaning judges, or even the enforcement of state-specific damage limitations.
But that is not to say the trucking industry is without options. To address the ever-evolving legal landscape related to personal jurisdiction, trucking companies and their attorneys may need to start using a different approach to the traditional manner in which cases have historically been handled. This requires an understanding of personal jurisdiction, the application of the Mallory v. Norfolk Southern Railway Co. decision, and nuances of state and federal law that could make a dramatic difference, as long as a more proactive approach is employed. In many cases, these proactive approaches may be useful notwithstanding personal jurisdiction concerns after the Mallory case but may be useful still in achieving the most favorable venue within a state where personal jurisdiction is already proper.
Background of Personal Jurisdiction
There are only two types of personal jurisdiction: general and specific.3
Specific jurisdiction allows a court without general jurisdiction over the defendant to exercise personal jurisdiction over specific causes of action, but it is “confined to the adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction.”4 For specific
jurisdiction to apply, “the suit,” or cause of action, “must arise out of or relate to the defendant’s contacts with the forum.”5 This “arise out of” requirement stems from a Constitutional requirement that the exercise of personal jurisdiction must comport with due process. The Due Process Clause protects an individual’s liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful contacts, ties, or relations.”6
General jurisdiction exists when a defendant’s affiliation with a state is so continuous and systematic that it renders the defendant “essentially at home” in the forum state.7 Trucking companies often have terminals or yards in various states across the county, beyond simply the state where the company is incorporated. But “the general jurisdiction inquiry does not focus solely on the magnitude of the defendant’s in-state contacts.”8 A trucking company that operates in the lower 48 states “can scarcely be deemed at home in all of them.”9 Therefore, “the inquiry calls for an appraisal of a corporation’s activities in their entirety.”10
Historically, except in an “exceptional case,” a corporation is only “at home” in its place of incorporation or its principal place of business.11 This means that a trucking
Clark Monroe*
David C. Dunbar*
* Dunbar Monroe, PLLC (Jackson, MS)
company could likely only be sued in one of three places: 1) the state of its principal place of business, 2) the state where an accident occurred, and 3) the state where its driver involved in the accident lives.
That is, until the United States Supreme Court rendered its decision in Mallory v. Norfolk Southern Railway Co. on June 27, 2023.
Mallory v. Norfolk
Southern Railway Co.
Norfolk Southern Railway Co. (“NSRC”) was sued by its former employee, Robert Mallory, in Pennsylvania for injuries that occurred in Ohio and Virginia. Because the injuries occurred in Ohio and Virginia, Mallory could not pursue under a theory of specific personal jurisdiction. It was undisputed that NSRC was not a corporate citizen of Pennsylvania. Therefore, Mallory could not rely on traditional arguments of general jurisdiction either.
Instead, Mallory argued that general jurisdiction arose not from NSRC’s state of incorporation or contacts within Pennsylvania, but because of NSRC’s business registration in the state. Specifically, Mallory argued that NSRC consented to general personal jurisdiction in Pennsylvania by registering under Pennsylvania’s business corporations act. Pennsylvania law requires out-of-state companies like NSRC that register to do business in Pennsylvania to consent to be sued in its state courts in “any cause of action,” regardless of whether the cause of action arises out of that company’s conduct within the state.12
At the state level, NSRC argued that Pennsylvania’s business corporation act violated the Due Process Clause of the Fourteenth Amendment to the United States Constitution. The Pennsylvania Supreme Court agreed and dismissed Mallory’s case for lack of personal jurisdiction. Mallory appealed to the United States Supreme Court, which granted certiorari
On June 27, 2023, the Supreme Court issued its decision, reversing the Pennsylvania Supreme Court’s decision. Justice Gorsuch, writing the opening plurality opinion of the Court, found that it is constitutional for states to require consent
to general personal jurisdiction as a cost of registering to do business in that state. Therefore, NSRC, which registered to do business in Pennsylvania, could be sued by Mallory in Pennsylvania without violating the Due Process Clause of the Fourteenth Amendment.
Legal Landscape
To be clear, the Supreme Court in Mallory did not find that registering to do business in any state constitutes per se consent to general personal jurisdiction in that state. The Mallory Court was only tasked with looking at Pennsylvania’s statutory language that explicitly provides for consent to general personal jurisdiction. Pennsylvania’s Business Corporate Act states that registration to do business in Pennsylvania “shall constitute a sufficient basis of jurisdiction to enable the [courts of Pennsylvania] to exercise general personal jurisdiction…”13
Compare that to the language of the Mississippi Business Corporation Act, which only states:
A foreign corporation with a valid certificate of authority has the same but no greater rights and has the same but no greater privileges as, and except as otherwise provided by Sections 79-4-1.01 et seq. is subject to the same duties, restrictions, penalties and liabilities now or later imposed on, a domestic corporation of like character.14
The overwhelming majority of states do not contain language similar to Pennsylvania but instead track closer to Mississippi: 15
• Connecticut: “[I]n the absence of a clear legislative statement and a definitive interpretation by the Connecticut Supreme Court and in light of constitutional concerns, we construe Connecticut’s registration statute…not to require registrant corporations…to submit to the general jurisdiction of Connecticut courts.”16
• Delaware: “In light of the U.S. Supreme Court’s clarifications of the due process limits on general
jurisdiction…, we read our state’s registration statute as a means for service of process and not as conferring general jurisdiction.”17
• Illinois:18
• Florida:19
• Louisiana: “[D]espite Plaintiff’s assertions, it is not clear from the statute and Louisiana case law that the effect of complying with the Louisiana registration statute is that a non-resident company is consenting to the general jurisdiction of Louisiana courts.”20
• Michigan: “Michigan law does not support the idea that mere registration to do business in the state confers general personal jurisdiction over a limited liability company.”21
• Montana: “Based on Montana’s registration statutes and the constitutional due process limitations on personal jurisdiction, a foreign corporation does not consent to general personal jurisdiction in Montana when it registers to do business in Montana and then voluntarily conducts in-state business activities.”22
• New Jersey: “New Jersey registrations and service statutes do not constitute consent to general jurisdiction because they do not contain express reference to any such terms.”23
• New Mexico: “[W]e conclude that the plain language of [New Mexico’s Business Corporations Act] does not require a foreign corporation to consent to jurisdiction. At no point does the [Act] state that a foreign corporation consents to general personal jurisdiction by registering and appointing a registered agent under the Act. We will not graft a requirement of this consent onto the language of the statute, as we conclude that the Legislature has not clearly expressed an intent to require foreign corporations to so consent.”24
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• New York: “New York’s [Business Corporation Act] does not contain any explicit language in reference to consent to jurisdiction – specific or general….[T]his Court finds that [a defendant corporation] is not subject to general jurisdiction merely because it has registered to do business here.”25
• North Carolina: “A corporation’s registration to do business in the state alone is not the deciding factor on which jurisdiction should be determined.”26
• Oklahoma:27
• Oregon:28
• Rhode Island: “[T]his Court will not presume that Defendant consented to personal jurisdiction where there is no indication that either the Rhode Island legislature, or Defendant itself, intended that corporation registration would serve as consent to personal jurisdiction in Rhode Island.”29
• Texas: “By registering to do business, a foreign corporation only potentially subjects itself to jurisdiction; it does not subject itself to potential jurisdiction. The designation of an agent simply gives the company more efficient notice than service through the secretary of state, when service is otherwise proper. In complying with the Texas registration statute, [a corporation] consent[s] to personal jurisdiction in Texas only if the jurisdiction were constitutional.”30
• Vermont: “[C]ompliance with Vermont’s foreign corporation registration statute does not entail consent to general personal jurisdiction, at least independently of the minimum contacts required by due process.”31
• Wisconsin: “It is too great a leap to characterize consent to general jurisdiction as a ‘duty’ imposed on every foreign corporation that registers to do business in Wisconsin, particularly where the
actual statutory language offers no warning that exposure to suits in Wisconsin for claims arising elsewhere is a consequence of registration.”32
Arguably, the Mallory opinion does not apply to any of the above states or any state which does not contain Pennsylvania’s clear language on personal jurisdiction. A case out of Georgia would seemingly support this proposition: Cooper Tire & Rubber Co. v. McCall, 863 S.E.2d 81 (Ga. 2021).
In Cooper Tire, the Georgia Supreme Court looked at Georgia’s Business Code, which contains similar language to Miss. Code Ann. § 79-4-15.05(b), to determine if personal jurisdiction would be appropriate over a company that registered to do business in Georgia. The relevant portion of Georgia’s Business Code states:
A foreign corporation with a valid certificate of authority has the same but not greater rights under this chapter and has the same but no greater privileges under this chapter as, and except as otherwise provided by this chapter is subject to the same duties, restrictions, penalties, and liabilities now or later imposed on, a domestic corporation of like character.
Ga. Code Ann. § 14-2-1505(b) (1988).
Compare that side-by-side to Mississippi’s statute:
A foreign corporation with a valid certificate of authority has the same but no greater rights and has the same but no greater privileges as, and except as otherwise provided by Sections 79-4-1.01 et seq. is subject to the same duties, restrictions, penalties and liabilities now or later imposed on, a domestic corporation of like character.
Miss. Code Ann. § 79-4-15.05(b) (1988).
The Georgia Supreme Court in Cooper Tire importantly acknowledged that “obtaining the necessary certification to conduct business in a given state amounts to consent to general jurisdiction in that
state only if that condition is explicit in the statute or the state courts have interpreted the statute as imposing that condition [.] ”33 The Georgia Supreme Court in Cooper Tire did not use the language in its similar Business Corporations Act as the basis for finding general personal jurisdiction, but instead used its “general jurisdiction holding in [a Georgia Supreme Court case from 1992]” as the basis for notification to “out-of-state corporations that their corporate registration will be treated as consent to general personal jurisdiction in Georgia[.]”34
This distinction is important for two reasons. First, the Cooper Tire case should not be construed to “explicitly” provide for the imposition of general personal jurisdiction as would be required under United States Supreme Court precedent. Herein lies a strong separation-of-powers argument. In light of Pennsylvania’s Business Corporation Act, it is clear that that state legislatures may decide to include language in their business corporation acts that provide for consent to general personal jurisdiction. However, at least prior to the United States Supreme Court’s decision in Mallory, not many other states have followed Pennsylvania’s lead.
The second major takeaway from the Cooper Tire case is, if other state supreme courts follow similar logic, unless there are other state court opinions which exist to interpret that state’s statute in such a manner, personal jurisdiction should not be appropriate. United States Supreme Court precedent requires “consent to general jurisdiction in that state” through registration under a state’s business corporation act is appropriate “only if that condition is explicit in the statute or the state courts have interpreted the statute as imposing that condition[.]”35 Without either, the first prong of a personal jurisdiction analysis - compliance with relevant state law - is not satisfied, and the exercise of personal jurisdiction would be improper.36
The Problem
Many businesses – especially trucking companies – operate in multiple, if not all, of the lower 48 states. If other state legislatures decide to adopt language similar to
Pennsylvania’s, or if other state appellate courts issue decisions like Cooper Tire in Georgia, then a new possible venue exists for a truck accident: 1) where the accident happened; 2) where the trucking company is incorporated/has its principal place of business; 3) where the truck driver lives, and now 4) any state where the truck company is registered to do business.
When given original options, savvy plaintiff attorneys were left with the calculus of determining which jurisdiction has the most favorable venire and jurisprudence for a massive plaintiff verdict? Which jurisdiction offers the most plaintiff-leaning judge? Which venue offers the most favorable racial, age, socio-economic, etc. demographics? Now, those same plaintiff attorneys are given another option to choose. But that may not be the biggest concern. Choice of law precedent could have even bigger implications.
There are several approaches to the resolution of conflict of laws issues in tort cases.37 The traditional approach, frequently referred to as the “vested rights” approach, was set forth in the Restatement (First) of Conflict of Laws and established the rule of lex loci delicti. Under this traditional rule, a tort action is governed by the substantive law of the state where the tort was committed.38 Subsequently, due in part to an attempt to accommodate the increased mobility of the population and interstate and international commerce, other approaches emerged which were perceived to be less territorial.39 These approaches have gained acceptance in deciding which state’s substantive law should apply.40 The first such approach is based upon a concept of “governmental interest.”41 This approach, developed by Professor Brainerd Currie, involves an analysis of the respective interests of the involved states to determine the law that most appropriately applies to the issues in this case; controlling effect is given to the law of the jurisdiction which has the greatest concern with the specific issues raised in the litigation.42 This theory mandates that a court first identify the specific law in each state bearing upon the legal issue in dispute, then determine the precise policies which the respective laws were designed to serve, and finally, that the
court examine the relationship of each jurisdiction with the litigation and determine whether the application of a particular’s state law would be consistent with the purposes identified as supportive of that law.43
In defending truck accidents, there are three points of law that are both relevant to overall exposure in a particular case and vary greatly state-to-state: 1) damages caps, 2) the availability of punitive damages, and 3) the viability of a direct negligence claims against an employer when the employer has admitted it is vicariously liable for the negligent acts of its employees. Damage caps and punitive damages arguably have the greatest impact on a case’s overall valuation and present the biggest concern with a choice-of-law analysis.
For example, noneconomic damages are capped at $750,000 in Tennessee, unless the plaintiff suffered catastrophic injury, in which case damages are capped at $1 million.44 In contrast, the Georgia Supreme Court found that noneconomic damage caps violate a constitutional right to a trial by jury.45 So, because the Georgia Supreme Court found that damage caps “unconstitutionally infringe” on “the right to a jury trial as guaranteed under the Georgia Constitution,” it is easy to envision a Georgia Court, tasked with applying Tennessee law, decline to apply Tennessee’s damage caps due to a public policy consideration afforded in a choice of law analysis.46 In a state where an elected judge may be asked to apply damage caps against an instate plaintiff – do defendants really want to take the risk of hoping the state trial judge makes a correct Erie analysis and elects to enforce another state’s damage caps? The answer more often than not is “no.”
Possible Solutions Forum Non Conveniens
When personal jurisdiction is deemed appropriate in Pennsylvania for a company that registered to do business there,47 that does not mean a defendant has waived the right to challenge incorrect venue. Instead, defendants may be able to file a motion to dismiss for improper venue. There is a reason “lack of personal jurisdiction” is a wholly different defense from “improper venue.”48 But defendants may not find as
much shelter under a forum non conveniens (improper venue) argument as might seem to exist on first blush.
For one, forum non conveniens may not apply. The doctrine of “forum non conveniens ” permits a court to dismiss an action when, although it may have jurisdiction over a claim, the court determines that in the interest of substantial justice the action should be heard in another venue.49 In making this determination of whether another valid jurisdiction may be a more suitable forum, “[i]mportant considerations are the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling [witnesses], and the cost of obtaining attendance of willing witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive.”50 In short, this means an analysis under a motion to dismiss under the doctrine of forum non conveniens often looks at the location of evidence, the location of key witnesses, and the relative subpoena power of the court in relation to individuals who may need to be compelled to attend trial/discovery.
In the Mallory case, Norfolk Southern Railway was not able to argue forum non conveniens because case evidence lay on the state line between Ohio and Pennsylvania. No one forum – as between Ohio and Pennsylvania – was arguably any more or less convenient than the other. This could easily happen in a situation where an accident happens just over a state line, and the availability of witnesses and subpoena power of the relevant court makes little difference for a convenience determination. If a plaintiff is a resident of the state where he or she elects to file suit, that adds another factor for a court to consider in its power and interest to adjudicate matters involving citizens of its state.
It is also important to remember the difficulty of succeeding on a motion to dismiss under forum non conveniens. Defendants arguing dismissal “must meet a high burden of showing that the balance of factors strongly favors litigation in another forum.”51 If a defendant believes they have sufficiently met the standard for dismissal,
TLA Feature Articles and Case Notes
a trial judge could still disagree, and the standard of review by an appellate court of a trial court’s ruling on a motion to dismiss for forum non conveniens is an abuse of discretion.52 This means, “if there is any basis for the trial court’s decision, the decision must stand.”53 Choosing simply to file a motion to dismiss for forum non conveniens is a gamble with the odds stacked against the defendants, first for success at the trial court level, and then even lower odds of a reversal by a state appellate court.
This gamble could be highly risky, but it may be the only option available.54
Snap Removal
If sitting back until a complaint is received and then filing a motion to dismiss is not the preferred route, that begs the question: What should be done? One effective defensive strategy that may be available in certain jurisdictions requires a more proactive approach to typical case management – a concept known as “Snap Removal,” which permits non-forum defendants to remove a case to federal court before a home-state defendant has been properly joined and served.55 Snap Removal may allow a case, which otherwise could not have been heard in federal court if removed, to be presented to a federal judge who, presumably, may be less inclined to consider a plaintiff’s state of citizenship in determining whether to apply a state’s damage caps and who often will be more educated on complicated choice-of-law or forum non conveniens analyses.
To understand how Snap Removal works, federal jurisdiction has to be understood. Federal jurisdiction, other than issues arising out of a federal question, exists “where the amount in controversy exceeds the sum or value of $75,000” and the controversy “is between citizens of different states[.]”56 Even when there is complete diversity of the parties, the presence of an in-state defendant (like a truck driver defendant who lives in the forum state) prevents removal to federal courts. This idea, known as “the Forum Defendant Rule,” is based in the United States Code section related to the process of removal: 28 U.S.C. § 1444. This Section refers to a forum defendant who is “joined and served” in the case.57
However, 28 U.S.C. § 1332, which provides federal courts jurisdiction, includes no such reference to a “forum defendant” – joined, served, or otherwise. All that is mentioned in § 1332 and relevant case law is the existence of complete diversity among the parties. Circuits and federal district courts are divided on how to resolve this possible discrepancy in language. Only certain federal circuits/district courts allow for this perceived gamesmanship by a savvy defendant/defense attorney:
• 11th Circuit – NOT ALLOWED – Goodwin v. Reynolds, 757 F.3d 1216 (11th Cir. 2014)(rejecting snap removal).
“Snap Removal” allows attentive defense attorneys to strategically remove a case to federal court promptly, even in a situation where delayed action might otherwise prevent removal at all. A defense attorney who receives e-mail notifications of filings against current clients and sees suit filed in state court with a forum defendant, especially in a situation where the federal venue may not be the most convenient forum, could theoretically immediately waive service of process by filing an answer and notice of removal to federal court before the forum defendant is served.58
Priority of Jurisdiction
Just because a motion to dismiss under forum non conveniens may not solve the issue does not mean defendants are left without other options to potentially handle these issues of venue, personal jurisdiction, and choice of law. The most effective strategy for a trucking company may require creative thinking: Go on offense and be the plaintiff yourself and take advantage of the legal doctrine generally known as “priority jurisdiction.”
The priority of jurisdiction rule applies
to situations where suit could be filed in more than one jurisdiction/venue. The rule states, “the court which first acquires jurisdiction retains jurisdiction over the whole controversy to exclusion or abatement of the second suit.”59 So a trucking company whose driver is involved in an accident with a would-be plaintiff could decide to affirmatively sue the plaintiff (if the trucking company has a potential claim against the would-be plaintiff, like for property damage) in a state court of the motor carrier’s choosing to take advantage of a more favorable venue, choice-of-law, etc.60
When diversity of citizenship under 28 U.S.C. § 1332 may provide federal jurisdiction, the concept still exists but is known as the “First-to-file Rule.” “The ‘first to file’ rule, which was originally articulated by the Supreme Court in 1824, states that ‘in all cases of concurrent jurisdiction, the Court which first has possession of the subject matter must decide it.’”61
The rationale behind these rules — the priority jurisdiction rule and the first-tofile rules — is that the would-be plaintiff’s claims, instead of being filed as a complaint, become a compulsory counterclaim which must be filed in the original action filed by the typical defendant.62 If the would-be plaintiff declines to bring a personal injury claim as a compulsory counterclaim, they are likely barred from later bringing suit separately in a forum of their choosing.63
Would-be plaintiffs in this scenario, presented with suit filed against them by the trucking company, often choose to file suit against the trucking company in the more plaintiff-friendly jurisdiction. But “when parties have instituted competing or parallel litigation in separate courts, the court initially seized of the controversy should hear the case.”64 The hearing of the case by the original court is often “to exclusion or abatement of the second suit.”65 The concept is the same in federal court: “[O] nce a court becomes aware that an action on its docket involves a claim that should be a compulsory counterclaim in another pending federal suit, it will stay its own proceedings or will dismiss the claim with leave to plead it in the prior action.”66
Generally, when determining which
court will hear a case or which court obtained jurisdiction first to the abatement of the second, courts look to the date of the initial pleading filed in each matter.67 It becomes, like other issues in the law, a true race to the courthouse. If quick-thinking and fast-reacting defense counsel can win that race, they may be able to save their clients thousands, if not millions, of dollars. But to obtain dismissal on the basis of jurisdictional priority, the two suits must not only be arising out of “the same controversy,” they must also be “between the same parties.”68 That means it may be necessary to include a defendant truck driver as a plaintiff with a personal injury claim against the usual would-beplaintiff, otherwise, the plaintiff may file a suit that includes the truck driver (if the truck driver was omitted from the original suit), and a court may not dismiss the latter filed suit.
Conclusion
By employing these proactive
Endnotes
TLA Feature Articles and Case
strategies when available, trucking defense attorneys across the country and their clients can shape the litigation landscape, secure more favorable jurisdictions, and potentially benefit from federal court procedures. This approach ensures a more predictable and strategic legal environment for trucking companies. Trucking defense attorneys can take advantage of priority of jurisdiction by strategically filing a complaint first in a more favorable venue, assuming there are valid grounds to support a cause of action against a would-be plaintiff. By initiating legal proceedings in a jurisdiction that may not present as volatile of a forum, attorneys can secure the advantage of having their client’s case heard in a preferred court, and possibly, with more favorable law being applied. This approach allows attorneys to shape the narrative and control the legal environment to better suit their clients’ interests, and all that is required is a little bit of outside-of-the-box thinking and winning a race to the courthouse.
2 See e.g., Salts v. Gulf Nat. Life Ins. Co., 743 So. 2d 371 (Miss. 1999).
3 Bristol-Myers Squibb Co. v. Superior Ct. of California, San Francisco Cnty., 582 U.S. 255 (2017).
4 Id.
5 Id. (emphasis added and in original).
Defense attorneys can take advantage of Snap Removal, if available in their federal district, by allowing a case to be heard by a federal judge that may be better suited to handle the complicated legal arguments at issue. At minimum, motions to dismiss for forum non conveniens and/or lack of personal jurisdiction should be filed, pointing out the arguably limited application of the Mallory case to only statutory language found in states like Pennsylvania.
While it might be strange to “go on offense,” for instance by early by filing suit as a party plaintiff or immediately waiving service of process once a defendant has knowledge of a suit, these early defense strategies allow attorneys to position his or her clients for a more favorable outcome in the country’s ever-evolving legal system when questions about personal jurisdiction are popping up now more than ever.
6 Burger King Corp. v. Rudzewics, 471 U.S. 462, 471 (1945)(quotation omitted); Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 918 (2011)(“A state court’s assertion of jurisdiction exposes defendants to a State’s coercive power, and is therefore subject to review for compatibility with the Fourteenth Amendment’s Due Process Clause.”); see also Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)(explaining that assertion of jurisdiction over out-of-state corporation must comply with “traditional notions of fair play and substantial justice”)(quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).
7 BNSF Ry. Co. v. Tyrerell, 581 U.S. 402, 413 (2017).
8 BNSF Ry. Co., 581 U.S. at 414.(quoting Daimler AG v. Bauman, 571 U.S. 117 (2014)).
9 Id.
10 Id. (emphasis added).
11 Id. (emphasis added).
12 Pa. Cons. Stat. § 5301(a)(2)(i) (1981).
13 Pa. Cons. Stat. § 5301(a)(2)(i) (1981).
14 Miss. Code Ann. § 79-4-15.05(b) (1988).
15 The provided list includes state appellate court opinions, succinct federal opinions recapping state-specific law, or federal district opinions making relevant Erie guesses.
16 Brown v. Lockheed Martin Corp., 814 F.3d 619, 641 (2d Cir. 2016).
17 Genuine Parts Co. v. Cepec , 137 A.3d 123, 148 (Del. 2016).
18 Perez v. Air & Liquid Sys. Corp., No. 3:16-cv-00842-NJW-DGW, 2016 WL 7049153 (S.D. Ill. Dec. 2, 2016).
19 Sofrar, S.A. v. Graham Eng’g Corp., 35 F. Supp. 2d 919 (S.D. Fla. 1999).
20 Gulf Coast Bank v. Designed Conveyor Sys., LLC , No. 16-412-JJB-RLB, 2017 WL 120645 (M.D. La. Jan. 12, 2017).
21 Magna Powertrain De Mex. S.A. De C.V. v. Momentive Performance Materials USA LLC , 192 F. Supp. 3d 824, 826 (E.D. Mich. 2016).
22 DeLeon v. BNSF Ry. Co., 426, P.3d 1, 10 (Mont. 2018).
23 Display Works, LLC v. Bartley, 182 F. Supp. 3d 166, 179 (D.N.J. 2016).
25 Amelius v. Grand Imperial LLC , 57 Misc. 3d 835, 652-53 (N.Y. Sup. Ct. 2017).
26 Pub. Impact, LLC v. Bos. Consulting Grp., Inc ., 117 F. Supp. 3d 732, 738 (M.D.N.C. 2015).
27 Samuelson v. Honeywell, 836 F. Supp. 1503 (E.D. Okla. 1994).
28 Lanham v. Pilot Travel Ctrs., LLC , No. 03:14-cv-01923-H2, 2015 WL 5167268 (D. Or. Sept. 2, 2015).
29 Harrington v. C.H. Nickerson & Co., Inc ., No. 10-104-ML, 2010 WL 3385034, at *4 (D.R.I. Aug. 25, 2010).
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30 Leonard v. USA Petroleum Corp., 829 F. Supp. 882, 888-89 (S.D. Tex. 1993).
31 Viko v. World Vision, Inc ., No. 418-cv-238-DMB-RP, 2009 WL 2230919, at *7 (D. Vt. July 24, 2009).
32 Segregated Acct. of Ambac Assurance Corp. v. Countrywide Home Loans, Inc., 898 N.W. 2d 70, 79-80 (Wis. 2017).
33 Cooper Tire & Rubber Co. v. McCall, 863 S.E.2d 81, 89 (Ga. 2021)(emphasis added)(referencing Pa. Fire Ins. Co. of Phila. v. Gold Issue Min. & Mill. Co., 243 U.S. 93 (1917)).
34 Cooper Tire, 863 S.E. 2d at 90.
35 Id. at 90. (emphasis added)(referencing Pa. Fire Ins. Co., 243 U.S. 93).
36 Int’l Shoe, 326 U.S. at 316 (explaining the two steps of a personal jurisdiction analysis, both of which must be independently satisfied).
37 16 Am. Jur. 2d Conflict of Laws § 124.
38 See, e.g., Georgia Farm Bureau Mut. Ins. Co. v. Williams, 597 S.E.2d 430 (Ga. 2004).
39 See, e.g., Hataway v. McKinely, 830 S.W.2d 53, 57 (Tenn. 1992).
40 16 Am. Jur. 2d Conflict of Laws § 124.
41 Id.
42 16 Am. Jur. 2d Conflict of Laws § 129; see Brainerd Currie, The Disinterested Third State, 28 Law and Contemporary Problems 754 (1963). That state’s law will be applied, “unless a public policy exception dictates a contrary result.” Dowis v. Mud Slingers, Inc ., 621 S.E.2d 413, 415 (Ga. 2005)(emphasis added).
43 Hataway, 830 S.W.2d at 58 (citing Gregory E. Smith, Choice of Law in the United States, 31 Hastings L.J. 1041, 1047 (1987); B. Currie, Selected Essays on the Conflict of Laws (1963)).
44 Tenn. Code Ann. § 29-39-102.
45 Atlanta Oculoplastic Surgery, P.C. v. Nestlehutt, 691 S.E.2d 218 (Ga. 2010).
46 Nestlehutt, 691 S.E. 2d at 224.
47 The true first option a defendant has in a situation such as this would be to file a motion to dismiss for lack of personal jurisdiction if the forum state does not have statutory language similar to Pennsylvania and/or that state’s jurisprudence does not contain caselaw similar to Georgia’s. Assuming neither situation applies, the argument that the Mallory case has limited application to only Pennsylvania’s language should be one of the first arguments made in support of dismissal. However, this paper assumes personal jurisdiction may be proper in that state, either because of Mallory -esque language is added to a state statute later or because a state appellate court views the Mallory case to now warrant the finding of personal jurisdiction in that state notwithstanding possible differences in statutory language.
48 Compare Fed. R. Civ. P. 12(b)(2) with Fed. R. Civ. P. 12(b)(3).
49 Wild v. Pennsylvania, 115 A.D.3d 944 (N.Y. 2014); see also Luna v. Sherwood, 208 S.W.3d 403 (Tenn. Ct. App. 2006)(noting “forum non conveniens” deals with the discretionary power of the court to decline to exercise a possessed jurisdiction whenever, because of varying factors, it appears the controversy may be more suitably or conveniently tried elsewhere).
50 Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947).
51 Langenhorst v. Norfolk S. Ry. Co., 848 N.E.2d 927, 941 (Ill. 2006)(emphasis added)(internal quotation marks omitted).
52 Ryder Sys., Inc. v. Davis, 997 So. 2d 1133, 1134 (Fla. Dist. Ct. App. 2008).
53 Robbins for Est. of Robbins v. Consol. Rail. Corp., 212 A.3d 81, 86 (Pa. Super. Court 2019)(emphasis added).
54 Unfortunately, depending on the nature of factors outside of the defendant/defense counsel’s control, a motion to dismiss for forum non conveniens may be the only available opportunity for an attorney to seek relief in a more favorable venue. If a trucking company and/or its driver do not have a valid claim against the other side, or if the trucking company for whatever reason is not aware of the accident before suit is filed from the claimant, all that may be left is a motion to dismiss for forum non conveniens or a motion to dismiss for lack of personal jurisdiction if the forum state statute has not yet adopted language similar to Pennsylvania.
55 See, e.g., Texas Brine Company, L.L.C. v. American Arbitration Assoc. Inc ., 955 F.3d 482, 487 (5th Cir. 2020).
56 28 U.S.C. § 1332.
57 28 U.S.C. § 1444(b).
58 Snap Removal has potential benefits beyond issues related to personal jurisdiction/venue. By doing so, insurance defense attorneys and their clients can benefit from the federal court’s potential jurisdiction over the matter. This allows attorneys to take advantage of federal laws, procedures, and potentially more favorable legal precedents that may exist in federal courts. For instance, a client may benefit from the federal pleading standard found in Iqbal/Twombly that may not otherwise exist under a state’s notice pleading standard. A client may also benefit from the requirement of a unanimous jury verdict in federal court presents benefits to the defense. Additionally, federal courts are often perceived to be more efficient, which can expedite the litigation process and potentially save clients time and resources.
59 Lee v. Lee, 232 So. 2d 370, 373 (Miss. 1970); see also Bedingfield v. Bedingfield, 417 So. 2d 1047 (Fla. 4th DCA 1995)(citing 20 Am. Jur. 2d Courts § 128 (1965)) (“[W]here courts within one sovereignty have concurrent jurisdiction, the court which first exercises its jurisdiction acquires exclusive jurisdiction to proceed with that case.”).
60 This option under a state’s “priority of jurisdiction” or “first to file” rule applies not just to situations where personal jurisdiction across multiple states is an issue. Often, the disparities in venues state-to-state are just as significant – if not more so – within the same state, county-to-county. Therefore, this proactive approach affirmatively to sue the would-be plaintiff could and should still be utilized by trucking companies across the county, if only by filing suit in a county with a more favorable venire (maybe the would-be plaintiff’s county of residence) rather than waiting for suit to be filed in a less favorable venue (like a defendant truck driver’s county of residence or the county where the accident occurred) if such a situation applies. The would-be plaintiff’s county of residence adds a venue option for the trucking company defendant that may otherwise not be available if the plaintiff files suit first.
61 Keating Fibre Intern., Inc. v. Weyerhauser Co., Inc ., 416 F. Supp. 2d 1048, 1051 (E.D. Pa. 2006)(quoting Smith v. McIver, 22 U.S. 532 (1824)).
62 See, e.g., Martino v. McDonald’s Sys., Inc ., 598 F.2d 1079 (7th Cir. 1979)(referencing Fed. R. Civ. P. 13(a)).
63 Krikava v. Webber, 716 P.2d 916 (Wash. App. 1986).
64 Collegiate Licensing Co. v. American Cas. Co. of Redding, Pa., 713 F.3d 71, 78 (11th Cir. 2013)(emphasis added).
65 Lee, 232 So. 2d at 373.
66 Aaron Fine Arts v. O’Brien, 244 F.R.D. 294, 297 (D. Md. 2007)(quoting 6 C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure, § 1410 (2007)).
67 Copiah Med. Assocs. v. Mississippi Baptist Health Sys., 898 So. 2d 656, 663 (Miss. 2005).
68 Braswell v. Ergon Oil Purchasing, Inc., 179 So. 3d 997, 1003 (Miss. 2015)(emphasis added).
Logistics on the Offensive: Using Contractual and Common Law Rights as a Sword
We are now in the era of freedom of contract in the logistics arena. While contracts provide many protections to contracting parties, they can also be used offensively, to affirmatively protect legal rights. There are many common law and contractual causes of action available to transportation contracting parties (shippers, brokers, and carriers), including breach of contract, breach of covenant of good faith, and misappropriation of trade secrets. Also, in many instances, the attorneys’ fees spent to prosecute the claim in litigation may be recoverable. The potential wrongs for which there may be recourse include double brokering (huge casualty/cargo exposure), back solicitation (your hard-earned customers!), confidentiality clauses (knowledge is an asset), and trade secrets/noncompetition/ customer lists (most important asset).
The Critical Clauses Clauses that should be considered in virtually every transportation contract include:
Exclusivity Clauses:
These are the gold standard and are worth enforcing. They keep those big customers locked in for a fixed duration. They are also crucial for capacity and financial forecasting, especially during periods of economic or epidemiological uncertainty. Noncompetition Clauses:
These clauses are typically contained in contracts with employees (and sometimes with independent contractors). Although the FTC has attempted to ban them, that ban has been, essentially, judicially stayed, so they remain viable. These clauses protect the entity’s customer lists and other
* Benesch (Cleveland, OH)
Eric L. Zalud*
technological/proprietary information, which often are the most important assets in a logistics enterprise. Common law rights are very narrow here, so it is imperative to infuse these protections into an actual, enforceable contract. Non-Solicitation clauses may be the most important here, and those will probably remain viable, regardless of the FTC outcome.
“No Double Brokering” Clauses:
Logistics contracts (of shippers and brokers) should include provisions prohibiting double brokering, a practice that is a major concern due to huge casualty/cargo exposure. Double brokering also often spawns freight charge issues, involving factoring companies and collection agencies. It may also have MAP-21 implications, which can subject individual officers and owners to liability.
“No Back Solicitation” Clauses:
Logistics contracts of brokers should include provisions prohibiting back solicitation. These provisions help logistics companies protect their hard-earned customers and preserve the shipper/broker/ carrier model. They are also potent weapons in contract litigation.
How to Make a Successful Claim - The Liability Prong
Various theories of liability in these actions include straightforward breach of contract actions (the strongest), or ancillary breach of covenant of good faith and fair dealing causes of action. There may also be tortious interference with existing or prospective business relationship claims, and misappropriation of trade secrets claims (although difficult without an actual contract). These actions apply particularly in noncompetition agreements. (It is imperative that a noncompetition clause have a reasonable duration and geographic scope,
and restriction on dissemination of confidential information).
The Liability Prong/ Damages
If there is liability, there must also be damages. One challenge in these cases can be actually proving damages. That is because proving damages involves discovery from potential or prior customers, which is often problematic from a business standpoint. Also, it is possible that the plaintiff did a very good job of keeping its customer’s business, even in spite of the violative conduct, and thus has little out-of-pocket damage. So, in light of the frequent difficulty in proving up ascertainable damages, some of these contracts have a liquidated damages provision. However, those too must bear some reasonable relationship to the actual damages anticipated to be incurred. Importantly, many of these contracts also provide for attorney’s fees to the prevailing party. The notion of who “prevails” can also be litigation point. One measure of damages which has been approved by several courts, is extrapolating prior revenue/earnings from the relationship to the remaining years on the contract, after the breach occurred.
In cases of back solicitation, one critical fact is whether the defendant, either a competing broker or motor carrier, had previously conducted business with the shipper, prior to the initiation of the contract that contained the back solicitation clause.
Pre-existing relationships can take the teeth out of these claims for back solicitation and exclusivity.
The Caselaw Supports Successful Contractual Lawsuits by Logistics Entities
For instance, in All-Ways Logistics, Inc. v. USA Truck, Inc 1, the Plaintiff/Broker/ Agent, All-Ways, and motor carrier, USA Truck, entered into a brokerage commission agreement, by which All-Ways would receive a 5% commission for USA freight brokered by All-Ways. USA terminated the agreement and then contracted directly with Rheem, one of All-Ways’ shipper customers. Consequently, All-Ways sued for (1) breach of contract; and (2) tortious interference. The court found that whether the commission agreement contained an implied prohibition against back solicitation was a question of fact for the jury (a good result for the plaintiff broker). Also, whether the back solicitation violated the implied covenant of good faith and fair dealing was also to be determined by the jury. There were also factual issues of actual reliance upon USA’s promise not to engage
in back solicitation, and whether that reliance was reasonable. The court also refused to grant summary judgment to USA on AllWay’s tortious interference claim, because there was evidence of secret conversations with the customer and USA about contracting directly with USA. Also, the punitive damage claims stayed in case. So, all the plaintiff brokers’ claims withstood summary judgment, and the case went to the jury— every plaintiff’s dream!
Confidentiality Clauses Can Also be Judicially Enforced
For instance, in Brown v. Rollett Bros. Trucking Co.2, Brown worked as a dispatcher for Rollett Logistics. He was responsible for finding loads by contacting established and prospective customers. Brown terminated his employment with Rollett and went to work for a competitor. Rollett then sent Brown’s new employer a letter claiming that Brown had breached his noncompete provision. The court found that the Agreement was not enforceable because the noncompete provision did not operate to protect customer contacts or trade secrets. The court found that Brown’s
interaction with customers did not rise to the level of “customer contacts,” because the customers ultimately made decisions based upon price—not upon a pre-existing relationship with a sales representative. Also, the defendants’ customer list, rate sheets, and pricing process were not trade secrets because most of the information on customer lists was publicly available, the information contained on the rate sheets was not a “process” or device for continuous use in the business,” and the plaintiff was never involved in the pricing process anyway. Moral: It is tough to protect trade secrets without a specific contractual provision
Check Those Contracts! So, if the transportation entity’s contractual relationship ends, whether terminated by business exigencies, or a breach by the adverse contracting party, do not walk away and do nothing without conducting some due diligence on possible recourse in the courts, on valid breach of contract claims (or other contractual or common law claims). In other words, don’t keep that contractual arrow in the quiver, because it may be right on target!
Implementing and Ethically Navigating AI in Legal Practice
I. Introduction
Artificial Intelligence (“AI”) has rapidly evolved into a transformative force in the legal industry, reshaping traditional workflows by offering new capabilities for research, discovery, and data analysis. Initially limited to simpler functions like keyword searching or predictive coding, AI-powered tools — particularly generative AI — can now draft entire pleadings, summarize complex files, and provide strategic insights almost instantaneously. As courts, bar associations, and law firms increasingly embrace AI for its efficiencies, they must also grapple with a host of ethical, practical, and managerial considerations.
In July 2024, the American Bar Association (“ABA”) issued Formal Opinion 512 (“Generative Artificial Intelligence Tools”), recognizing AI’s promise while cautioning attorneys about possible confidentiality breaches and overreliance on flawed AI outputs.1 Several states, including Illinois, have explicitly endorsed AI within existing professional rules.2 Yet, as a series of disciplinary cases in New York, Texas, Colorado, Missouri and elsewhere demonstrates, “AI hallucinations” and fabricated citations pose significant risks—underscoring the urgent need for robust oversight.3
This article aims to give lawyers a practical framework for ethically and effectively
deploying AI in their practices. We begin with a comparison of AI and traditional legal databases, elucidating how AI differs in capabilities and potential pitfalls. Next, we examine AI’s defining features, along with directions from various states and the ABA on how best to navigate AI’s emerging complexities. We will then discuss ethical duties, best practices for law-firm adoption, and the critical function of well-crafted internal policies. Ultimately, our goal is to help practitioners tap into AI’s vast potential while maintaining the profession’s foundational standards of competence, confidentiality, and candor.
II. Comparing AI to Traditional Databases
AI represents a significant departure from the static databases — like traditional Westlaw and LexisNexis — that have long dominated legal research. Recognizing the distinctions between these technologies is vital for determining whether and how to integrate AI into everyday practice.
A. Shortcomings of Traditional Databases
1. Rigid Query Requirements
Standard legal databases rely on Boolean logic and precise keywords. Users must construct detailed and exact queries, which can be particularly limiting when confronting novel or nuanced legal issues.4
2. Manual Data Synthesis
While these databases retrieve cases, statutes, and secondary sources, it remains the attorney’s task to review, interpret, and consolidate those authorities into a cohesive legal argument.
3. Lack of Adaptive Learning
Conventional databases do not learn from user behavior or refine search results based on context, often
returning similar findings time and again, even for complex or evolving inquiries.
4. Challenges in Managing Large Data Sets
Large volumes of case law or documents require extensive filtering and sifting — efforts that can be both time-intensive and prone to human oversight.
B. The AI Advantage
Compared to these static repositories, AI tools — especially those featuring Machine Learning and Natural Language Processing — offer considerable improvements:
1. Natural Language Understanding AI tools can process conversational queries (e.g., “Summarize recent case law on negligent hiring under Missouri law”), generating synthesized legal summaries rather than merely listing cases.
2. Pattern Recognition and Trend Analysis
AI can detect correlations among cases, legal arguments, and judicial tendencies that might not emerge as readily through a manual review.
3. Continuous Learning and Adaptation
AI systems evolve with ongoing use, refining search results and recommendations based on prior user inputs and interactions.
William M. Davis*
Patrick Foppe**
TLA Feature Articles and Case Notes
4. Efficiency in Document Creation, Drafting, and Editing
AI excels at processing large volumes of legal documents, highlighting key passages, relevant precedents, and negative treatment in a fraction of the time it would take human researchers. Beyond review, AI can assist in creating, drafting, and editing contracts, pleadings, and other materials—proposing language refinements or reorganizing content for clarity and consistency.
Understanding these key differences allows legal professionals to make informed decisions about adopting AI-driven tools for research and document review, ensuring they reap efficiency gains without compromising quality or ethical compliance.
III. Defining and Understanding AI
Although the term “AI” is often used broadly, it encompasses a range of diverse technologies. Grasping these distinctions helps legal professionals identify which AI tools will best serve their needs.
A. What Is AI?
AI refers to systems capable of performing tasks that typically require human intelligence — learning, decision-making, language processing, and pattern recognition.5 In legal settings, four AI-related technologies have particular relevance:
1. Machine Learning
Employs statistical models to detect complex patterns in large datasets, improving in accuracy through iterative inputs.
2. Computer Vision
Analyzes visual data (e.g., scanned briefs or exhibits), enabling swift identification and extraction of relevant content.
3. Natural Language Processing
Powers AI’s ability to interpret and generate human language, integral to chatbots, contract analysis, and research platforms.
4. Automation
Streamlines repetitive tasks, including contract clause extraction,
standardized document formatting, or billing entry creation.
“Generative AI” (e.g., ChatGPT, Google Gemini) stands apart by creating entirely new text or images in response to user prompts, as opposed to merely analyzing existing data. Although such tools can accelerate legal drafting and research, they also introduce the risk of “hallucinations,” wherein the AI invents facts or citations. Consequently, attorneys must diligently validate any AI-derived content. Moreover, unwritten customs, local court idiosyncrasies, or novel legal questions often lie outside standard datasets, reinforcing the importance of rigorous human oversight in confirming the accuracy and relevance of AI outputs.
IV. National Trends and State-Specific Actions
AI’s promise has attracted the attention of courts, bar associations, and regulatory bodies throughout the country. Lawyers planning to incorporate AI should be mindful of both supportive policies and disciplinary precedents that illustrate how improperly monitored AI can lead to sanctions.
A. Illinois - The Illinois Supreme Court endorses AI use, highlighting that existing rules of professional conduct already address many of its associated risks.6 This supportive stance stems from the view that AI can promote cost savings and expanded access to justice.
B. New York - Mata v. Avianca, Inc. (S.D.N.Y.) provides a cautionary lesson: sanctions were imposed on attorneys who filed a brief replete with fictitious case citations generated by ChatGPT.7 The court underscored that lawyers must “reasonably inquire” into the veracity of sources.
C. Texas - In Gauthier v. Goodyear Tire & Rubber Co. (E.D. Tex.), the court fined counsel for filing a brief containing AI-generated but fabricated citations, and further mandated AI-specific legal education.8 This response reinforces the principle that attorneys must thoroughly verify any reference produced by AI before submission.
D. Colorado - People v. Crabill (Colo.) showcases how failing to disclose AI usage — and then attempting to obscure glaring
mistakes—can culminate in severe disciplinary consequences, including suspension.9
E. California - California’s ethics guidance stresses the obligation to safeguard client data while using AI platforms.10 Though generative AI can expedite work, attorneys remain accountable for protecting client information and validating outputs.
F. Florida - Florida Bar Ethics Opinion 24-1 endorses AI but warns lawyers to remain vigilant when employing AI for client-intake chatbots or automated marketing.11 Even if an AI platform interacts with prospective clients, the lawyer retains ultimate responsibility for any misleading or unethical statements.
G. ABA Formal Opinion 512 - The ABA clarifies that attorneys need not be experts in technology but must still comprehend AI’s functionalities and risks, especially the phenomenon of “hallucinations.”12 Blind acceptance of AI output, particularly regarding factual or legal citations, violates attorneys’ obligations under multiple Model Rules.
V. Core Ethical and Professional Considerations
Technical mastery of AI alone will not suffice; attorneys must harmonize AI’s capabilities with foundational professional duties such as confidentiality, competence, and candor. This section explores how AI intersects with those obligations and what steps attorneys should take to stay compliant.
A. Duty of Confidentiality and Data Security
Pursuant to Model Rule 1.6, attorneys have a duty to safeguard client information.13 Because AI technologies often run on cloud-based systems, lawyers must examine data-sharing settings and privacy policies.14 If no secure option is available, lawyers may need explicit informed consent from clients or must avoid inputting confidential details into AI applications.15
B. Technological Competence and Duty of Supervision
Model Rules 1.1, 5.1, and 5.3 collectively mandate that attorneys remain proficient
in applicable technology and supervise both lawyers and nonlawyers who use such tools.16 This requirement can be met by formulating documented internal policies, conducting ongoing training, and designating a central authority (such as a “technology committee”) to guide best practices.
C. Client Communication and Consent
Under Model Rule 1.4, lawyers must keep clients informed, which may include how AI is used to produce legal work.17 Clients should be aware of any efficiency gains, costs, turnaround times, or confidentiality risks. Proper disclosure respects client autonomy and fosters trust.18
D. Avoiding AI “Hallucinations”
One pressing risk is the phenomenon of hallucinations: AI sometimes invents authentic looking but incorrect citations or facts.19 While AI can expedite drafting and research, it is ultimately the attorney’s responsibility to verify that all references exist and align with controlling law.
E. Recent Disciplinary Consequences
Courts have made it clear that failing to confirm AI-generated text can lead to sanctions:
• Mata v. Avianca, Inc. (S.D.N.Y.): Sanctions for fictitious citations from ChatGPT.20
• Gauthier v. Goodyear Tire & Rubber Co. (E.D. Tex.): Monetary fines and mandated AI education.21
• People v. Crabill (Colo.): Suspension following efforts to conceal false references.22
• Kruse v. Karlen (E.D. Mo.): Emphasized the obligation to verify citations in all filings.23
In each instance, the courts underscored that using AI does not diminish a lawyer’s duty to adhere to professional standards of competence, candor, and supervision.
VI. Implementation Framework for Law Firms
While AI’s potential for productivity and innovation is undeniable, its effective adoption requires strategic planning, transparent policies, and vigilant oversight. By developing a clear implementation
framework, attorneys can leverage AI’s advantages while mitigating ethical and operational risks.
A. Practical Use Cases of AI in Law Firms
1. Transactional Work
AI can rapidly review large volumes of contracts for nonstandard clauses, allowing attorneys to dedicate more time to high-level negotiations and client advising.24
2. E-Discovery and Document Review
In intricate litigation matters, AI platforms can quickly cluster thousands of documents, flag privileges, and summarize key information. Nonetheless, attorneys must still review sensitive or pivotal documents to maintain accountability.
3. Legal Research
Solutions incorporating naturallanguage processing can streamline research by summarizing pertinent statutes and case law. However, lawyers should verify such summaries against recognized legal databases or official court websites.
4. Summarization Drafting & Analysis:
AI can assist in drafting pleadings, contracts, and internal memoranda, but human review remains critical.
5. Deposition and Testimony Analysis:
AI tools can review deposition transcripts and witness testimony, highlighting inconsistencies and summarizing key points for trial preparation.
6. Contract Review & Compliance:
AI can assist in analyzing contractual language for risk factors, ensuring consistency across agreements, and identifying non-compliant clauses.
7. Billing & Timekeeping:
AI can streamline time tracking, task categorization, and billing entry descriptions. It enhances accuracy, detects inefficiencies, and helps ensure compliance with billing guidelines. However, attorneys must review AI-generated entries to
ensure they accurately reflect work performed and align with ethical billing standards.
8. Administrative Efficiencies
AI automation can handle routine tasks (e.g., drafting form pleadings, populating client-intake forms, calendaring deadlines, managing billing entries), freeing up attorneys and staff for more strategic work.
By integrating AI thoughtfully, law firms can boost efficiency without compromising their ethical and professional responsibilities.
B. Developing Internal Policies and Engagement Letter Terms
As AI becomes more deeply woven into legal practice, establishing firm policies and transparent disclosures is crucial for minimizing risk and maintaining client trust.
1. Codifying AI Usage Guidelines
Drafting a formal AI policy clarifies which platforms are authorized, how to handle data, and how attorneys must verify AI-generated content. Firm-wide consistency bolsters both quality control and ethical compliance.
2. Ensuring Confidentiality and Security
Model Rule 1.6 demands that attorneys protect client data.25 Law firms should ensure that AI vendors provide adequate encryption, data segmentation, and the ability to opt out of data sharing if needed. Particularly sensitive data (e.g., privileged communications or health records) may require heightened safeguards.26
3. Engagement Letter Disclosures
Many firms now include a clause in their engagement letters stating that AI tools may be used and that steps have been taken to preserve confidentiality and accuracy. Clients should be able to ask questions, raise concerns, or possibly opt out of AI usage altogether.
4. Ethical Safeguards and Opt-Out Provisions
For high-stakes or highly confidential
TLA Feature Articles and Case Notes
matters, attorneys can rely on anonymized data sets or permit clients to expressly prohibit AI-based analysis of certain materials, enabling the firm to apply AI selectively as needed.
Through these measures, law firms can leverage AI’s efficiencies while maintaining professional standards and client confidence.
C. Training, Oversight, and Quality Control
AI can yield significant benefits only when accompanied by appropriate policies, thorough training, and structured oversight. To that end, law firms should adopt a multifaceted approach that ensures all personnel — attorneys and support staff alike — are well-prepared to use AI responsibly and effectively.
First, firm-wide training is indispensable. Teaching attorneys and staff the fundamentals of AI, from crafting prompts to safeguarding data privacy, fosters a consistent standard of practice across the organization. By highlighting AI’s limitations and the potential for ethical pitfalls, such as inadvertent disclosures or reliance on incorrect output, training programs help minimize errors and reinforce the need for human oversight.
Second, AI sandboxes and pilot projects offer a controlled environment in which firms can safely experiment with new AI tools. By testing these technologies on lower-risk matters, the firm can gather feedback, evaluate the tools’ performance, and fine-tune workflows before deploying AI on high-stakes cases.
Third, multiple review layers are critical. Relying blindly on AI-generated outputs is perilous; introducing a multitiered review system — wherein an associate or paralegal performs an initial review and a senior attorney conducts final checks — significantly reduces the risk of incorporating erroneous, fabricated, or “hallucinated” citations into client work.
Fourth, data monitoring and audits ensure compliance with the firm’s policies on confidentiality and data-sharing. Regular audits help confirm that staff are following established guidelines, disabling data-sharing features where required, and properly verifying AI-driven content. Moreover, a firm culture that encourages the prompt reporting of issues fosters early detection and remediation.
Finally, addressing emerging AI tools demands continual vigilance. Because the AI landscape evolves rapidly, the firm should maintain a designated review committee — ideally composed of attorneys, IT experts, and ethics counsel — to assess newly released or updated platforms. This committee can confirm that each prospective tool meets the firm’s security requirements, aligns with professional obligations, and ultimately benefits client representation.
When approached holistically — with robust training, meticulous oversight, and a steadfast commitment to ethical standards — AI can substantially enhance a law firm’s efficiency and service quality without compromising the foundational duties of competence and confidentiality.
D. Key Advice for Responsible AI Use
Beyond frameworks and policies, the following practical tips should guide attorneys in managing AI responsibly. First and foremost, lawyers must maintain professional judgment: although AI can expedite tasks and generate drafts, it cannot replace legal reasoning or decision-making. Before filing or sharing any work product, attorneys should confirm that the final output meets professional standards.
A second critical point is to verify all AI-generated content. Every AI-assisted document — whether a brief, contract, or research memo — requires a thorough factcheck before submission. Associates should disclose their AI usage to supervising partners, treating AI like a “neophyte associate” prone to mistakes. Even tools from reputable providers (e.g., Lexis+ AI, Microsoft
Copilot, or ChatGPT) can produce errors known as “hallucinations,” underscoring the need for vigilant oversight.
Third, guard confidential data. Attorneys must avoid inputting sensitive or privileged client information into public or otherwise unsecured AI platforms. Instead, they should use paid or enterprise versions with data-sharing disabled to prevent inadvertent disclosures.
Finally, attorneys should be curious and stay informed. Because AI regulations, ethical rules, and relevant case law are in constant flux, lawyers must regularly consult updated bar opinions, follow evolving best practices, and monitor recent court decisions. By taking these practical steps, attorneys can harness AI’s efficiencies while preserving the fundamental duties of competence, confidentiality, and candor.
VII. Conclusion
As AI continues to shape the legal landscape, attorneys must carefully balance technological benefits with their foundational duties of competence, confidentiality, and candor. Tools powered by AI can streamline legal research, document drafting, and client service, yet they also pose unique risks involving accuracy, data protection, and regulatory compliance.
To incorporate AI responsibly, law firms must draft clear policies, conduct regular training, and set up robust oversight mechanisms to ensure adherence to ethical rules. Above all, legal professionals should remain vigilant when verifying AI outputs, shielding client data, and staying abreast of evolving regulations and best practices.
Ultimately, AI should serve as an aid that enriches legal practice—not a substitute for the judgment, expertise, and accountability attorneys are sworn to uphold. With a proactive approach, the legal profession can harness AI’s strengths while preserving the integrity of legal representation.
Endnotes
1 American Bar Association, Formal Op. 512 (July 29, 2024).
3 See, e.g., Mata v. Avianca, Inc., No. 22-CV-1461, 2023 WL 3707449 (S.D.N.Y. 2023); Gauthier v. Goodyear Tire & Rubber Co., No. 2:23-CV-1158, 2024 WL 3402264 (E.D. Tex. 2024); People v. Crabill, No. 23PDJ028 (Colo. O.P.D.J. 2023); Kruse v. Karlen, No. 4:24-CV-908, 2024 WL 4771380 (E.D. Mo. 2024).
4 See generally Boolean Query, Oxford English Dictionary.
5 American Bar Association, Formal Op. 512, supra note 1.
6 Illinois Supreme Court, AI Policy Announcement, supra note 2.
7 Mata, 2023 WL 3707449.
8 Gauthier, 2024 WL 3402264.
9 Crabill, No. 23PDJ028 (Colo. O.P.D.J. 2023).
10 State Bar of California Comm. on Prof. Resp. & Conduct, Practical Guidance for the Use of Generative Artificial Intelligence in the Practice of Law (Nov. 16, 2023), https://www.calbar.ca.gov/Portals/0/documents/ethics/Generative-AI-Practical-Guidance.pdf.
11 Florida Bar, Ethics Op. 24-1 (Jan. 19, 2024), https://www.floridabar.org/etopinions/opinion-24-1/.
12 American Bar Association, Formal Op. 512, supra note 1.
13 ABA Model Rules of Prof’l Conduct R. 1.6 (2023).
14 American Bar Association, Formal Op. 512, at 7–8.
15 Id. at 7–9; OpenAI, How Your Data Is Used to Improve Model Performance, https://help.openai.com/.
16 ABA Model Rules of Prof’l Conduct R. 1.1, 5.1, 5.3.
17 Id. R. 1.4.
18 American Bar Association, Formal Op. 512, at 10–12.
19 Mata v. Avianca, 2023 WL 3707449; Gauthier v. Goodyear, 2024 WL 3402264.
20 Mata, 2023 WL 3707449.
21 Gauthier, 2024 WL 3402264.
22 People v. Crabill, supra note 17.
23 Kruse, 2024 WL 4771380.
24 See, e.g., Mergers & Acquisitions and AI, Harvard Business Review (highlighting the advantages of contract analytics software).
25 ABA Model Rules of Prof’l Conduct R. 1.6.
26 See e.g., Steve Adler, Is ChatGPT HIPAA Compliant?, The HIPAA Journal, Jan. 9, 2025, https://www.hipaajournal.com/is-chatgpt-hipaa-compliant/.
Enforcing Arbitration Clauses on Land and Sea
In Canada, arbitration clauses are an increasingly common feature of contracts in various industries, including the transportation industry. They provide an alternative to litigation at a time when Canadian courts struggle to provide dispute resolution that is cost- and time-effective, and they can help maintain business relationships. In its simplest form, an arbitration clause requires parties to resolve disputes by some form of agreed-upon arbitration.
A unique feature of the transportation industry is that several parties can be involved in the transportation of the same goods, and more often than not, all the parties involved are not privy to the same contracts. This can lead to instances where one party attempts to enforce an arbitration clause against an entity that was not a signatory to the contract containing the relevant arbitration clause. In the recent 2024 decision, Crosby Molasses Company Limited v. Scot Stuttgart (Ship), 2024 FC 1358 (“Crosby”), the Federal Court of Canada provides guidance on the application of arbitration clauses to non-signatories in the transportation context.
In this article, we summarize the fundamental principles that govern the enforcement of arbitration clauses. We then discuss circumstances in which an arbitration clause may be enforced against a non-party, including the Crosby decision.
Four Key Principles Governing Enforcement of Arbitration Clauses
1.
Arbitration Clauses Enforceable Absent Legislation to the Contrary
The leading case for the enforcement of arbitration clauses is TELUS Communications Inc. v Wellman, 2019 SCC 19 (“ TELUS”). In TELUS, the Supreme Court of Canada (“SCC ”) discussed many of the principles underlying the application and enforcement of arbitration clauses. Most importantly, the SCC confirmed that courts must enforce arbitration clauses in the absence of any explicit and express legislative language indicating otherwise. If there is no legislation explicitly precluding the enforcement of the subject arbitration clause, then a court is not entitled to use any discretion to refuse a stay of proceedings, regardless of the circumstances. Once litigation has been commenced over issues that form part of the subject arbitration clause, the court must stay the proceedings and refer it to arbitration.1
Consequently, parties’ freedom to arbitrate will depend on a close examination of the law and legislation of the forum where the proceedings were commenced.
2. An Arbitration Agreement may be Void due to Unconscionability
An arbitration clause may be void or invalid if it is found to be unconscionable.
The leading case on applying the
doctrine of unconscionability to an arbitration clause is Uber v Heller, 2020 SCC 16 (“ Uber ”). The SCC in Uber held that the doctrine of unconscionability comes from equity and is intended to protect vulnerable persons in transactions with others.2 The doctrine requires proof of (1) an inequality of bargaining power in the sense that one party is incapable of adequately protecting his or her interests; and (2) an improvident bargain in the sense that it unduly advantages the stronger party, or unduly disadvantages the more vulnerable party, measured at the time the contract is formed.3
Parties should always beware of potential power imbalances when contracting and be cautious not to engage in any actions that take advantage of the weaker party during the negotiation and formation of a contract.
3.
Challenges to the Jurisdiction of Arbitration Agreements are Generally Made to an Arbitrator
The “Competence-Competence” principle is a recognized legal tenet which holds that “arbitrators should be allowed to exercise their power to rule first on their own jurisdiction.”4 That is to say, in most circumstances, any challenges to the validity or application of an arbitration agreement must first be referred to an arbitrator, not a court, as an arbitrator has the power to rule on its own jurisdiction.5
However, in Uber, the SCC summarized
Johann Annisette*
Michael Furyk*
Ian Breneman*
* Alexander Holburn Beaudin + Lang LLP (Toronto)
that courts may derogate from that general rule and hear a challenge to an arbitrator’s jurisdiction in the following circumstances:
a) The challenge to the arbitrator’s jurisdiction concerns a question of law alone;
b) The challenge to the arbitrator’s jurisdiction involves a question of mixed fact and law, where the relevant factual questions require “only a superficial consideration of the documentary evidence in the record;”6 or
c) Where there is a real prospect that referring the matter to arbitration would contravene the principle of access to justice and result in the challenge never being resolved (ie. because arbitration is too costly or is otherwise inaccessible).7
When considering a challenge to the jurisdiction of an arbitrator, parties should consider the above-noted factors in deciding whether to bring such a challenge to a court or directly to an arbitrator.
4. The Application of Arbitration Clauses to Non-Signatories
In most cases, courts have refused to impose arbitration on a party that was not a signatory to the agreement containing the arbitration clause.
The SCC has held that some non-signatories may be considered a party to an arbitration agreement through the operation of ordinary contract law.8 Depending on the unique facts of the case, a courtappointed receiver, agent, trustee, or assignee, may be considered a party to an arbitration agreement, and may be bound by its terms, even if they are not a signatory to the subject agreement.
Otherwise, contractual parties cannot generally use the principles of contractual interpretation to impose arbitration on a non-party because the non-party would not have been aware of the circumstances, intentions, and understandings that were present at the time of formation of the agreement.9
However, it may be possible to bind a non-party beneficiary of a contract to an arbitration clause. To do so, the requirement
TLA Feature Articles and Case Notes
to arbitrate must be manifest and expressed in clear and explicit language.10 In T. Co. Metals LLC v. Federal Ems (Vessel), 2012 FCA 284, the Federal Court of Appeal held that the benefit in a contract extended to a third party was not qualified by a mandatory requirement to arbitrate, as the language and construction of the contract did not explicitly reference a requirement to arbitrate to receive the subject benefit. 11
Crosby Molasses Company Limited v. Scot Stuttgart (Ship): The Application of Arbitration Clauses in Transportation Agreements
More recently, the Federal Court in Crosby discussed the application of an arbitration clause to a non-contracting party in a transportation dispute.
Background Facts
On September 4, 2020, ED & F Man Liquid Products LLC (the “ Charterer ”) entered into a charterparty with Scot Stuttgart S.A. (the “ Owner ”), which owned M/T Scot Stuttgart (the “ Ship”), to transport two cargoes of molasses from Guatemala to New Brunswick, Canada (the “ Charterparty ”). The Charterparty provided that any disputes between the Owner and Charterer be resolved by arbitration, and that any claim be presented within ninety (90) days of completion of discharge of the subject cargo.
The cargoes of molasses were transported pursuant to two bills of lading (“ Bill of Lading 1” and “ Bill of Lading 2 ”). The consignee of both bills of lading was Crosby Molasses Company (the “Consignee”).
On January 14, 2022, the Consignee commenced a number of proceedings, including proceedings against the Owner, alleging that the molasses had arrived in damaged condition due to contact with epoxy flakes in the Ship’s tanks.
The Owner moved for a stay of proceedings on the ground that the claim was bound by the arbitration clause in the Charterparty (the “Arbitration Clause”) and should have been referred to arbitration in New York.
Lower Court Decision
The Associate Judge held that the Consignee was not a party to the
Charterparty, and therefore, would not be bound by the Arbitration Clause unless the Arbitration Clause was validly incorporated into the bills of lading to which the Consignee was a party.
The Associate Judge found that the Arbitration Clause was not validly incorporated into Bill of Lading 1 because of ambiguity in the text. Bill of Lading 1 provided that the freight was payable per the terms of the Charterparty but then purported to incorporate the terms and conditions of another charterparty, dated in February 2016. In the absence of any evidence before the Associate Judge regarding a 2016 charterparty, she found that the Charterparty and Arbitration Clause had not been incorporated into Bill of Lading 1 and were not applicable to the Consignee.
While the Associate Judge found that the Arbitration Clause had been prima facie incorporated into Bill of Lading 2 by reference, she did not find it binding on the Consignee. Specifically, she considered the Owner and Charterer’s intention to apply the Arbitration Clause to third parties. In doing so, she examined the 90-day time bar for delivering claims as set out in the Arbitration Clause and held that it was inconsistent with the terms of the Bill of Lading 2. Bill of Lading 2 incorporated the Hague Rules and Hague-Visby Rules, and the Associate Justice found that the 90-day time limit was inconsistent with the time limit for resolving disputes under the Hague and Hague-Visby Rules. As a result, she found that the Arbitration Clause was not congruent with the intention of the parties as expressed in Bill of Lading 2 and was thus not binding on the Consignee.
Federal Court Decision
Justice Heneghan of the Federal Court agreed that the Arbitration Clause was not validly incorporated in Bill of Lading 1 due to the unexplained reference to another charterparty dated 2016. Justice Heneghan held that the lower court had reasonably exercised its discretion in declining to treat the unexplained reference as a mistake that could be rectified.
However, Justice Heneghan disagreed that the Arbitration Clause had not been incorporated into Bill of Lading 2. It had
TLA Feature Articles and Case Notes
been unambiguously incorporated by reference, and the fact that it contained a time limit which was inconsistent with the time limit in the Hague Rules and Hague-Visby Rules did not render the Arbitration Clause unenforceable. Further, Justice Heneghan held that a “Paramount Clause” in the Bills of Lading made it clear that the time-limits under the Hague Rules and Hague-Visby Rules would take precedence. Otherwise, all other terms of the Arbitration Clause were enforceable. As such, Justice Heneghan held that the Arbitration Clause was incorporated into Bill of Lading 2 and applicable against the Consignee.
Key Takeaways
Where disputes potentially involve a number of parties and jurisdictions, arbitration clauses can offer a practical and streamlined resolution for parties. By incorporating well-drafted arbitration provisions into transportation agreements, businesses can resolve disputes efficiently and maintain focus on their operations.
However, parties must use clear, precise, and exact language to avoid disputes over the scope and enforceability of an arbitration clause and its terms. Where there is ambiguity or vagueness, a court may not enforce an arbitration clause, especially
against a third party who was not a party to the original agreement.
The most effective way to bind a noncontractual party to an arbitration clause is to ensure that the arbitration clause is clearly incorporated into all bills of lading, subcontracts, or similar documents. To do so, parties should conduct a thorough and careful review of the relevant transportation agreements and related bills of landing to ensure that the desired arbitration clauses have been correctly and consistently incorporated by reference.
Endnotes
1 TELUS Communications Inc. v Wellman, 2019 SCC 19.
2 Uber v Heller, 2020 SCC 16, at paras 54, 60.
3 Ibid, at paras 64-66, 74.
4 Peace River Hydro Partners v Petrowest Corp, 2022 SCC 41, at para 39.
5 Uber, at paras 34-35.
6 Ibid, at para 32.
7 Ibid, at para 46.
8 Peace River Hydro Partners v Petrowest Corp, 2022 SCC 41, at paras 102-103.
9 Husky Oil Operations Limited v Technip Stone & Webster Process Technology Inc, 2024 ABCA 369, at para 31.
10 Ibid., at para 3.
11 T. Co. Metals LLC v “Federal Ems” (The), 2012 FCA 284, at paras 101-103.
Navigating the Carbon Frontier: Lessons from the EU’s CBAM Model and Implications for the U.S. Under Trump 2.0
The global push for sustainability is reshaping industries, and the transportation sector finds itself at a critical moment. The European Union’s Carbon Border Adjustment Mechanism (“CBAM”) and its potential adoption in the United States are poised to redefine the rules of global trade. With President Donald J. Trump inaugurated as the 47th President on January 20, 2025, the direction of these policies may change, but the fundamental focus on carbon accountability is unlikely to shift. This article explores CBAM’s potential implications for the transportation industry, highlighting the challenges and opportunities it unlocks as the U.S. navigates these policies under the second Trump administration.
Understanding CBAM
The Carbon Border Adjustment Mechanism is a policy tool designed to incorporate environmental costs into global commerce.1
By imposing fees on imported goods based on the carbon emissions generated during their production, CBAM aims to equalize the playing field between domestic industries and those in countries with less stringent environmental regulations..
* Roberts & Kehagiaras LLP (Long Beach, CA) ** Roberts & Kehagiaras LLP (Houstin, TX)
For the transportation sector, this mechanism brings both immediate challenges and long-term opportunities to innovate. CBAM was conceived as a response to the risk of carbon leakage — where companies relocate production to jurisdictions with weaker environmental standards in order to avoid stricter domestic regulations. By applying a financial penalty to imports based on their carbon footprint, CBAM encourages cleaner production practices globally while safeguarding the competitiveness of industries in carbon-conscious regions.
The European Union began the initial implementation of CBAM in October 2023, focusing on sectors like cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen. This transitional phase requires importers to report the embedded carbon emissions of their goods without imposing financial penalties, allowing stakeholders to adjust to the system. The mechanism is set to fully enforce financial obligations starting in 2026, with the goal of aligning the carbon costs of imported goods with those produced within the EU under the Emissions Trading System. Recent updates suggest the EU is expanding its coverage to additional sectors, including downstream products, as it fine-tunes its framework. This gradual approach ensures businesses have time to
adapt while maintaining pressure on trading partners to adopt greener practices.
For the transportation sector, CBAM’s eventual extension to cover transportrelated goods or fuels could significantly impact costs and trade flows, incentivizing investment in low-carbon technologies and sustainable supply chains.
U.S. CBAM Proposals at a Glance
Several legislative initiatives in the United States are exploring CBAM-like policies, each with distinct approaches to reducing carbon emissions and maintaining competitive balance:2
1) Clean Competition Act: Establishes benchmarks for carbon intensity and charges fees on goods that exceed these thresholds. This legislation also provides financial incentives for domestic producers to adopt cleaner technologies.
2) Foreign Pollution Fee Act: Focuses on imports from high-emission countries without introducing a domestic carbon tax. The phased approach in this act creates a timeline for importers to align with lower emission standards.
3) FAIR Transition and Competition Act: Aligns import fees with U.S.
Cameron Roberts*
Woongchan Yum**
Jay Acayan**
TLA Feature Articles and Case Notes
environmental compliance costs while exempting domestic producers. This proposal includes exemptions for least-developed countries and those with comparable climate policies.
4) PROVE IT Act: Aims to collect data to pave the way for future policies without directly implementing CBAM. This foundational approach highlights the need for reliable metrics to support carbon accountability.
Implications for the Transportation Industry
1) Increased Operational Costs: Transportation industry relies heavily on materials such as steel and aluminum, which are often sourced from global suppliers. CBAM could raise the cost of importing these materials from carbon-intensive producers like China, compelling companies to reassess supply chains or invest in substitutes. For instance, manufacturers of heavy-duty trucks and commercial vehicles may need to absorb higher costs for parts and raw materials, potentially affecting their pricing structures and market competitiveness.
2) Regulatory Compliance Challenges: CBAM’s reporting requirements place a significant administrative burden on importers, who must track and disclose carbon emissions associated with their products. For transportation firms managing complex global logistics, compliance will require robust data management and reporting systems. The introduction of these requirements could necessitate significant investments in technology and personnel to ensure accuracy and avoid penalties.
3) Opportunities for Sustainable Innovation: CBAM can act as a catalyst for positive change. By investing in low-emission technologies such as electric or hydrogen-powered vehicles, transportation companies can reduce their carbon footprint. Similarly, sourcing materials from
greener suppliers can enhance market competitiveness and compliance. Innovative practices such as utilizing carbon-neutral shipping options or adopting renewable energy in operations can further position companies as leaders in sustainability.
Industry Case Study: Lessons from the EU CBAM Rollout
The European Union’s gradual implementation of CBAM provides valuable insights into its potential impact. Beginning with a transitional phase focused on emissions reporting, the EU’s approach emphasizes transparency and gradual adaptation. Importers of carbon-intensive goods such as steel, aluminum, and fertilizers have faced initial reporting obligations without immediate financial penalties, allowing them to prepare for the definitive regime starting in 2026. This timeline has given companies time to assess their supply chains, invest in cleaner technologies, and establish compliance mechanisms.
For transportation-related firms operating in international markets, the EU CBAM’s focus on specific goods highlights the importance of understanding product-specific emissions. Companies can benefit from collaborating with suppliers to improve emissions reporting and exploring opportunities to source materials from lower-carbon regions.
Trump 2.0 and CBAM: What to Expect
With President Trump starting his second term, changes to environmental policies, including the potential adoption of CBAM in the U.S., may be on the horizon. However, its core objectives are likely to remain. Trump’s well-documented support for tariffs, famously calling them “the most beautiful word in the dictionary,” suggests the potential for a CBAM-inspired policy aligned with his ‘America First’ Trade Policy agenda. While it may not carry the CBAM name, such a strategy could impose targeted penalties on high-emission imports, giving an edge to U.S. industries, which
often operate with a lower carbon footprint than many of their global counterparts. For example, China’s aluminum industry, which produces more than half of the world’s supply, accounts for 81% of the industry’s perfluorocarbon (PFC) emissions, a greenhouse gas that lingers in the atmosphere for tens of thousands of years.3 While U.S. producers have largely transitioned to more advanced and lower-emission technologies, many Chinese smelters continue using outdated manual methods, leading to a higher environmental impact. This emissions gap could be used to justify tariffs on carbonintensive aluminum imports, aligning with broader trade policies while addressing concerns over industrial pollution. Rather than stalling CBAM, a Trump-led government might fast-track an alternative approach to taxing high-emission imports. Policies may emphasize national economic interests while aligning with global trends toward sustainability.
For the transportation industry, this signals the need to prepare for changes in how carbon accountability is addressed. Terminology may shift, and strategies might evolve, but the focus on reducing emissions is not going to disappear. By staying ahead of these changes, transportation companies can turn challenges into opportunities and position themselves as leaders in a greener global trade environment.
Actionable Steps and Recommendations
• Assess Supply Chain Emissions: Conduct detailed analyses of supply chains to identify carbon-intensive inputs. Engage with suppliers to improve transparency and reduce emissions.
• Invest in Clean Technology: Transition fleets to cleaner options, such as electric or biofuel-powered vehicles, and explore innovations that lower operational emissions.
• Diversify Supply Sources: Reduce reliance on high-emission imports by exploring domestic or environmentally friendly international suppliers.
• Engage in Policy Advocacy: Collaborate with industry associations to shape practical and fair CBAM regulations that consider the transportation sector’s unique needs.
• Enhance Carbon Reporting Systems: Develop and implement advanced data management tools to streamline emissions tracking and reporting. Accurate reporting not only ensures compliance but also
provides a competitive advantage in demonstrating sustainability leadership.
Conclusion
The transportation industry is uniquely positioned to lead in sustainability initiatives as CBAM policies gain traction. Whether through EU-style frameworks or a modified U.S. approach, the drive to align trade with environmental objectives is inevitable. By addressing challenges
proactively and embracing opportunities for innovation, we can navigate these changes effectively, ensuring both compliance and competitive advantage in an increasingly carbon-conscious marketplace. In times of uncertainty, adaptability becomes the driving force of progress. By prioritizing sustainability and leveraging strategic insights, the transportation industry can turn challenges into opportunities, setting the standard for a greener, more durable future.
Endnotes
1 European Commission, Carbon Border Adjustment Mechanism, https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en.
2 Joint Economic Committee, What is a Carbon Border Adjustment Mechanism (CBAM) and what are some legislative proposals to make one?, https://www.jec.senate.gov/public/index.cfm/democrats/2024/2/what-is-a-carbon-border-adjustment-mechanism-cbam-and-what-are-some-legislativeproposals-to-make-one.
3 Phil McKenna et al., Why Chinese Aluminum Producers Emit So Much of Some of the World’s Most Damaging Greenhouse Gases, Inside Climate News (Dec. 23, 2022), HYPERLINK "https://url.us.m.mimecastprotect.com/s/jiNsC5y11BIZyVjNszf2TklOZw?domain=insideclimatenews.org/"https://insideclimatenews. org/news/23122022/china-aluminum-immortals/
The Future of International Trade Under the Trump Administration
Peter Quinter*
For those of us who consider ourselves experts on international trade policies and enforcement, as of January 20, 2025, we are all in a daily guessing game.
On the very day of President Donald Trump’s inauguration, January 20, 2025, the White House circulated an “America First Trade Policy.” That document ordered the Secretary of Commerce and Treasury “to investigate the large and persistent annual trade deficit in goods” and “to identify unfair trade practices by other countries,” and ordered the U.S. Trade Representative to consider whether to renew the United States-Mexico-Canada Agreement, get more aggressive in pursuing antidumping and countervailing duty orders against countries “dumping” their products in the United States, study all trade agreements the U.S. has with China, conduct studies on foreign steel and aluminum, and the Secretary of Commerce study the duty-free de minimis exemption of $800 or less, and finally, but perhaps most importantly, “assess the unlawful migration and fentanyl flows from Canada, Mexico, and the PRC [China]…to resolve that emergency.” I have been a U.S. Customs and International Trade lawyer for 36 years and have never seen such an active agenda.
On February 1, 2025, President Trump
* Gunster (Miami, FL) Chair, U.S. Customs and International Trade Law Group
issued an Executive Order “Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border”. On February 3, 2025, U.S. Customs and Border Protection (CBP) issued “Guidance: Additional Duties on Imports from Canada,” imposing an additional duty rate of 25% on “all imports of articles that are products of Canada” with a few exceptions, effective after midnight. CBP issued its “Guidance: Additional Duties on Imports from China” imposing an additional rate of duty of 10%, with a few exceptions, also effective after midnight. Additional tariffs on Mexico were deferred for 30 days. Trump says he will soon issue an Executive Order for 25% addition duties on products from the European Union. Late in the day on February 3, 2025, the implementation of the planned tariffs on Canada was also delayed for at least 30 days.
So, what is a transportation lawyer to make of all these enormous changes in U.S. government policies that have happened or will happen? Note, no new laws or even federal regulations have been passed by Congress or the federal agencies. This is all coming straight from the White House through Executive Orders. Advice to clients to be sure that imported merchandise is correctly declared to CBP and other federal agencies is critical. Examples include:
1) Is that imported hardwood plywood only made in Vietnam or does it have some Chinese components? Does that men’s dress shirt made in Pakistan contain buttons from China?
2) What about that women’s scarf from Italy that might have a logo that appears to be an image similar to Gucci?
3) Does that imported steel or aluminum from Germany have the
necessary mill certificates, and did the importer submit the data to the U.S. Department of Commerce?
4) For that ocean container of TVs made in South Korea that just arrive at Long Beach, are the values of TVs really being declared accurately so that the correct amount of customs duties get collected?
While U.S. government policy and enforcement changes over time, I have never seen such a rapid change as is occurring with the Trump Administration. It is evident that the object of Trump’s concern is China which was the largest trading partner for the past 25 years until 2023 when both Mexico and Canada became #1 and #2. It is not only imported products from China, but U.S. exports to China that are being restricted. Any contracts that may involve a product that is ultimately destined to China may need some legal review, especially any high technology or defense-related items. That could even include basic computer or aircraft parts. Now, more than ever, products from China will be targeted for physical examination to determine whether they are prohibited or restricted items. For example, products from China made with forced labor will be refused entry into the United States and are subject to seizure. If a product from China (including Hong Kong or Macau) is allowed to enter the United States, questions will be asked whether all import requirements have been satisfied regarding country of origin marking, customs valuation, tariff classification, trademark protection, product safety. It is unfortunately common for imported products to display the “UL” (Underwriters Laboratories) symbol without being certified by UL which means the product is counterfeit and may be dangerous. It is
equally common to state that a product was made in Vietnam, South Korea, or Malaysia when it was really made in China, shipped to one of those countries, labeled as if made there, and then transported to the United States. This is an illegal transshipment, and it is done regularly to avoid paying the Section 301 additional tariff of 35% on products from China, and/or attempting to illegally evade an antidumping or countervailing duty order by the United States on numerous products from China for which additional duties are paid. Examples may include such simple things as twist ties or metal hangers or those ubiquitous polyethylene bags from China. The U.S. imposes an additional 62.42% antidumping duty and a 111.96% countervailing duty on those twist ties from China.
The radical increase in proposed tariffs on products from Canada, Mexico, China, and the European Union is used by President Trump to attempt to stop or slow the movement of both fentanyl and illegal immigrants from those areas. The risk to the relationship between Canada and the United States and Mexico and the United States is not limited to trade, but includes travel, energy, security, and so much else. The entire USMCA, which created the largest duty-free area in the world, may be scrapped during President Trump’s term. Economists generally agree that increased tariffs lead to decreased trade between countries and higher costs for consumers.
The economic growth of the post-World War II years was driven by international trade among the members of the World
Trade Organization. It is far from perfect, but the United States was the primary architect of the laws regarding international trade, and Americans have greatly benefitted from it. Next time you reach for your mobile phone, watch TV, have something to eat, put on some clothes, drive a car, stop to think about how you benefit from using all of the imported items. There are no TVs made in the United States, and there will not be, despite tariffs against China, Mexico, and Canada increasing up to 50%. It just makes no economic sense to do so. The free enterprise system that the U.S. promoted for decades requires that products be made at the lowest price for the lowest cost for the quality. For most consumer products, that will not be the United States.
Save the Date! CTLA 2025 Educational Conference and AGM
La version française suit
We are pleased to announce that the Canadian Transport Lawyers’ Association Educational Conference and Annual General Meeting will be held in beautiful Victoria, British Columbia, between September 18 – 20, 2025, at the Inn at Laurel Point. Victoria is a charming city located on Vancouver Island and is known for its rich history, stunning natural surroundings, and British-inspired architecture. In addition to its colonial charm, Victoria has a vibrant arts scene, lots of outdoor activities, and a fantastic food scene.
The hotel features stunning views of Victoria harbour and is located only a 10-15 minute walk away from the picturesque area, which is lined with historic buildings, including the British Columbia Legislature, and offers views of boats and the waterfront.
Nous sommes heureux d’annoncer que la conférence éducative et l’assemblée générale annuelle de l’Association canadienne des avocats en transport se tiendront dans la belle ville de Victoria, en Colombie-Britannique, du 18 au 20 septembre 2025, à l’Inn at Laurel Point. Victoria est une charmante ville située sur l’île de Vancouver et est connue pour sa riche histoire, son environnement naturel superbe et son architecture d’inspiration britannique. En plus de son charme colonial, Victoria possède une scène artistique dynamique, de nombreuses activités de plein air et une scène gastronomique fantastique.
L’hôtel offre une vue impressionante sur le port de Victoria et est situé à seulement 10-15 minutes à pied de cette région pittoresque, bordé de bâtiments historiques, y compris l’Assemblée législative de la Colombie-Britannique, et offre une vue sur les bateaux et le front de mer.
How to Obtain an Injunction to Protect Canadian Aquaculture Operations: Practical Advice for the Transportation Lawyer
Introduction
The Canadian aquaculture industry is poised for growth. In 2022, Canada generated 166,265 tonnes of aquaculture product. This included 125,907 tonnes of finfish such as salmon and trout and shellfish such as clams, oysters, mussels, and scallops. The total value of this product was $1,342,553,000.1 According to the Canadian government: “About 50% of Canada’s aquaculture production originates in Atlantic Canada and there is ample room to double or triple its output.”2 This sentiment aligns with predictions by the FAO that there is potential for significant increase in the Canadian aquaculture sector.3
As the aquaculture sector expands, so will the need for resilient methods of transportation to ensure reliable delivery of supplies and product. Many aspects of aquaculture supply chains are vulnerable to interference. For example, production of farmed salmon requires the continuous transfer of fish throughout the salmon’s life cycle in a time-sensitive and environmentally-controlled manner. In the early stages, juvenile salmon are shipped from landbased hatcheries to freshwater tanks to saltwater pens. This is followed by transport of mature salmon to processing facilities
* Shiels Marine Legal Services Inc. (Yarmouth, NS) ** Patterson Law (Halifax, NS)
and vendor locations. Commercial fishing vessels, trucks and trailers, and airplanes are routinely involved in shipping product across domestic and international borders. Delivery of aquaculture product may bear similar transportation hallmarks to delivery of wild product but the stages of production prior to harvesting have heightened and unique shipping requirements.
It should be emphasized that aquaculture production is not confined to controlled environments. In addition to open-pen salmon farming, activities like oyster and mussel cultivation can occur at exposed ocean sites. Such activities are vulnerable to diseases that can spread from one bay or estuary to another; for example: MSX and Dermo in oysters.4 Robust controls in shipment of goods and supplies may be required to limit potential contamination. But this reality can also attract sweeping policies and actions by third parties such as government actors that can have devastating operational impacts.
The question addressed in this article is a practical one which transportation lawyers may be asked to advise on, given the transportation-intensive nature of aquaculture operations: how can aquaculture operators seek injunctions against third parties and government actors to meet their production requirements?
Procedural Backdrop
An injunction is a judicial remedy that requires a party to refrain from doing a particular act or thing or requires that party to do a certain thing. It is a preventative measure that guards against future injuries5 that may result from a third parties’ action or inaction.
In order to obtain an injunction, a party must commence a court proceeding in the appropriate forum. Depending on the offensive activity, the proceeding may constitute an action or application for judicial review in federal court or in a provincial superior court. The action must have a proper legal foundation, such as a claim for damages. The damages must emanate from a recognized legal principal such as trespass, nuisance, interference, damage to equipment, improper use of authority, etc. Once the court proceeding has been started, parties can file motions for injunctive relief. Court rules allow parties to request an emergency hearing or special hearing date for such motions to be heard.
The motion for relief will require affidavit evidence for the court to consider. This evidence should include a detailed account of the disruption – i.e., the nature of the aquaculture operation, the harm caused by the offensive activity, and the identity and specific conduct of those interfering, if known.
In Canada, the legal test articulated in the case of RJR-Macdonald 6 is generally cited in determining whether an injunction should be granted:
A. Is there a serious issue to be tried? (case has legal merit)
Sarah Shiels*
Michael Kennedy**
CTLA Feature Articles and Case Notes
B. Would the applicant suffer irreparable harm if the injunction were not granted?
C. Does the balance of convenience weigh against the granting of the injunction?
As you can see, courts do not look at this lightly because they do not want to arbitrarily order a person or persons to do or not do something. The seeker of the injunction has a number of hurdles to overcome without any guarantee of success.
If an applicant is successful in satisfying the court that an injunction should be granted, the court may also require an undertaking as to damages. In other words, the party awarded injunctive relief may have to undertake to cover the other party’s losses upon the final determination of the underlying claim or judicial review.
Irreparable harm was defined in RJRMacDonald as harm that “either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other.” Examples of this type of harm include cases where a party is put out of business could suffer from substantial business disruption, experiences permanent market loss, suffers irrevocable damage to business reputation, or where there is a permanent loss of natural resources. Financial harm has been considered irreparable if it “could threaten the very viability of the business concerned”.7
The aspect of “balance of convenience” broadens the Court’s consideration from the immediate request to the effects of allowing the injunction on the interests of parties other than the applicant, including the public interest.8 In other words, the Court will weigh the likely effects of granting or not granting the relief sought. Where everything else is equal, the Supreme Court of Canada has noted it is a counsel of prudence to “preserve the status quo” (RJRMacDonald per American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396 ).
Case Law
There is limited Canadian jurisprudence directly pertaining to a quest for injunctive relief in aquaculture operations.
However, there are many cases which are instructive – especially when one considers the layered components of many aquaculture facilities. While some aquaculture production is carried out in-land, there are many marine lease sites with associated transport of supplies and product by vessels to nearby wharves. As noted in the introduction to this paper, at different stages of production, various aquaculture elements may have to be transported between different sites (See Mowi, below).
Product may then be shipped to processing facilities off-site before being shipped to market. All of these production and transportation aspects are vulnerable to interference.
In the case of Sipekne’katik Band Council v. Doe, 2020 NSSC 310, lobster catch was landed at a Nova Scotia public wharf based on a First Nations Band asserting a treaty right. There was associated vandalism and an assault at a nearby lobster pound. In his decision granting an injunction, Justice Chipman noted the following at paragraph 31:
The Band is trying to realize its constitutionally protected right to harvest lobster. The Respondents are attempting to prevent the Band from doing so with an unlawful campaign of tortious and criminal intimidation, threats, and property destruction.
Note first of all, that the activity by the First Nations group was found to be a legal activity. If not, the injunction would not have been successful.
The Court determined that an order was to be issued with clear language that RCMP/enforcement agencies would enforce prohibitions.9
What this case tells us is that where a legal activity is being interfered with by a third party or parties, it is possible to obtain an injunction to prevent the interference. Aquaculture activities that have been authorized by an existing licence may be able to seek such relief. The same principle would not apply prior to the granting of the licence.
Another reported fisheries case where an injunction was sought involved a juvenile
American eel conservation study being carried out in East River, Chester, Nova Scotia. This is case is cited as Canadian Committee for Sustainable Eel Fishery Inc v. Francis, 2021 NSSC 185. The elver conservation study was allegedly jeopardized by intimidation, unlicensed fishing, and tampering with equipment. An action was filed against named and unnamed parties. Ultimately an injunction order was not granted because the Court considered the harm to the public interest a “speculative and indirect impact that is not balanced by potential harms to unnamed persons” (paragraph 44). The Court also expressed concern that the terms of the proposed Order were very broad and could criminalize activities taking place outside of the localized area of the Study (paragraph 61).
Finally, the case of Mowi Canada West Inc. v. Canada (Fisheries, Oceans and Coast Guard), 2021 FC 293 involved applications for judicial review in relation to marine finfish aquaculture licenses. The federal court considered a federal Minister’s decision to phase out existing salmon farming sites and restrict the transfer of live fish between hatcheries and saltwater sited and between saltwater sites (paragraph 4). In this case an interlocutory injunction was granted against the federal Minister to allow the transfer of fish into three sites. The Court recognized the Minister’s broad discretion to enact fisheries policy with respect to Canada’s fisheries but granted the injunction so far as it interfered with transfer licences deemed a vital and necessary part of fish farm operations for which aquaculture licences had been issued. Notably, in this case no undertaking was required for damages (paragraph 154).
This case was arguably quite technical in its approach - it was found that the order for injunction did not interfere with the Crown’s overall legal discretion under the enabling legislation. However, Mowi clearly stands for the possibility that such an order may be granted in the aquaculture industry.
This brings up another issue. Although it is clear that injunctions are available against third parties when the circumstances are appropriate, such relief is not always available against the Crown.
Litigants should be mindful that the Crown has unique standing and potential immunity in accordance with Canadian law and that Crown policies will be afforded some measure of deference.
Conclusion
Remedies are available to aquaculture
CTLA Feature Articles and Case Notes
operators facing interference with their operations by private actors and government agents. Injunctive relief can assist law enforcement agencies in protecting harvesting and transport operations to mitigate damage. As demonstrated by Canadian jurisprudence, the question for proponents seeking court-backed protections will be
whether the facts particular to their circumstances rise to the occasion of the three-part test articulated in RJR-MacDonald. Critical to a Canadian court’s determination will be the proponent’s ability to demonstrate specific, irreparable harm to their operation and that preserving the status quo aligns with the public interest.
Endnotes
1 See Government of Canada “Aquaculture production quantities and value, 2022”, https://www.dfo-mpo.gc.ca/stats/aqua/aqua22-eng.html.
2 See Government of Canada “Aquaculture in Atlantic Canada”, https://www.canada.ca/en/atlantic-canada-opportunities/services/aquaculture-in-atlantic-canada. html.
3 FAO. 2025. Canada. Text by Olin, P.. In: Fisheries and Aquaculture. https://www.fao.org/fishery/en/countrysector/naso_canada.
4 See Government of Canada “Response to MSX and Dermo in oysters”, https://inspection.canada.ca/en/animal-health/aquatic-animals/diseases/reportablediseases/response-multinucleate-sphere-unknown-dermo-oysters.
5 Definition adapted from Barron’s Canadian Law Dictionary.
6 RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 SCR 311, https://canlii.ca/t/1frtw.
7 Apotex Inc. v. Wellcome Foundation Ltd., 1998 CanLII 8113 (FCA) at para 8, https://canlii.ca/t/4m9g.
8 Mowi Canada West Inc. v. Canada (Fisheries, Oceans and Coast Guard), 2021 FC 293 at para 118, https://canlii.ca/t/jg653.
9 Copy available online: https://www.aptnnews.ca/wp-content/uploads/2020/10/Court-Order_Oct.-21.pdf.
Canada’s Proposed Regulations on Marine Emergency Services and Pollution Response: A Critique by Concerned Transportation Lawyers
Introduction
Transport Canada has released a discussion paper proposing new regulations aimed at increasing access to marine emergency services and improving responses to pollution incidents.1 These regulations are part of Canada’s broader Oceans Protection Plan and have the stated objective of enhancing marine safety while ensuring compliance with international standards. While these objectives are commendable, it is the authors’ view that the proposed framework contains several shortcomings that must be addressed prior to implementation. This article critically examines the potential regulations, highlighting concerns about jurisdictional overlap, practical feasibility, economic impact, and the proposed response coordinator role. It argues for a more measured, phased approach that accounts for existing industry capacity, seeks alignment with international standards, and ensures better regulatory clarity.
Summary of the Proposed Regulations
Transport Canada’s proposed regulations aim to improve Canada’s marine
emergency response framework by addressing perceived gaps in current policies. These regulations are being developed in response to the evolving risks associated with marine transportation and pollution incidents. The proposed regulations are built upon several guiding principles, including the idea that risk generators, such as vessel owners and operators, should be responsible for preparedness and response. The framework emphasizes that response capacity should align with identified risks, and that regulations should be flexible and integrate with existing policies. Additionally, impacted parties are expected to contribute to regulatory development to ensure broad participation in the process.
The first key component of these regulations is the requirement that certain commercial vessels (exact criteria still to be determined) have contractual arrangements in place with marine emergency service providers for firefighting salvage and towing assistance. This initiative aims to ensure faster and more consistent emergency responses, ultimately mitigating risks to onboard personnel, the marine environment, and the stability of the supply chain. To achieve this, Transport Canada suggests mirroring U.S. legislation by introducing response time commitments,
service provider capability requirements, and coordination exercises as key components of the regulatory framework.
The second key component is the enhancement of pollution response capabilities. First, vessels and handling facilities dealing with hazardous and noxious substances (HNS) will be required to develop pollution response plans specific to HNS, something not specifically addressed under existing pollution response regulations. Second, the proposed regulations will introduce a mandatory response coordinator role among and within Canadian vessel owner organizations to improve stakeholder coordination. The framework also aims to align Canada’s regulations with international protocols, including those established by the International Maritime Organization (IMO), namely, the IMO’s Protocol on Preparedness Response and Co-operation to Poluttion Incidents by Hazardous and Noxious Substances.
Critique of the Proposed Regulations
While the proposed regulations provide a structured approach to improving marine emergency responses, several concerns arise when examining their practical implementation. One of the most pressing
Seamus Ryder*
Katherine Shaughnessy-Chapman**
Robin Squires***
issues is the narrow definition of “risk generators,” which focuses primarily on vessel operators while overlooking other key players, such as shore-based facilities, shippers, and freight forwarders. Expanding this definition would allow for more equitable responsibility distribution and a more comprehensive approach to risk management.
The emphasis on regulatory flexibility, while beneficial in theory, raises compliance challenges for industry stakeholders. The ability to adapt regulations to evolving risks may make it easier for policymakers to adjust requirements, but it also creates uncertainty for those expected to comply. A phased approach to implementation would mitigate these concerns by providing a structured timeline for adaptation.
Another key issue is the assumption that mandated response capacity will align with market availability. Simply requiring emergency service capabilities does not ensure that such services exist in sufficient numbers. Transport Canada must ensure that emergency service providers are readily available before imposing regulatory obligations. Additionally, cost efficiency considerations appear to be missing from the discussion. Aligning the new requirements with international standards and taking a phased approach to implementation would prevent competitive disadvantages for Canadian shipping.
The rationale for regulating marine safety through mandatory emergency service arrangements is also questionable. Transport Canada acknowledges that marine accidents are rare and that emergency response services already exist commercially. However, the assumption that requiring contracts will lead to faster and more consistent response times is not substantiated by evidence. Given Canada’s vast geography and remote regions, imposing contract requirements does not necessarily translate to improved emergency response times. Similarly, mirroring U.S. response time requirements without addressing existing infrastructure gaps could result in unrealistic compliance expectations for vessel operators.
The regulatory burden placed on vessel owners also presents concerns. While they
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are expected to secure contracts with emergency service providers, Transport Canada does not propose to certify or regulate these providers, creating the potential for disputes over due diligence and compliance in the event of an emergency. A more structured regulatory oversight mechanism would mitigate this risk.
In terms of pollution response, jurisdictional overlaps and legal conflicts present another challenge. Marine pollution response involves coordination between federal, provincial, municipal, and Indigenous authorities, but the discussion paper does not sufficiently address how these relationships will be managed. A clearer framework is needed to ensure that different levels of government work collaboratively without regulatory inconsistencies.
Financial and logistical challenges also arise concerning Canada’s accession to the IMO protocol. The discussion paper does not clearly outline how additional response capacity will be funded or how resources will be distributed equitably across Canada’s extensive coastline. Key questions remain regarding the feasibility of financing response infrastructure and ensuring adequate coverage in remote coastal regions.
The role of the response coordinator, which is proposed as a key element in pollution response management, also raises several concerns. Without statutory powers, the coordinator lacks the authority to direct provincial agencies, private contractors, or Indigenous stakeholders, which may hinder their ability to act effectively during an incident. Additionally, the response coordinator could face legal liability without indemnity protections, making the role particularly risky. Transport Canada must define clear liability allocations among vessel owners, coordinators, and regulators to ensure accountability without undue legal exposure.
A further complication stems from the unclear division of authority between vessel owners and the response coordinator. If vessel owners remain legally responsible for pollution response, but a separate coordinator is given operational control, potential conflicts over decision-making
authority may arise. Furthermore, there are no established certification requirements for response coordinators. Unlike certified oil spill response organizations, response coordinators are not currently required to meet any specific qualifications. Implementing a national accreditation program would enhance accountability and ensure that qualified individuals occupy these critical roles.
Recommendations for Improvement
To improve regulatory effectiveness, Transport Canada should take a more measured and evidence-based approach. Expanding the definition of “risk generators” to include shore-based stakeholders would distribute responsibilities more equitably and ensure that all parties contributing to potential risks are included in the regulatory framework.
Before imposing response capacity requirements, a comprehensive market assessment should be conducted to verify the availability of emergency service providers. Transport Canada should also grant legal authority to the response coordinator role, ensuring that they have the necessary enforcement capabilities to direct response efforts effectively. Additionally, establishing a certification and training program for response coordinators would enhance credibility and ensure that individuals in these roles have the expertise required to manage emergency situations.
Clearer jurisdictional delineation between federal, provincial, and Indigenous authorities is also necessary to avoid regulatory conflicts and inefficiencies. Furthermore, liability protections should be introduced to prevent undue legal exposure for response coordinators and ensure that their role can be carried out without fear of personal litigation. Finally, a phased approach to implementation would allow industry stakeholders to adapt gradually and ensure that sufficient infrastructure is in place before full compliance is required.
Conclusion
Transport Canada’s proposed regulations represent a well-intentioned effort
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to improve marine emergency preparedness and pollution response. However, they present significant legal, economic, and operational challenges that must be
addressed to ensure their effectiveness. By refining these regulations through stakeholder consultations, risk assessments, and a phased approach to implementation,
Canada can develop a sustainable and enforceable framework that enhances marine safety while ensuring compliance remains realistic and achievable.
The Supreme Court Directs a More Robust Review of Regulations: What it Means for the Transportation Industry
On November 8, 2024, the Supreme Court of Canada (SCC) unanimously decided that courts should apply the robust “reasonableness” standard of review when considering challenges to subordinate legislation.1 In doing so, the SCC has lowered the threshold for declaring that regulations and similar instruments (e.g., ministerial directives, guidelines, and orders-in-council) are invalid. They ought to be reviewed in much the same way as any other administrative decision.
The rejection of a distinct approach to reviewing regulations brings coherence and predictability to administrative law. It also removes an important barrier to the viability of legal challenges to regulations.
This shift is of direct relevance to businesses operating in the highly regulated transportation industry.
The Road to
Reasonableness Review of Regulations
The SCC’s landmark 2019 decision in Vavilov sets out a comprehensive framework for determining the degree of scrutiny courts must apply when conducting
substantive review of an administrative decision.2 Within this framework, “reasonableness” is presumed to be the standard of review.
Vavilov explains that reasonableness review allows a court to intervene where there is a failure of rationality internal to the reasoning of the administrative decisionmaker, or where the decision is in some respect untenable in light of the relevant facts and law.
Vavilov marked a significant departure from prior jurisprudence concerning both when and how reasonableness review would be conducted. Since 2019, Canadian courts have been tasked with re-evaluating prior jurisprudence in light of Vavilov. In doing so, lower courts were split on the question of whether reasonableness ought to apply when determining whether subordinate legislation is valid.
When reviewing the validity of subordinate legislation, the main question is whether it is authorized by the enabling statute or whether it is ultra vires (i.e., not authorized).
Since 2019, some courts have followed Vavilov and conducted reasonableness review to determine whether subordinate legislation is ultra vires ; meanwhile, others continued to apply a much higher threshold
for judicial intervention set out in an earlier SCC decision: Katz 3 Under Katz, a challenge would only succeed if subordinate legislation was shown to be “irrelevant,” “extraneous,” or “completely unrelated” to the purpose of its enabling statute. The Katz approach has been described as uniquely “hyperdeferential.”4
This difference in approach had significant practical consequences for litigants, as regulations and other subordinate legislation were much more difficult to challenge under Katz than under Vavilov. For businesses in highly regulated industries such as transportation, the Katz approach limited the prospects for a successful legal challenge on a potentially wide range of issues.
Reasonableness Review is the Rule: Auer and TransAlta
In two companion decisions— Auer and TransAlta— the SCC has confirmed that Vavilov’s robust reasonableness standard is presumed to apply to the review of subordinate legislation. Though some of the principles set out in Katz continue to inform aspects of the reasonableness analysis, the “hyperdeferential” approach is set aside.
The SCC also confirmed that when determining whether subordinate legislation is ultra vires, the focus will typically be
Jean-Simon Schoenholz*
Christopher A. Guerreiro**
Florence Méthot*** Miteau Butskhrikidze*
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on ensuring government has acted within the scope of its lawful authority based on the legislation. In this regard, courts will be most concerned with the governing statutory scheme, other statutory or common law, and the principles of statutory interpretation. Courts may also consider whether regulations follow a coherent chain of reasoning. The reasoning process for regulations can often be deduced from various sources, including debate, policy, and regulatory statements.
The SCC warned that this does not, however, open the door to examining the policy merits of a regulation to determine whether it is “necessary, wise, or effective in practice.”5 Thus, examining the consequences of a given regulation will only be relevant in deciding whether the government was reasonably authorized to enact subordinate legislation that would have such consequences.
Takeaways
For individuals and corporations operating in regulated industries, the decisions in Auer and TransAlta represent an important step forward. These decisions ensure that across Canada, courts will now follow a clear and consistent approach to reviewing regulations.
Businesses in the transportation industry regularly challenge subordinate legislation. In the past five years, challenges have been brought against the Marine Transportation Security Regulations, the Air Passenger Protection Regulations, and the application of municipal by-laws to transport-related federal undertakings.6
In doing so, it was previously unclear how much scrutiny courts should apply in their review of these regulations. In fact, in International Air Transport, the Federal Court of Appeal highlighted this uncertainty in its analysis.7
In the wake of Auer and TransAlta, there is now clear guidance from the SCC that the Vavilov framework applies to challenges to subordinate legislation. The practical consequence for those in the transportation industry facing what they view to be unfair or unauthorized regulations is two-fold. First, these will be less difficult to challenge now than they were under the “hyperdeferential” Katz approach. Second, the case to be met in such a challenge will be much clearer.
Stakeholders now have clear guidance on the arguments they can advance to ensure oversight and accountability of public decision-makers who exercise regulation-making powers. Where it appears that subordinate legislation does not bear the “hallmarks of reasonableness—justification, transparency and intelligibility”8 —a previously improbable legal challenge may now be viable.
Endnotes
1 Auer v Auer, 2024 SCC 36 (Auer); TransAlta Generation Partnership v Alberta, 2024 SCC 37 ( TransAlta).
2 C anada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 ( Vavilov). See our previous publication on Vavilov here.
3 Katz Group Canada Inc v. Ontario (Health and Long-Term Care), 2013 SCC 64 (Katz).
4 Innovative Medicines Canada v. Canada (Attorney General), 2022 FCA 210, at para 30. Auer, at para 56, citing Katz, at para 27.
5 Auer, at para 56, citing Katz, at para 27.
6 Canadian Maritime Workers Council v Canada (Attorney General), 2020 FC 177; International Air Transport Association v. Canadian Transportation Agency, 2022 FCA 211 (International Air Transport); and Halton (Regional Municipality) v. Canadian National Railway Company, 2024 ONCA 174.
7 International Air Transport, at paras 188-190.
8 Auer, at para 50.
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