TLA TTL December 2023

The

Transportation Lawyer A Comprehensive Journal of Developments in Transportation Law

December 2023 Volume 25 Number 3

translaw.org

A Joint Publication of the Transportation Lawyers Association and the Canadian Transport Lawyers Association

ctla.ca

Transportation Lawyers Association 2023–2024 Executive Committee Members President Eric R. Benton Mayer LLP 2900 N. Loop W., Ste. 500 Houston, TX 77092 (713) 863-2781 ebenton@mayerllp.com President-Elect Katherine T. Garber Clark Hill 909 Fannin Street, Ste. 2300 Houston, TX 77010 (713) 951-5665 kgarber@clarkhill.com First Vice President Louis Amato-Gauci Miller Thomson LLP 5800 - 40 King St. W, Box 1101 Toronto, ON M5H 3S1 (416) 595-8551 lamatogauci@millerthomson.com Second Vice President Patrick E. Foppe Lashly & Baer, P.C. 714 Locust Street Saint Louis, MO 63101 (314) 436-8312 pfoppe@lashlybaer.com Secretary/Treasurer Roger Watts Lindsay LLP 1000-564 Beatty Street Vancouver, BC V6B 2L3 (604) 484-3083 rwatts@lindsayllp.ca Immediate Past President Christopher M. Kelly Gallivan, White & Boyd, P.A. 6805 Carnegie Blvd., Ste. 200 Charlotte, NC 28211 (704) 227-1940 ckelly@gwblawfirm.com Voting Past Presidents Frank C. Botta The Lynch Law Group, LLC 375 Southpointe Boulevard Suite 100 Canonsburg, PA 15317 (724) 776-8000 fbotta@lynchlaw-group.com Kathleen C. Jeffries Scopelitis, Garvin, Light, Hanson & Feary, LLP 2 N. Lake Ave., Ste. 560 Pasadena, CA 91101 (626) 795-4700 kjeffries@scopelitis.com Patrick K. McMonigle Dysart Taylor Cotter McMonigle & Brumitt, P.C. 700 West 47th Street Suite 410 Kansas City, MO 64112 (816) 714-3039 pmcmonigle@dysarttaylor.com Steven B. Novy Canty Novy Bertkau Gordon, LLC 1242 Deertrail Lane Libertyville, IL 60048 (847) 625-8200 snovy@cnbglaw.com William D. Taylor Hanson Bridgett LLP 500 Capitol Mall Ste 1500 Sacramento, CA 95814 (916) 551-2939 wtaylor@hansonbridgett.com

Canadian Transport Lawyers Association 2022–2023 Officers and Directors

Representatives-At-Large Peggy Smith Bush Term 5/22 – 5/24 Marshall Dennehey 315 E. Robinson St., Suite 550 Orlando, FL 32801 (407) 505-4673 psbush@mdwcg.com

President/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

Chris E. Cotter Term 5/22 – 5/24 Roetzel 222 S. Main St., Suite 400 Akron, OH 44308 (330) 819-1127 ccotter@ralaw.com

Vice President & Secretary/ Vice-président et secrétaire Jaclyne Reive Miller Thomson LLP 5800 - 40 King St. W, Box 1101 Toronto, ON M5H 3S1 (416) 595-7935 jreive@millerthomson.com

Kristen M.J. Johnson Term: 05/22 - 05/24 Cargomatic 103-3023 Eastland Blvd Clearwater, FL 33761-4106 kmjohnson@cargomatic.com Thomas C. Martin Term: 05/22 - 05/24 Price, Meese, Shulman & D'Arminio, P.C. 50 Tice Blvd.

Woodcliff Lake, NJ 07677 (201) 995-6704 tmartin@pricemeese.com Marshal M. Pitchford Term: 5/23 – 5/25 DiCaudo, Pitchford & Yoder LLC 209 South Main Street, Suite 300 Akron, OH 44308 (330) 787-9841 mpitchford@dpylaw.com Daniel R. Sonneborn Term: 06/23 – 06/25 Daniel R. Sonneborn Preti Flaherty Beliveau & Pachios, LLP 60 State St., Ste. 1100 Boston, MA 02109 (617) 226-3800 dsonneborn@preti.com Rick A. Steinberg Term: 05/23 – 05/25 Price, Meese, Shulman & D’Arminio, P.C. 50 Tice Blvd., Ste. 380 Woodcliff Lake, NJ 07677 (201) 995-6704 rsteinberg@pricemeese.com Ashley W. Winsky Term: 5/23 – 5/25 Gentry Locke 919 E Main St, Ste 1130 Richmond, VA 23219 (804) 297-3704 winsky@gentrylocke.com CTLA Representative-At-Large Carole McAfee Wallace Gardiner Roberts LLP Bay Adelaide Centre – East Tower 22 Adelaide St W Toronto, ON M5H 4E3 (416) 203-9551 cwallace@grllp.com TLA EXECUTIVE OFFICE 111 West Jackson Blvd., Suite 1412 Chicago, IL 60604 (913) 222-8652; Fax: (913) 222-8606 Email: tla-info@kellencompany.com Website: www.translaw.org

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 Orvel Currie DD West LLP 300-305 Broadway Winnipeg, MB R3C 3J7 (204) 957-6401 ocurrie@ddwestllp.com

Treasurer/Trésorier Pui Hong Trimac Transportation 700-II, 326 - 11 Avenue S.W. Calgary, AB T2R 0C5 (403) 298-5140 phong@trimac.com Director of Communications/ Directeur des communications Brian Lipson McCarthy Tétrault LLP 500 Grande Allée East 9th Floor Quebec City, QC G1R 2J7 (418) 521-3037 blipson@mccarthy.ca Past President/Ancien président Robin Squires Borden Ladner Gervais LLP 27 Adelaide St. W Toronto, ON M5H 4E3 (416) 367-6595 rsquires@blg.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 Stein Monast 70 Dalhousie Street, Suite 300 Québec, QC G1K 4B2 (418) 476-3621 pascale.demeyer@steinmonast.ca Seamus Ryder Metcalf & Co. 1459 Hollis St. Halifax, NS B3J 1V1 (902) 420-1990 seamusryder@metcalf.ns.ca Non-Resident Director Steven Canty Canty Novy Bertkau Gordon LLC 65 E Wacker Place, Suite 1220 Chicago IL 60601 (847) 625-8200 scanty@cnbglaw.com

The Transportation Lawyer Copyright © 2023. TLA and CTLA. All rights reserved.

Publication Schedule Submission Deadlines February 2, 2024

PLEASE submit material by email in time to meet these deadlines to TLA Editor, Louis Amato-Gauci (see address above).

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.

December

Contents

Association Business

CTLA Feature Articles and Case Notes

Messages from the Presidents

Feature Articles

TLA – Eric R. Benton ......................................................................................... 2 CTLA — Elizabeth Fashler.................................................................................. 4

Is it Wise to Use a Smart Contract?: Benefits and Risks of Smart Contracts in Transportation and Logistics – Ian Breneman and Michael Furyk................. 51

Editors’ Columns

Case Notes

TLA — Louis Amato-Gauci ................................................................................. 5

Electronic Logging Devices — Finally Here, With A Major Surprise! – Jean-Sébastien Tremblay-Mimeault.............................................................. 54

CTLA — Brian Lipson.......................................................................................... 6

Financial Update TLA Secretary/Treasurer’s Report – Patrick E. Foppe......................................... 7

Membership Section

Announcement

In Memoriam: María Arcelia (Arcie) Izquierdo Jordan .................................................... 56

TLA Officer Changes – Executive Committee................................................... 8

TLA Membership Application......................................................................... 57

Conference Reports

TLA Committees Application Form................................................................. 58

2023 Transportation Law Institute Pictorial....................................................... 9 2024 Chicago Regional Seminar and Boot Camp........................................... 11 2024 TLA Annual Conference & CTLA Midyear Meeting Rio Grande, Puerto Rico ................................................................................... 16

TLA Committee Corner Labor & Human Resources Committee – Paul B. Mello and Caroline D. Milner ................................................................ 22

TLA Feature Articles and Case Notes Feature Articles The Modern-Day Risks of Transportation Brokerage – Katherine T. Garber....... 23 Sunshine on My Shoulder: Reptile Smiting in the Sunshine State!

And an Update on Legislative Nuclear Verdict Reform Elsewhere – Eric L. Zalud and Megan K. MacCallum ............................................................. 30 Amendments to the Limitation Act: Small Passenger Vessels Are Restricted from Limiting Their Liability for Marine Casualties – Katie Matison and Matthew A. Stoloff................................................................ 34 Railways: Complex, Vast and Cyber-connected – William B. Pentecost, Jr., Henry J. Sienkiewicz and David M. Olive.................. 38 International Aviation Liability, Its History and Evolution – Jonathan R. Todd, Vanessa I. Gomez and Sara Mishic....................................... 44 The Statute of Limitations in Freight Charge Collections: The Case for a Lengthier State Law Approach – Edgar Davison and Richard L. Grant................................................................................................... 47

Case Notes East Palestine Derailment Lawsuit Expands in Scope – Andrew J. Steif........... 49

CTLA Membership Application...................................................................... 59 Calendar – Save The Date!............................................................................ 60

Association Business

TLA

President’s Message

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s you start to read the December issue of The Transportation Nielsonn & Johansen, LLC high marks for hosting our attendees.

Lawyer, the calendar for 2023 is reaching its end but I feel like No rest for the weary as the Transportation Lawyers Association’s it should be about July or August not December. I hope the winter traveling show’s next stop is the Chicago Regional. Put on your weather will be better behaved than the summer weather was this snow tires and chains just in case their winter is as bad as this past past year. The lower third of the country, including my home state summer. This always popular conference is already generating a of Texas, was locked into a high-pressure zone that brought record great amount of interest as Joelle Nelson and Carlos Sesma, Jr. temperatures and drought, while the northeast had a record and the Educational Committee have put together a tremendous amount of rain. Our members have a lot to be excited about even panel of speakers that will focus on the impact technology is having if the weather does not cooperate. on our clients and our law practices. Not to be left behind, Frank Before jumping into next year, however, I would like to take Botta and Alecia Walters-Hinds have put together a Boot Camp the opportunity to reflect on the last half of 2023. to teach attorneys just starting their travels (and In the hottest summer on record for Houston, I more seasoned explorers) the behind the scenes held the annual Executive Committee meeting in interactions between insurance company adjustors Houston and invited the Executive Committee to and our clients. Knowing what risk managers need to meet to approve this year’s budget and address the manage risk is sometimes lost in our personal need outstanding issues of the Transportation Lawyers to win our cases and negotiations.

Association. Despite of the weather, the committee After all of those travels to the home of chammet and took care of the Association’s business and paign powder skiing in Salt Lake City for the we even managed to slip in some fun. We travTransportation Law Institute and the frozen shores eled across the street from our hotel to watch the of Lake Michigan for the Chicago Regional, it’s time Houston Astros and down the highway for a visit to for one last trip for my term as TLA President: start the Johnson Space Center, which is the headquarscheduling your visit to the Caribbean Island of ters for NASA. As NASA plans to return to the moon Puerto Rico. After a long winter of travels and trials, Eric R. Benton and then on to Mars they are taking transportation it is time to hit the beach for the Annual Conference. to another level.

The Wyndham Grand Rio Mar Puerto Rico Golf and You don’t have to go to the moon or Mars to get the latest Beach Resort will host the Annual Conference May 1 to 4. Gordon information affecting transportation. Stephen Dennis, Chair of the Hearn and Billy Davis and the Educational Committee have been Webinar Committee, hosted Eric Zalud and Tamara Goorevitz on hard at work to provide us with an educational program that will October 10, 2023, with a webinar entitled “Reprise: The Sun Never make your travels to this beautiful spot worthy of your time and Sets on Broker Liability. . ..” This topic continues to be one that money and, if needed, the substance and timing of presentations draws interest. The winding road of sometimes conflicting decisions that will make even envious bosses and partners approve your following Schramm v. Foster1 remain an area that gathers the trans- travel. In addition to a wide-ranging program, the various practice portation bar together to try to determine where we are heading. committees will allow members practicing in more specific areas to Thanks to those who joined the webinar and for the never-ending develop their network with other members that specialize in your support of Eric and Tamara. area of practice. The after-hours networking at dinners, receptions The road to Salt Lake City can seem very remote at times and hospitality suite ensure that you can develop those relationdepending on the route you took to get there. My wife and I spent ships that lead to referrals the rest of the year.

As I reflect on my own personal journey of being the President a week (not nearly long enough) and traveled through the National Parks of Utah. Most of the time, Utah seemed like Mars as the rocks of this great organization during the past seven months, I am most and soil were generally reminiscent of the Red Planet but extremely thankful for those who contribute their time and energy to the TLA. beautiful. We ended our trip in Salt Lake City. I knew then that I Even though I have been a member for over 30 years and have had to hold the Transportation Law Institute in this beautiful city. served in a wide variety of positions within the organization, I never As I am sure you had a similar experience this past October when realized how many members are involved and responsible for makwe convened the TLI in Salt Lake and enjoyed its beauty and the ing TLA the best association of attorneys in any subject area. While tremendous educational program put together by Program Chairs it takes more members than I can possibly thank in this column, Paul Mello and, Salt Lake’s own, Mark Thornton. Paul and Mark I do want to recognize the work and support of the Officers and and the Educational Committee deserve high marks for the pro- Executive Committee. Kathy Garber is the President-Elect and is gram and Mark and Stevan Baxter and their law firm, Skoubye involved in every aspect of the organization. Louis Amato-Gauci is

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Association Business

the First Vice President and the Editor of The Transportation Lawyer.

Second Vice President Jeffrey Pincus has had to resign but brought his knowledge and Long Island humor to all the projects he worked on. Jeff and his wife, Amy, will be sorely missed. Patrick Foppe has moved up the ladder to fill the resulting vacancy, and he continues to contribute to the Recruitment and Member Services Committee.

Last but not least, please join me in congratulating Roger Watts, on his election to the role of Secretary/Treasurer.

I don’t know who thought of the idea of having Voting Past Presidents, but what a great source of comfort that I can rely upon the counsel provided by these fine attorneys during the year. Frank Botta, Kathleen Jeffries, Patrick McMonigle, Steve Novy and Bill Taylor have graciously given their time and energy to provide the guidance a president needs during their time as president, and the organizational knowledge of all that has gone on before their term. The Executive Committee Representatives-at-Large: Peggy 1

Smith Bush, Kristen Johnson, Rick Steinberg, Chris Cotter, Daniel Sonneborn, Marshal Pitchford, Ashley Winsky and Tom Martin along with the CTLA Representative-at-Large, Carole McAfee Wallace, provide energy and experience to get the job done when needed and wise advice on the issues before the organization. Erin Erickson, Macey Murray, Rachel Celentano, and Rebecca Pierucci and the fine folks at Kellen Company make sure a bunch of attorneys can successfully run TLA. As an association made up of hard-working attorneys, who are always over-booked, their contributions cannot go without a big “Thank You.” May you take a little time this holiday season to think about those who encourage and support you and your families, work and organizations. Thanks to all of those who have assisted me in my role as President, partner, husband and father this past year. May you and the Transportation Lawyers Association have a wonderful ride into 2024!

341 F. Supp. 2d 536 (D. Md. 2004).

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.

TLA Website: www.translaw.org Members Only area: User Name: First initial + last name + the Zip code where you receive TLA mail, i.e., jbrown66061. (Canadian members—please note that your postal code may include a space which counts as a character.)

Password: translaw1 If you wish, you can personalize your user name and password using the ID & Password link in the members services area of the TLA website.

Are you receiving emails from TLA? If not, your spam blocker may be preventing you from receiving important updates about TLA events and developments in transportation law. To ensure that you will receive updates, be sure that your system will accept emails from TLA-info@kellencompany.com.

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Association Business

CTLA

President’s Message

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Non-Resident Director – Steven Canty ’m delighted to be writing my first column for The Transportation Lawyer as the CTLA President for 2023-2024.

(Canty Novy Bertkau Gordon) This column comes immediately on the heels of the CTLA Director for BC – Mathew Crowe (Alexander Holburn) Annual Conference and AGM held in Montréal October 19-21, 2023.

Director for AB – Julia Loney (McMillan) The Conference was a resounding success, thanks in large part to Director for SK and MB – Orvel Currie (DD West) Robin Squires, now the Past President. We had a fabulous time reconnecting at the social events, includDirector for ON – Andrea Fernandes (Gardiner Roberts) ing the murder mystery night Can-Am Director for QC – Pascale de Meyer (Stein Monast) from which the conference Director for NB, NS & NL – Seamus Ryder derived its theme. We were (Metcalf & Company) also treated to the panache of Robin Squires with a monFor those who haven’t already heard, the ocle and a mustard-coloured Nominating Committee was extra busy this year. beret in his turn as Colonel For the first time in numerous years, the Nominating Col. Mustard, aka Robin Squires Mustard of Clue fame.

Committee put forward David Blair as a candidate for CTLA Lifetime Member status to recognize I would also like to unreservedly boast in reporthis commitment and dedication to the Association ing that the Canadians emerged victorious from year after year, including his term as President in the Can-Am. In addition to the fun and games, we 1994-1995. Unsurprisingly, the membership voted were treated to two days of substantive educational unanimously in favour of the motion. David also said panels. These panels covered a range of topics in a few words at our gala dinner on the last night of numerous modes of transportation. I want to extend the conference. In expressing his regard for CTLA, Elizabeth Fashler my deep thanks to all those who took the time to David emphasized that CTLA is a place where the prepare such excellent presentations. It was both most knowledgeable lawyers in the transportation edifying and engaging. space in Canada and the USA meet, year after year. We develop Planning and executing a conference, in addition to steering friendships, share knowledge, and support each other, consciously the CTLA towards increasing membership and general engagesetting aside the competitive aspects of legal practice. In these ment, is an enormous task. At CTLA, a huge component of this work respects, CTLA is very special. I could not agree more with these is done by volunteers on top of each of their busy legal practices. sentiments, as I have experienced the same in my time as a CTLA It represents a huge commitment, and I am incredibly grateful to member. I look forward to continuing to increase our membership those who dedicate their time to CTLA. I extend my thanks to the to bring others into the fold.

2022-2023 Executive and Board Members, and members of the Turning the focus to the upcoming year, I am pleased to share Nominating Committee and the Membership Committee. I would that the 2024 CTLA Annual Conference and AGM will be held in also like to extend sincere thanks to Lisa Isaacs, who played a key Calgary between November 14-16, 2024. Cowboy hats and boots role in planning the conference. At the risk of descending into lazy are optional but strongly encouraged. We will share details as they clichés, it has been a true team effort. develop, including what obscure activity we should all be training The members of our Board of Directors for the coming year are in to increase the chances of victory in the 2024 Can-Am. In the as follows: interim, please save the date in your calendar.

President – Elizabeth Fashler (Borden Ladner Gervais) In addition to the CTLA events, we will also be focusing on Vice President & Secretary – Jaclyne Reive (Miller Thomson)

Treasurer – Pui Hong (Trimac Transportation) Director of Communications – Brian Lipson (McCarthy Tétrault) Past President – Robin Squires (Borden Ladner Gervais)

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working together with the TLA and being involved in TLA events.

Cooperation is key to our continued growth and the health of both organizations. We look forward to working together with our American friends. I would also like to take this opportunity to encourage those who are members of only one organization to join both.

Until next time!

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Association Business

Editor’s Column

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he holiday season is upon us, bringing with it that inevitable inclimisappropriation of freight charges. nation to look back at the year that was. And what a year 2023 has • Eric Zalud and Megan MacCallum analyze Florida Tort Reform been for TLA, filled to the brim with top-quality educational programs and legislative initiatives in other states that should help counter and excellent networking events!

Reptile theory litigation tactics, by curbing the inflammatory and I would like to take a moment to congratulate and thank those non-proximate causally related aspects of litigation involving members who went above and beyond to make this a year to motor carriers, brokers and shippers. remember: Boot Camp Chair William (Bill) Taylor; Chicago Regional • From the Pacific Northwest, Katie Matison and Matthew Stoloff Seminar Co-Chairs Robert L. Reeb and Laura P. Gordon; TLA Annual walk us through the history and rationale behind the limitation of Conference Co-Chairs Kristen Johnson and Stevan Baxter; and liability for marine casualties, and describe recent amendments the 56th Transportation Law Institute Co-Chairs Mark Thornton to statutory provisions that will deny this benefit to and Paul Mello. It was wonderful to see old friends owners of small passenger vessels. and meet new members at all of these events. Many • Bill Pentecost, Henry Sienkiewicz and David of us will cherish the memories of this year’s novel Olive resume their overview of cyber security vulactivities, like the “Touch the Truck” breakout session, nerabilities, and the government agency guidance the (somewhat damp) evening at Belmont Park, the and industry best practices designed to combat debut ping-pong tournament, toasting marshmalthose vulnerabilities, focussing this time around lows outside the hospitality suite, and bonfires on on the railway industry. the beach on our final night in San Diego, California.

• We have an excellent discussion of the internaMake your plans now to join us once again in tional conventions that govern air carrier liability, Chicago early in the New Year, for another great Boot contributed by Jonathan R. Todd, Vanessa I. Camp brought to you by Frank C. Botta and Alecia Gomez and Sara Mishic.

Walters-Hinds, exploring the role of insurance in • Next, Edgar Davison and Richard L. Grant describe transportation and logistics. This will be followed by Louis Amato-Gauci the different statutes of limitation at federal an in-depth study of the emerging technologies that and state level that govern the collection of freight are reshaping the industry, led by Co-Chairs Joelle charges from brokers, shippers and consignees, and illustrate a Nelson and Carlos Sesma, Jr. I suspect that those of you from the northern U.S. states, Canada judicial inclination in favor of a more flexible, localized approach, and Western Europe will soon grow weary of brisk wintry weather. If which often leads to the adoption of the longer limitation periods you fall into this category, I strongly recommend that you book your permitted under state laws. airfare now and take advantage of early-bird registration rates for • We close out the TLA section of this edition with a case comment

by Andrew J. Steif, regarding some of the arguments that have the TLA Annual Conference on Puerto Rico, la Isla del Encanto! These simple steps are guaranteed to lift your spirits. recently been presented in the ongoing lawsuit regarding the Norfolk Southern Railway derailment in East Palestine, Ohio.

This third edition of TTL, Vol. 25 features some of our Association’s more prolific writers and several new voices, covering a broad range Thank you to all of these fine authors for their informative conof issues affecting four different modes of transportation and the tributions to our journal, to my co-editors, Pui Hong (outgoing) and transport intermediary industry: Brian Lipson (incoming), and Rachel Celentano at Kellen. Without • Kathy Garber walks us through the modern-day risks of you, there would be no TTL. transportation brokerage, including liability for the negligent Warm wishes to you and your loved ones for happy, peaceful selection of motor carriers, the dangers posed by double-bro- holiday season! kering and fraudulent operators, and carrier concerns about the

TTL Call for Articles We are looking for more featured articles and case notes for upcoming issues. This is an opportunity for TLA and CTLA members to write on timely issues which will allow greater exposure among our memberships. Publishing in the TTL will give you nationwide recognition and is a great way to expand your networking abilities as part of a well-respected and widely read industry publication.

The submission deadline for the next publication is February 2, 2024.

Please direct any questions and submissions to TTL Editor Louis Amato-Gauci at lamatogauci@millerthomson.com.

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Association Business

CTLA

Editor’s Column

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Our Canadian contributions in this issue of TTL both deal with s I write these lines, it is late October in the Canadian north, and the snow already falling on the King’s Highway (Chemin technological advances in the transportation industry. Ian Breneman Royal) near my house is a reminder that winter is coming. By the and Michael Furyk, in “Is it Wise to Use a Smart Contract?: time of publication of this issue of TTL, this stark autumn will have Benefits and Risks of Smart Contracts in Transportation and been beheaded1 and a new season will be upon us. Whether you Logistics”, look at the impact of blockchain and automation on are reading this issue next to your fireplace while petting your dog contracts. In “Electronic Logging Devices – Finally Here, With a or moose, or rather sitting on your deck by the beach because you Major Surprise!”, Jean-Sébastien Tremblay-Mimeault zooms in live somewhere with better weather than my home on Quebec’s commercial vehicle regulator’s delayed in Quebec, I hope you are having a great run-up to and chaotic response to Transport Canada’s delayed the holiday season. and chaotic response to the FMCSA’s ELD mandate.

The CTLA’s annual conference was held in This issue marks my first as CTLA director of October in Montreal and was very well attended, communications, and I thank new CTLA treasurer with outstanding panelists and speakers from all and outgoing editor Pui Hong for her excellent modes of transportation. Outgoing President and work during an extended tenure at this post. I also current Past President Robin Squires put on a terrific look forward to working with TLA editor (and fellow event and handed the Chain of Office to President Canadian) Louis Amato-Gauci as we produce the Elizabeth Fashler. One highlight of the conference next few issues of this magazine. In the meantime, was David Blair (CTLA President in 1994-1995)’s we at the CTLA look forward to seeing many of you at being granted Lifetime Membership in the CTLA. Brian Lipson the TLA Chicago Regional Seminar. Please also save David (who is – full disclosure – my mentor and the date for the upcoming CTLA Mid-Year Meeting in colleague) gave a heartfelt and touching speech Rio Grande, Puerto Rico, on May 1, 2024. at Saturday night’s gala that underscored the association’s goals of collaboration and aspiration toward better and more complete To all CTLA and TLA members: best wishes for a wonderful knowledge in our shared field, and in which he reminded us that holiday season and a happy New Year 2024!

CTLA events are intended to be places where competitors are colleagues and where rivals are friends.

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This one was a bit forced, but by now you have caught on to the passé Game of Thrones references.

CTLA Website: www.ctla.ca User Name: Transport Members Only Password: ship

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Secretary/Treasurer’s Report

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irst and foremost, I want to extend a heartfelt thank you to a professional gathering; it's a celebration of our shared passion for Billy Davis and the Technology and Social Media Committee transportation law and an opportunity to recharge our enthusiasm for their outstanding work in producing the membership videos for the work we do. that have been gracing our LinkedIn feeds. These videos have But beyond the professional benefits, there's something magialready featured testimonials from esteemed members like Kevin cal about Puerto Rico. The island's rich culture, stunning landscapes, Brejcha, Emily Petrie, Kristen Johnson, and Roger Watts. and warm hospitality create the perfect backdrop for a memorable There are more to come! conference experience. Whether you're exploring the vibrant streets Watching these videos, I was reminded of the incredible diver- of San Juan, relaxing on pristine beaches, or indulging in delicious sity and depth of talent within our TLA community. Each testimonial Puerto Rican cuisine, this conference promises to be showcased a unique journey and a shared passion a unique blend of business and pleasure. for transportation law. In these videos, our memAs we prepare for this exciting journey, I encourbers shared insights, experiences, and anecdotes age all of our members to start planning their travel that underscored the importance of TLA in their arrangements early. Take advantage of favorable professional lives. Whether it was the networking flight deals, explore accommodation options, and, opportunities, the wealth of knowledge, or the most importantly, mark those conference dates on lasting friendships formed, it was clear that TLA your calendar. Your participation in this event will holds a special place in the hearts of its members. not only enrich your professional life but also provide It was a vivid reminder that TLA is more than just you with cherished memories to last a lifetime. an organization; it is a close network of dedicated Let's take a moment to appreciate the sound professionals who support and uplift each other. financial footing of our beloved TLA. TLA’s new fiscal These videos demonstrate the genuine camaraderie year began August 1, 2023. As of September 30, and support within TLA, and have highlighted the Patrick E. Foppe remarkable stories that make our Association so 2023, the Association had cash assets of $514,820, special. of which $279,851 is in the Truist operating bank accounts, $56,072 Now, let's switch gears to an event that's already causing a in two money market accounts, and $124,705 in certificates of stir among our members: TLA's Annual Conference in Puerto Rico, deposit. Year to date revenues of $153,485 represents having scheduled for May 1 to May 4, 2024, at the stunning Wyndham received 19% of our budgeted revenues. Total expenses year-todate are $76,529, which is 10% of our budgeted expenses. We Grand Rio Mar Puerto Rico Golf & Beach Resort.

I recently booked my flights on Southwest Airlines for myself, are currently working on redesigning the TLA website, of which, a my wife, and our four kids, and I can hardly contain my excitement. $10,000 expense deposit was made to the vendor supporting this The roundtrip tickets from St. Louis to Puerto Rico were not only project last month. Our total net income as of September 30, 2023 convenient but also incredibly budget-friendly, costing less than was $66,529. Through prudent management and a commitment to $250 each. Considering how much it usually costs to fill up my new fiscal responsibility, TLA has navigated the financial seas with skill and precision.

Wagoneer, I might just consider flying everywhere!

At the Executive Committee meeting in Salt Lake City on As we look ahead to our conference in Puerto Rico, I can't help but think about the incredible networking opportunities, the October 28, 2023, I was honored to have been promoted to the insightful sessions, and the chance to connect with old friends position of Second Vice President with the incredibly debonair and make new ones. Yes, there will be enlightening sessions and Roger Watts having been elected as the new Secretary/Treasurer. networking opportunities, but there will also be salsa dancing, With his charismatic presence, theatrical finesse and dedication, I snorkeling, and perhaps a few questionable attempts at speaking have every confidence that Roger will take over with flair and excelSpanish. Who knew learning the legal intricacies of transportation lence. Please join me in congratulating Roger, a true ace, as he joins law could be so much fun? The Annual Conference is more than just TLA’s leadership ladder!

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Association Business

TLA

Announcement RE: ELECTION OF ROGER WATTS TO POSITION OF SECRETARY/TREASURER AND TLA OFFICER LADDER. TO:

ALL TLA MEMBERS

FROM: EXECUTIVE COMMITTEE The TLA Officers were informed on October 3, 2023 by Jeff Pincus that he would be resigning from his position as Second Vice President and as a member of TLA. Jeff has left his current firm and joined a plaintiff’s firm. He promptly informed the TLA Officers of his change in status and resignation. We have enjoyed getting to know Jeff and Amy and will miss them but also wish them the best in their future endeavors.

Article IV, Section 6 of the Bylaws of the TLA provides as follows: Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Executive Committee for the unexpired portion of the term.

The Executive Committee had several options on how to respond to Jeff’s resignation and decided that it would be best to move Patrick Foppe up the ladder to the position vacated by Jeff, the office of Second Vice President, and then pursuant to the bylaws elect a new Secretary/Treasurer so that the person selected obtained experience in the role of Secretary/Treasurer before moving up to the next position on the ladder.

A Nominating Committee had already been formed, comprised of Immediate Past President Chris Kelly, and the following members appointed by President Benton: Hillary Arrow Booth, Kathleen Jeffries, William D. Taylor, Fritz Damm, Allen Jones, Melissa Richardson, Kathy Garber, Emileigh Hubbard, Jeremy Handschuh and Jameson Rice. Pursuant to the bylaws the Nominating Committee initiated the process to fill the position of Secretary/Treasurer.

As a result of the process, the Nominating Committee nominated Roger Watts at the October 28, 2023, Executive Meeting in Salt Lake City, Utah. Roger is a member and past director of Canadian Defence Lawyers, a national organization, is a member of the Canadian Bar Association BC Branch, and past president of the Canadian Transport Lawyers Association. Previously, Roger also served as chair of the CBABC Maritime Law Subsection, legislative chair of the Marine Insurance Association of BC and a director of the Trial Lawyers Association of BC. Roger has been a TLA member since 2008, has served on the TLA Executive Committee as a Representative-at-Large, a speaker numerous times at TLA events, a moderator, the hospitality suite coordinator/host for over 11 years and a Distinguished Service Award winner. The Nominating Committee and Executive Committee felt that in this unique situation Roger was well situated to step in and perform the duties and responsibilities of the Secretary/Treasurer and ultimately each position on the ladder.

The Executive Committee voted unanimously to elect Roger to the Secretary/Treasurer position and Roger has accepted.

Please join us in congratulating Roger in joining the ladder and in his decision to serve the TLA by accepting the nomination as Secretary/Treasurer.

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Transportation Lawyers Association • Canadian Transport Lawyers Association • December 2023, Vol. 25, No. 3

56th Transportation Law Institute October 27, 2023 Hyatt Regency Salt Lake City

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Association Business

Transportation Lawyers Association Executive Committee Meeting Saturday, October 28, 2023 Hyatt Regency Salt Lake City

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2024 Chicago Regional Seminar Information & Registration Form Chicago, Illinois • January 18–19, 2024 Frank Botta & Alecia Walters-Hinds, Boot Camp Co-Chairs Joelle Nelson & Carlos Sesma, Jr., Reginal Seminar Co-Chairs

We look forward to you joining us in Chicago for the 2024 TLA Chicago Regional Seminar and Boot Camp taking place January 18 -19, 2024 at the Radisson Aqua Blu. Thursday, January 18 • 2024 Transportation Boot Camp 12:45 p.m. – 1:00 p.m.

Introductions and Welcome by Frank Botta and Alecia Walters-Hinds, Boot Camp Co-Chairs

Speakers:

Eric Benton, TLA President Joelle Nelson and Carlos Sesma, Jr., 2024 Chicago Regional Seminar Co-Chairs

1:00 p.m. – 2:30 p.m.

“Transportation Insurance Claims – From the ISO form,to the Motor Carrier, to the Claims Handling”

Learn about ISO forms, what they are and how the work. The panel will explain the theory behind the ISO form, that it seeks to provide consistency and predictability in insurance coverages, in order to avoid having different jurisdictions interpreting the insurance contract in different ways. The panel will discuss the terms and conditions within the various parts of the ISO forms for Auto and General Liability Coverages, as well for ISO forms for other coverages, such as cargo, inland marine, non-trucking, and others. The panel will then discuss the motor carrier side, particularly how those ISO coverages fit in to the needs of a leading supply chain services company, as well as when and why a non-ISO coverage may be better suited. Finally, the panel will explore how those ISO and non-ISO coverages play out in the claims handling realm, including what coverage issues may arise in litigation.

Moderator: Timothy Groustra, Dickie McCamey, Grosse Pointe Farms, MI Presenters: Chase Carmichael, J.D., CIC, Director, Risk & Compliance, Transportation & Logistics Practice, Commercial Risk Solutions, Aon, Little Rock, AR; Blake Deitrich, General Counsel, Quantix, Louisville, KY; David Brown, Senior Vice President - Claims & Corporate Attorney, Claims Direct Access (Prime Insurance), Salt Lake City, UT. 2:30 p.m. – 2:45 p.m.

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Association Business 2:45 p.m. – 3:45 p.m.

“What's a Freight Broker to Do? Insurance Coverages Needed for New Norm”

There was a time when freight brokers operated in a fairly risk-free environment, arranging loads while avoiding any liability—contractual or otherwise. There wasn’t even a need for a specialized insurance product for brokers then. But those days are gone. The number and size of brokers have since proliferated. There is a new norm. To compete with the biggest motor carriers to sign on the largest customers, brokers have become more willing to accept contractual liabilities, making them a target if something goes wrong. With brokers’ pervasive role in interstate transportation, plaintiffs, with the help of the courts, also created tort theories to find liability where it didn’t exist before. With most motor carriers having only $1 million in coverage for auto liability claims, larger brokers with higher limits face negligent hiring and vicarious liability claims for arranging the transportation of property with a motor carrier that is subsequently involved in a motor vehicle accident. Specifically, juries have awarded damages to plaintiffs where the broker selected an unsafe carrier or exerted too much control over the carrier or driver involved in the accident. When serious injuries or fatalities are involved, jury verdicts can be multimillion-dollar amounts. Cargo claims involving high-value shipments can also result in huge losses. With brokers taking on primary liability for larger customers, a need exists for cargo insurance solutions too.

For freight brokers to be in the best position to defend and be protected from such claims, the Panel will discuss the “gold standard” for protecting a freight broker’s operations and stakeholders. Those coverage lines include: Third-Party Liabilities; Hired / Non-Owned Auto Liability; Contingent Auto Liability; Cargo / Contingent Cargo; Errors & Omissions; Excess Towers; and available Shippers Interest Coverage.

Moderator: Jeffrey Simmons, Phoenix, AZ Presenters: Patrick Bobo, Chief Legal Officer, U.S. Multimodal Group, Denver, CO; Brett McGinnis, Executive Vice President, National Transportation Practice, McGriff Insurance Services, Portland, OR; William Worthington, Vice President, Shippers Interest, Falvey Insurance Group, North Kingstown, RI 3:45 p.m. – 5:00 p.m.

“Where we are Today: Contract Logistics in the Modern Era”

This panel will explore insurance coverage from the in-house perspective of a motor carrier, as well as insurance coverage expectations coming from brokers and other parties with whom motor carriers transact business. Our seasoned professionals provide insight into coverage required by applicable state and federal agencies, available coverage on the market and practical considerations like cost, liability exposure and tolerance therefor. Bonus material includes tips and pointers for in-house contract negotiations and best practices relating to motor carrier insurance.

Moderator: Sandra Hiller, General Counsel, The Dart Network, Eagan, MN Presenters: Daniel Johnson, Aon, Little Rock, AR; Jason Orleans, Coyote Logistics, LLC, Chicago, IL; Matt Grimm, Greenwich Transportation Underwriters, Inc., Brentwood, TN 12:00 p.m. – 5:00 p.m.

Registration

5:00 p.m. – 6:00 p.m.

Corporate Counsel and New and Young Lawyers Committee Reception

6:00 p.m. – 7:00 p.m.

Welcome Reception

7:15 p.m.

Welcome Dinner – Gibsons Steakhouse

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Friday, January 19 • Chicago Regional Seminar 7:00 a.m. – 5:00 p.m.

Registration

7:00 a.m. – 8:00 a.m.

Breakfast

8:00 a.m. – 8:15 a.m.

Opening Remarks, Introduction of Speakers Speakers: Eric Benton, TLA President; Joelle Nelson and Carlos Sesma, Jr., 2024 Chicago Regional Seminar Co-Chairs

8:15 a.m. – 8:30 a.m.

Self-Introduction of Participants

8:30 a.m. – 9:15 a.m.

“AI – New Technology and Impacts on Cargo Today and Tomorrow.”

Artificial Intelligence (AI) continues to influence the shipping industry and delivers considerable benefits to supply chains and shipping operations. This panel will discuss as well as educate on the different types of AI platforms being utilized to transform the industry. There is no question that AI has the potential to revolutionize supply chains and improve efficiency, safety, and profitability. Finally, this panel will outline and address the impact AI will have on cargo regulation and litigation.

Moderator: William “Billy” Davis, Bovis Kyle Burch & Medlin, LLC, Atlanta, GA

Panelists: Joseph J. Goldberg, Cole Scott & Kissane, PA, Miami, FL; Beata Shapiro, Wilson Elser, Boston MA; Emileigh Hubbard, Henry Oddo Austin Fletcher, Dallas, Texas; Sophia Bernard, Taylor Nelson, Winter Haven, Florida 9:15 a.m. – 10:15 a.m.

“Legal, Economic and Business Implications of Nearshoring in North America”

“Nearshoring,” the inverse of offshoring, means that companies are progressively transferring part or all of their production to countries close to their markets and with similar time zones, in order to minimize the effects of disruptions in supply chains. We will hear from our panelists from very different perspectives as to how the Nearshoring effect in North America is generating unsuspected economic growth for the region and growth will continue for the foreseeable future. We will explore the legal and business implications of Nearshoring that will help you prepare your practice for the international business your clients will certainly be engaged in.

Moderator: Arturo Rivera, Sesma, Sesma & McNeese, Mexico City, Mexico Panelists: Eduardo Haros, Owner/CEO, Racing Cargo, S. A. de C. V., Monterrey, NL, Mexico; Eric A. Baker, Frost, Brown, Todd Attorneys, Indianapolis, IN; Peter A. Quinter, Gunster, Miami, FL 10:15 a.m. – 10:30 a.m.

Refreshment Break

10:30 a.m. – 11:15 a.m.

“Ethics – To Work From Home or Not To Work From Home?!”

This ethics panel will be focused on the discussion of working at the office or working from home. There is now a growing push for workers to return to the office full time. The discussion has truly divided all work communities, but especially the legal community. When workplaces are restructured based on a tectonic shift – many questions arise – from productivity assessment to DE&I concerns and carrier advancement considerations. This panel is sure to generate an interesting and high-level debate.

Moderator: Kristen Johnson, Chief Legal Officer, Cargomatic Panelists: Alyssa Milby, Taylor Johnson PL; David Greenspan, McGuire Woods; Jill Wilkie, Miller Thomson LLP 11:15 a.m. – 12:15 p.m.

“New Transportation Technology – Digital Networks, Freight, and Autonomous Vehicles”

In a constantly and rapidly changing digital world, there are constant improvements and advancements in technology available to those in the transportation industry. This panel will explore the functionalities of technologies, such as GPS tracking, digital brokering, digital records keeping, vehicle safety advancements (and requirements for the same), as well as a discussion of fully autonomous vehicles.

With these advancements come increased efficiency, but also the potential for more complicated discovery in litigation. We will explore the potential for cost savings, efficiencies, and environmental impacts of these new technologies.

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Association Business Moderator: Chris Cotter, Roetzel & Andress, Akron, OH

Panelists: Todd Wolfe, General Counsel, Arrive Logistics, Austin, Texas; Daniel Sbanotto, General Counsel, Uber Freight, Springdale, Arkansas; Heather Devine, Chief Legal Officer, Traffix, Toronto, Ontario, Canada 12:15 p.m. – 12:45 p.m.

Lunch

12:45 p.m. – 2:30 p.m. “Accident Reconstruction and Impact of New and Improved Technology with Accident Reconstruction Demonstration.”

This program addresses new and improved technologies that are utilized in the analysis of Accident Reconstruction. This panel will discuss and demonstrate how new and improved technology can aid in a fleets safety record as well as prevent claims. Further, the panel will explain how new technologies aid both new and experienced attorneys in defending claims against both motor carriers and brokers, which can immediately be utilized in practice.

Moderator: Matthew Koch, Marwedel, Minichello & Reeb, P.C., Chicago, IL P anelists: James Whelan, P.E., Beacon Forensic, Richmond, VA; Katherine Vaughn, Director of Claims Management, DB Schenker, Van Buren, Arkansas; Ashley Winsky, Gentry Locke, Richmind, VA 2:30 p.m. – 2:45 p.m.

Refreshment Break

2:45 p.m. – 4:00 p.m.

“Technology: Claims Handling and In-House Perspectives Today and Into the Future.”

Claims handling and In-House management of claims is innovating. Business models, services and processes are rapidly evolving, largely backed by technological developments. This discussion will address the potential legal risks as well as benefits new technology presents and how to effectively defend claims, while comparing and contrasting defense strategies from both the claims handling and in-house perspectives.

Moderator: Christopher M. Kelly, Gallivan White Boyd Panelists: Deacon Jamie Schilling, AIC, CBCA, Inc., MU Claims Manager; Neal Krokosky, Deputy General Counsel, Litigation, Transdev North America.

4:00 p.m. – 5:00 p.m.

“Social Inflation, Nuclear Verdicts, and Nuclear Options”

Shifts in societal attitudes, coupled with advances in technology and influential social media, have contributed to both corporate anger and inflated jury awards. This panel will address how technology effects jury attention and changing dynamics in the courtroom. Further, should a case go nuclear, this panel will discuss what nuclear options are available for appropriate asset protection planning, in accordance with subchapter 5 of the Bankruptcy Code.

Moderator: Stevan Baxter, Skoubye Nielson & Johansen, LLC Panelists: Alexander Karcher, Roetzel & Andress; Richard Westley, Blitch Westley Barrette; J. Dave Krekeler, Krekeler Law, S.C. 5:00 p.m. – 6:00 p.m.

Wine and Cheese Reception

6:30 p.m.

Dine Arounds

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T h e T r a n s p o r tat i o n L a w y e r 2024 Chicago Regional SeminarAssociation & Business Focus on the Industry Boot Camp: Combined Registration Form TLA Focus on the Industry Boot Camp • Chicago, Illinois • Thursday, January 18, 2024 TLA Chicago Regional Seminar • Chicago, Illinois • Friday, January 19, 2024 PRE-REGISTRATION DEADLINE - JANUARY 5, 2024 Please note: Registrations completed and paid by credit card will incur a 3% credit card fee in addition to the registration fee.

Name Firm Address City

State

Zip

Telephone Email Emergency Contact Name and Mobile Phone

Special Needs: ❏ Vegetarian ❏ Vegan ❏ Gluten-Free ❏ Other: ❏ I plan to attend both the TLA Focus on the Industry Boot Camp and the TLA Chicago Regional Seminar. ❏ TLA Members: $520 ❏ Non-Members*: $685 ❏ Students: $200 ❏ I plan to attend only the TLA Focus on the Industry Boot Camp on Thursday, January 18, 2024. ❏ TLA Members: $275 ❏ Non-Members*: $380 ❏ Students: $90 ❏ I plan to attend only the TLA Chicago Regional Seminar on Friday, January 19, 2024. ❏ TLA Members: $390 ❏ Non-Members*: $560 ❏ Students: $140 *Non-member attendees will be eligible for a discounted introductory membership in TLA that will be good through July 2024 if he/she meets the membership qualifications. A non-member is defined as an individual who has never previously been a member of TLA.

❏ I plan to attend the dinner at 7:15 p.m. on Thursday, January 18, 2024 at Gibson's Bar and Steakhouse ❏ Thursday Night Dinner $150 x _______ = $ _______ .

Dinner Guest Name: __________________________________________ From what state(s) will you be requesting CLE for this program? __________________________________________ Please note: seminar materials will only be provided electronically.

TOTAL DUE: $ ______________ ❏ Check/Money Order# _______ (Please make payable to the Transportation Lawyers Association in U.S. currency.)

Credit card payments must be submitted online. Checks should be mailed to the address below.

Register online at https://portal.translaw.org/integratedEvents/home/2024-CHICAGO-REGIONAL-SEMINAR-AND-BOOTCAMP OR return this form with check to: TLA Executive Office 529 14th Street, NW, Suite 1280 Washington, DC 20045 USA Cancellation Policy: • A $75 cancellation fee will be imposed upon cancellations received before the registration deadline.

• Cancellations will not be accepted after that date; however, substitutions will be allowed.

• Cancellations must be received in writing by email by Jan. 5, 2024. After Jan. 5, no cancellations will be allowed.

• Refunds, if any, will be processed at month end following the meeting.

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2024 TLA Annual Conference & CTLA Midyear Meeting Calendar of Events & Continuing Legal Education Program Grand Rio Puerto Rico Golf & Beach Resort Rio Grande, Puerto Rico May 1 – 5, 2024

Eric Benton, President Gordon Hearn and Billy Davis, Education Co-Chairs We are excited to announce the 2024 TLA Annual Conference and CTLA Midyear Meeting scheduled for May 1 - 4, 2024 at the Wyndham Grand Rio Mar Puerto Rico​Golf & Beach Resort​in Puerto Rico. Your planning committees are working diligently to provide a first-class educational program combined with a variety of networking events that will ensure that your visit to this seaside paradise is a memorable and rejuvenating experience.

The Resort

Nestled between the gold beaches of the Caribbean and the natural beauty of El Yunque National Forest – the only tropical rain forest in the U.S. National Forest System – lies the picturesque Wyndham Grand Rio Mar Golf & Beach Resort that will host the 2024 Annual Conference. With two miles of exclusive golden beaches, two 18-hole golf courses on site, a state-of-the-art tennis center, a 7,000 square foot spa, a lively casino, and three lagoonstyle pools there is no limit on fun on la Isla del Encanto (“the Isle of Enchantment”).

The resort offers a wide range of activities for your family while you are in the conference educational sessions or attending your committee meetings. Snorkeling, tennis, rainforest tours, horseback riding on the beach or offshore fishing are all available on or near the resort. In addition to the beach activities there is rum tasting and exploring Old San Juan and its unique history as the oldest European-founded city in the Americas.

Dining, both on and off the resort property, entice all to taste the culinary delights of the Caribbean. There are nine restaurants in the resort ranging from fine dining to fish tacos beachside at the Tiki Hut. Need a drink? Try the 5 O’Clock Somewhere Bar & Grill in Margaritaville located on the resort. Just down the highway from the resort is Luquillo Kiosks, a collection of restaurants and shops that the locals love to explore. We are in the process of creating a pamphlet with recommendations from Puerto Rican members on where to shop, eat and visit.

TLA has arranged for attendees to enjoy discounted room rates of $249 plus tax per night, double occupancy.

Networking And Social Events

Wednesday, May 1 – After a day of travel or recreation, including the annual golf tournament, TLA will officially welcome you to the tropical get-away of Wyndham Grand Rio Mar. Join colleagues for drinks and heavy appetizers on the resort’s grounds with islandinspired entertainment and ocean views. Keep an eye out during

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receptions for new members and corporate counsel: this is one of many ways to meet new friends and clients.

Thursday, May 2 – After a morning packed with exceptional CLE opportunities and an afternoon of committee meetings in your practice areas, attendees will board private shuttles to venture into Old San Juan for a night of fun, dining and exploring the cobblestone streets of this magnificent historic town. Be sure to sign up for the dine-around as we will explore the streets and smells of tantalizing dishes, coffee at its finest, and history unparalleled in the Americas.

Friday, May 3 – After a day of classes and committee meetings, the Annual Banquet will be held on the property. Attire is designated as “tropical black-tie” so bring your whites and palm prints for an evening of recognition and the passing of the President’s gavel from current President Eric Benton to President-Elect Kathy Garber.

Saturday, May 4 – The Closing Celebration is held on Saturday night as a casual opportunity to say temporary good-byes to old friends and new acquaintances as we wind down an educational and fun week of learning the latest and greatest for those who represent the transportation industry. Attendees will be presented with local fair and island vibes beneath the stars. This resort casual event will close out the Annual Conference at this beautiful tropical location.

Educational Program

We hope that you will resist the allure of this breezy seaside location just long enough to take in the timely and informative legal education program created by this year’s Program Committee, made up of the following dedicated TLA members: Elizabeth Bass, Marc Blubaugh, Kevin Brejcha, Rebecca Burroughs, Eliseo RoquesArroyo, Soumit Roy, Shannon Wheeler. The Program Committee is led by program co-chairs, Gordon Hearn and Billy Davis.

In addition to providing updates on all the latest developments in the core areas of transportation practices, the Educational Program for the 2024 Annual Conference will have presentations

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from multiple disciplines, from trial advocacy to insurance considerations to corporate transactions. All panels focus on the business of transportation and logistics and the skills needed to stay sharp in the industry. Panels will consist of experienced transportation

attorneys, in-house transportation corporate counsel, and industry leaders. All will play significant roles as moderators and presenters at the 2024 Annual Conference.

Tuesday, May 1, 2024 12:30 p.m.

Golf Tournament

Wednesday, May 2, 2024 8:00 a.m. – 12:00 p.m.

TLA Executive Committee Meeting

12:30 p.m. – Shotgun Start Time

Golf Tournament

2:00 p.m. – 4:00 p.m.

Tennis Tournament

4:00 p.m. – 7:30 p.m.

Registration

6:30 p.m. – 8:30 p.m.

Welcome Reception

8:30 p.m. – 10:00 p.m.

Dine-Around

Thursday, May 3, 2024 8:15 a.m. – 12:30 p.m.

EDUCATIONAL PROGRAM I

8:15 a.m. – 8:30 a.m.

Welcoming Remarks

Eric Benton Billy Davis Gordon Hearn 8:30 a.m.– 9:30 a.m. Technological Advancements in the Transportation Industry: How Tech is Reshaping the Industry As the dynamics of the transportation industry continue to shift with the advent of new technologies, understanding and leveraging these advancements is crucial in our legal profession.

This panel will provide a comprehensive understanding of the critical role technology plays in protecting and shaping the future of the transportation industry. The discussions will offer a blend of insights and practical strategies to equip attendees with practical ways to harness these technological advancements in their legal practice and operational initiatives and to further enhance industry-wide protection and safety.

Moderators: Edwina “Winney” Kessler, Catri, Holton, Kessler & Kessler, Fort Lauderdale, FL Panelists: Matt Arbour or Jim Hyrcay from Hrycay Engineering in Canada will provide an engineering perspective regarding data review and conspicuity analysis, providing a vital understanding of the role of engineering in improving safety and legal outcomes.

Shelley Bennett, General Counsel and Senior Vice President for Lytx, will provide industry insight including an insider's perspective on the evolving role of technology in the transportation sector, touching on safety measures, productivity improvements, and legal considerations.

David Cases, a conspicuity expert, will offer a comprehensive understanding of his crucial aspect of vehicular safety and its legal implications.

Steve Stanaszak, Partner at Scopelitis Garvin Light Hanson & Feary, and Edwina “Winney” Kessler, Partner at Catri, Holton, Kessler & Kessler will provide their legal perspectives on how these technological advancements are affecting their practice and having an impact on transportation-related litigation.

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Association Business 9:30 a.m. – 10:30 a.m. Public Perception of the Transportation Industry and its Impact on Rulemaking, Insurance, Hiring, Contracts, and Litigation Not since Smokey and the Bandit (1977) or Santa Claus behind the wheel of a Coca-Cola truck has a truck driver been prominently portrayed in a positive light in US pop culture. How Hollywood and other content creators portray the transportation industry can have long-reaching impact on the perception of those in the transportation sector and those who deal with such organizations.

The entertainment industry has a long history of negative portrayals of transportation professionals, from works directed at young audiences (e.g.: Large Marge from Pee-wee’s Big Adventure [1985] and the truck driver from the ”Gridlocked” episode of the Disney cartoon Big City Greens [2018]) to works targeted for more mature audiences, where trucks and transportation equipment have been depicted as a means for mass destruction in many chase and accident scenes (e.g.: The Batman [2022], Avengers: Infinity War [2018], and The Matrix Resurrections [2021]) while their operators have been depicted as hardened criminals (e.g.: Die Hard with a Vengeance [1995] and Super Troopers [2001]). This, coupled with plaintiff attorney advertisements, limits the impact of any current positive outreach from our sector that attempts to break through into mainstream pop culture.

Given these headwinds, how can transportation counsel work to educate law makers, the general public, shippers and receivers, jurors, and those interested in transportation careers? Are there ways for transportation counsel to break down negative public perception and show the industry for what it is: a community of safety-focused professionals that work tirelessly to ensure the health, prosperity, and wellbeing of their employees and the general public?

Please join us as we identify and discuss direct and indirect pop culture and public sentiments that shape opposing party and juror perception of transportation clients and their teams. We aim to present theories, approaches, and tools to combat real and perceived prejudices against transportation clients in order to secure fair, just, and equitable results in all matters.

Moderators: Bryan Nelson, Taylor Johnson, Clearwater, FL Panelists: [TBA] 10:30 a.m. - 10:45 a.m.

Break

10:45 a.m. – 11:30 a.m. Confronting the Most Common Employment Law Issues Faced by Trucking Companies – Progressive Discipline, Termination, Accommodation, and Documentation This Panel will provide valuable perspective, insight, and guidance on the employment law challenges faced everyday by trucking companies in the employment of drivers and how those challenges interplay with the unique nature and inherent risks of running a trucking company. This expert panel will discuss how to manage the largest assets a trucking company has: its human capital. This presentation will take on the most common, difficult matters such as: keeping drivers retained and happy while providing needed progressive discipline; terminating drivers; providing accommodations and leave requests; and complying with federal and multi-state employment laws while still complying with federal regulatory standards and meeting company objectives.

Moderators: Shannon Wheeler, Tenstreet, Tulsa, OK Panelists: Carole McAfee Wallace, Gardiner Roberts, Toronto, ON; Shannon Butler, B.R. Williams Trucking, Oxford, AL; Ellen Slattery, Taylor Johnson, Winter Haven, FL 11:30 a.m. –12:15 p.m.

I n House Counsel: Customer-Focused and Business-Driven—Learn Their Challenges, Daily Demands, and How to Expand and Improve Customer Service

This Panel of seasoned in-house counsel will provide invaluable advice to external counsel who seek to anticipate and answer the differing requirements of their General Counsel clients. From tips on budgeting in phases, to understanding the business pressures imposed upon General Counsel who may answer to business units, executives, or directors this panel is designed to help land the first file, to expand upon legal services already provided, and importantly to withstand the pressure from competitors.

Moderators: Heather Devine, Chief Legal Officer, TRAFFIX, Toronto, ON Panelists: Lori Posluns, Chief Operating Officer, Traffic Tech, Montreal, QC; and Daniel Sbanotto, VP-Legal, Uber Freight 12:30 p.m. – 1:30 p.m.

TLA Business Meeting Luncheon

1:30 p.m. – 2:00 p.m.

TLA Committee Chair Orientation

3:00 p.m. – 5:00 p.m.

CTLA Executive and Directors Meeting (Staff will confirm date/time)

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Association Business

2:00 p.m. – 5:15 p.m.

Committee Meetings (times will be coordinated by TLA Staff) 2:00 p.m. – 3:15 p.m.

3:15 p.m. – 4:15 p.m.

4:15 p.m. – 5:15 p.m.

6:00 p.m. – 10:00 p.m.

Evening Activity

Friday, May 4, 2024 7:30 a.m. – 8:30 a.m.

Past President’s Breakfast

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.

Cybersecurity in Transportation and Logistics: A Ransomware Tale

Cybersecurity is a strategic business enterprise risk. Double extortion ransomware is the latest iteration of cybercrime that keeps the C-suite up at night. The gaps in your privacy program are laid bare in a ransomware situation.

What do you do when your IT director calls and tells you your network has been encrypted and there is a ransom note demanding $500,000? Did the threat actor exfiltrate data? Do you contact the threat actor, and how do you negotiate? What do you tell your customers and employees while you try to get your network running again? When do you call law enforcement? How long will your forensic investigation take? Will the attorney general knock on your door?

Join our expert panel as they discuss the people, processes, and technology needed to improve your chances of not becoming the next ransomware tale.

Moderators: Scott Carey, Baker Donelson, Nashville, TN Panelists: Justin Daniels, Shareholder, Baker Donelson, Atlanta, GA; Troy Bettencourt, Global Leader IBM X-Force Cybersecurity Incident Response 9:30 a.m. – 10:30 a.m. A General Counsel’s M&A and Transaction Survival Guide: Navigating Transactional Aspects of the Practice and the Legal Role in Mergers, Acquisitions, Consolidations, and Integrations When facing tectonic developments like new regulations, seismic geopolitical shifts, game-changing technologies, global pandemics, and unpredictable economic change - to name a few – motor carriers and brokers have devised ways to conquer these challenges.

Whether through multiple acquisitions for growth, or the development of new technology, or creative contractual, corporate structure or risk management strategies, these players in the transportation industry have identified different ways to succeed, prosper and grow.

While much of transportation counsel’s role involves litigation, claims, and disputes – another portion of counsel’s role involves transactional aspects, public and private equity reporting, corporate structure and governance, due diligence for M&A transactions, and the legal aspects of integration thereafter. The speakers will discuss all aspects - practical, strategic, legal, and economic – of those transactional components, of the practice. Insights will be provided for when the time is right – or not right – for acquisitions, exit strategies, full-blown combinations, and bolt-ons for focused growth. The panel will also explain the demands of integration post-merger, including protecting intellectual property, personnel issues, and strategies to protect cash flow and manage risk. Additionally, the panel will also provide a walk-thru on due diligence processes and procedures for any acquisition, and provide targeted transportation contracting tips, for contracting with shippers and freight intermediaries, and regulatory and corporate structure tips to minimize risk. Our speakers will include senior executives of motor carriers, along with M&A specialists.

Moderators: Eric Zalud, Benesch, Cleveland, OH Panelists: [TBA] 10:30 a.m. – 10:45 a.m.

Break

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Association Business 10:45 a.m. – 11:45 a.m.

Defending Transportation Claims with a Focused and Coordinated Defense from Day One

An in-depth analysis of lessons learned from defending high exposure and catastrophic claims and what tools can be implemented to coordinate discovery efforts and prepare transportation entities for a successful defense, including through the time of trial. This analysis will begin from preparation before any incident occurs. This presentation will address: 1) The need to identify a consistent defense story; 2) How to on how handle the judgmental eye of the public; 3) How to balance the competing needs for drivers with the need for skilled professionals; and, 4) The need for a cooperative tri-partite relationship between client, attorney, and insurer/broker to set the claim up for success.

Moderators: Stephanie Chesney, MG+M The Law Firm, Boston, MA Panelists: Adam Hays, MG+M The Law Firm, Hattiesburg, MS & New Orleans, LA; and [TBD] 11:45 a.m. – 12:45 p.m. Recent Detention and Demurrage Disputes, Legislative Developments and Rulemaking: How They Affect the Carriage of Goods from Origin to Final Destination Panelists will discuss resolution of detention and demurrage disputes in the context of highly increased claims; new legislation and rulemaking; and business considerations.

Moderators: Steve Block, Lane Powell, Seattle, WA Panelists: Rui Fernandes, Gardiner Roberts, Toronto ON; Marco Remiorz, Arnecke Sibeth Dabelstein, Hamburg, Germany; FMC Representative [TBD] 12:45 p.m. – 2:00 p.m.

Lunch (on your own)

2:00 p.m. – 5:00 p.m.

Committee Meetings 2:00 p.m. – 3:15 p.m.

3:15 p.m. – 5:00 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 5, 2024 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.

An Inside View of NTSB Investigations: Investigative Protocol and Strategy Considerations

This panel discussion will explain the importance of the NTSB investigation: the process, what it accomplishes, and the end-results. The panel members will explain the benefits of a good working relationship with the NTSB’s investigators and its general counsel and explain how to leverage relationships to provide an advantage to your client. Additionally, the panel will discuss the statutory framework behind the NTSB and the challenges and opportunities presented during the investigation process when litigation is contemplated by one or more of the parties. Finally, the panel will discuss litigation strategies and evidentiary considerations for litigation arising in connection with an NTSB investigation.

Moderators: Latasha Johnson, Ehrenstein|Sager, Coral Gables, FL Panelists: Benjamin Allen, Holland & Knight, Washington, D.C.; Thomas W. Tobin, Wilson Elser, White Plains, NY; Daniel Braude, Mullen Coughlin, Rye, NY

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Association Business

9:30 a.m. – 10:30 a.m.

Puerto Rico: The Jones Act and Other Regional and Domestic Regulatory Regimes

Discussion of the regulatory framework of the Jones Act, its impact on ocean freight destined for Puerto Rico and the region and other regulatory regimes in effect.

Moderators: Eyck O. Lugo Rivera, EDGE Legal, San Juan, PR Panelists: Mr. Eduardo Pagán, Vice President & General Manager Caribbean Services, Tote Maritime Agency – Puerto Rico.

10:30 a.m. – 10:45 a.m.

Break

10:45 a.m. – 11:45 a.m.

Multi-Modal and International Law Update

Different presenters will provide updates on leading case law and legislative developments across different regions concerning the ocean, air, road and rail carriage of goods and related logistics services.

Moderators: Gordon Hearn, Gardiner Roberts, Toronto, ON Panelists: [TBA] 11:45 a.m. – 12:45 p.m.

Professional Responsibility in the AI Era

This panel will feature a discussion on the new reality of Artificial Intelligence in the context in the practice of law. While presenting certain advantages, the new reality promises to pose challenges to the ethical practice of law and compliance with professional standards.

Moderators: Eliseo Roques-Arroyo, EDGE Legal, San Juan, PR Panelists: Luis M. Negron Portillo, Doel Quinones (Professors of Ethics, Interamerican University of Puerto Rico, School of Law) 12:45 p.m. – 2:00 p.m.

Lunch (on your own)

2:00 p.m. – 5:00 p.m.

Poolside Fun and Games

5:30 p.m. – 9:30 p.m.

Evening Event

Committee Meetings

Committee meetings and the CTLA Mid-Year Meeting will be held in the afternoon on Thursday and Friday. The committee meetings will allow for more in-depth discussions and attendee participation on those themes and topics from the main conference agenda that have direct relevance to their particular focus areas. The committee chairs will each determine whether their meeting will offer CLE credits, and the form and substance of the meeting.

Sporting Events

Golf – Our Golf Committee is planning outings for both Tuesday and Wednesday on the award-winning courses in the Rio Grande area.

Tennis – The tennis tournament will be hosted at the resort.

Fun Run – The Fun Run/Walk chairs will have a blast plotting the course for our attendees and guests who plan to participate in the event this year. All registrants will receive a commemorative Fun Run t-shirt with their registration fees. Stretch those legs and pack those sneakers.

Poolside Fun – TLA will offer attendees and guests the opportunity to lounge poolside on Saturday afternoon and watch friends and colleagues engage in pool fun – maybe raft races will make a comeback! Bring your swimsuit and get ready to relax and have fun with your friends.

Getting To Paradise Point

The Luis Muñoz Marin International Airport (SJU) offers flights to and from airports all over the world. SJU is about a half hour drive to Wyndham Grand Rio Mar, and the hotel offers transportation options to and from the airport. Learn more at https://www.wyndhamriomar.com/.

Mark your calendars now, invite your colleagues, and bring your families for an exceptional educational program, networking events, fun, and relaxation.

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TLA Committee Corner

Labor & Human Resources Committee Paul B. Mello* Caroline D. Milner**

The Labor & Human Resources Committee’s principal purpose is to communicate with TLA members on employment-related matters that have an impact on the transportation industry. Motor carrier and other transportation employers face unique and complex labor union issues as well as problems in recruiting and keeping drivers and other employees. Changing employment laws require constantly evolving strategies and policies. For example, California Trucking Association, Inc. v. Bonta addressing California’s AB 5 legislation, otherwise known as the ABC Test, has been one of the nation’s most hot button legal topics in recent years. To keep TLA members up to date, the Committee regularly publishes articles in The Transportation Lawyer and presents as part of the Legal Education Program at TLA conferences. Recently, Committee Chair Paul B. Mello moderated a panel at the 2023 Transportation Law Institute in Salt Lake City, Utah on The National Labor Relations Act:1 Why it Matters to All Transportation Companies, Including Non-Unionized Companies. The panel discussed recent changes to the NLRA and how it impacts every member of the TLA and their clients.

The Committee also provides bi-annual updates to TLA members identifying several significant labor and employment law cases and developments. A few recent developments from the 2023 Mid-Year Review include: • The Ninth Circuit Strikes Down California Law Banning Employment Arbitration * HansonBridgett (San Francisco, CA) ** Scopelitis (Chicago, IL)

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Agreements But Ambiguity With Respect To “Transportation Workers” Persists. On February 15, 2023, Chamber of Commerce v. Bonta, the Ninth Circuit upheld a lower court’s decision that the Federal Arbitration Act (“FAA”) preempted California’s AB 51 which banned mandatory arbitration in the employment setting.

As a result, many California employers may require their employees to execute arbitration agreements and arbitration agreements that include class and representative action waivers are enforceable so long as the arbitration agreement in question is not procedurally or substantively unconscionable. But the enforceability of arbitration agreements, including arbitration agreements that include class and representative action waivers, for workers in the transportation industry is still uncertain and will hinge on how courts interpret which employees are workers engaged in foreign or interstate commerce.

• Confidentiality and Non-Disparagement Provisions in Severance Agreements – The National Labor Relations Board’s Position and Why it Also Matters to Non-Union Employers. In February 2023, the National Labor Relations Board (NLRB) issued a significant decision regarding the enforceability of confidentiality and non-disparagement provisions in severance agreements for non-supervisory employees, irrespective of the nonsupervisory employees’ union status. In McLaren Macomb,2 the NLRB is making clear that broadly worded severance agreements cannot contain confidentiality and non-disparagement provisions that have the effect of chilling cooperation with NLRB investigations, and more generally “assisting coworkers with workplace issues

concerning their employer.”

• The United States Supreme Court Signals that Unions May Be Liable in Tort when It or Its Members Fail to take Reasonable Precautions to Protect Employers’ Property When Engaging in Work Stoppages or Strikes. On June 1, 2023, in Glacier Northwest, Inc. v. International Brotherhood of Teamsters Local Union No. 174,3 the United States Supreme Court held that because union truck drivers did not take reasonable precautions to protect employer’s property from imminent danger during a work stoppage the employer’s state law tort claims against the union may not be preempted by the NLRA, and remanded the matter back to the lower court.

• Music Played in the Workplace May Create a Hostile Environment. The Ninth Circuit recently issued a decision in Sharp v.

S&S Activewear, L.L.C.,4 that should remind employers to monitor more closely the music being played in work locations.

Look out for updates on Labor & Human Resources Committee social events and presentations at the upcoming 2024 Chicago Regional Seminar and the 2024 TLA Annual Conference in Puerto Rico. Please contact Committee Chair Paul B. Mello or Vice-Chair Caroline D. Milner with any questions or if you would like to become more involved in the Labor & Human Resources Committee.

Endnotes 1

29 U.S.C. §§ 151-169.

372 NLRB No. 58 (2023).

3 (2023) 143 S.Ct. 1404.

4 9th Cir., June 7, 2023, No. 21-17138; 2023 WL 3857491.

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TLA Feature Articles and Case Notes

The Modern-Day Risks of Transportation Brokerage Katherine T. Garber *

Transportation brokers arrange, or offer to arrange, for compensation the transportation of property by a motor carrier.1 As stated by the FMCSA, brokers “don’t transport the property, don’t operate motor vehicles or have drivers, and don’t assume responsibility for the cargo being transported.”2 Given what they don’t do, it would seem that brokers should have little legal risk aside from the occasional breach of contract claim. Unfortunately, however, recent case law indicates that brokers’ exposure—whether it be for claims resulting from motor vehicle accidents or supply-chain fraud—is a very real and expensive concern.

Negligent Selection

Brokers potentially face tort liability for the negligent selection of a motor carrier when accidents occur during the transportation of cargo by carriers they select, whether the same results in cargo damage, personal injury, or both. At common law, a transportation broker’s liability for negligent selection turns on whether it used reasonable care in the selection of a motor carrier by confirming that the carrier: (i) had the proper authority or license; (ii) maintained the required cargo and liability insurance; and (iii) had an appropriate safety rating.3 Brokers must strike a careful balance to negate a negligent selection claim while avoiding a possible claim for vicarious liability resulting from the exercise of too much control over a motor carrier or driver.4 In 1994, as part of the Federal Aviation Administration Authorization Act (“FAAAA”), Congress expressly preempted States from enacting or enforcing laws relating to prices, routes, or services provided by, among other entities, brokers: * Senior Counsel, Clark Hill PLC (Houston, TX)

Except as provided in paragraph (2) and (3), a State, political subdivision of a State, or political authority of 2 or more States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier (other than a carrier affiliated with a direct air carrier covered

by Section 41713 (B) (4)) or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.5 Over the last several years, FAAAA preemption has gained traction in cases involving cargo damage or loss claims, with courts in several jurisdictions holding that the foregoing statutory provision preempts a negligence claim against a transportation broker because such a claim affects its services.6 Claims for bodily injury, however, may fare better when it comes to establishing a broker’s tort liability. While courts appear to uniformly apply FAAAA preemption to suits against brokers for cargo loss as noted above, some have refused to find preemption of common law tort claims against freight brokers in cases involving personal injury.7 In 2020, the Ninth Circuit Court of Appeals in Miller v. C.H. Robinson Worldwide, Inc.8 concluded that tort claims against brokers are not preempted because they fall under the “safety exception” of the FAAAA, which states that the statute’s preemptive grant shall not restrict the safety regulatory authority of a State with respect to motor vehicles, the authority of a State to impose

highway route controls or limitations based on the size or weight of the motor vehicle or the hazardous nature of the cargo, or the authority of a State to regulate motor carriers with regard to minimum amounts of financial responsibility relating to insurance requirements and self-insurance authorization….9 Noting that the phrase “with respect to” is synonymous with “relating to,” the Ninth Circuit interpreted the application of the safety exception as broadly applying to regulations both directly and indirectly having a connection with motor vehicles, including negligence claims against brokers arising out of motor vehicle accidents.10 However, in a dissenting opinion, Justice Fernandez disagreed, asserting that the relationship between a broker and a motor vehicle was simply too attenuated for the statute’s safety exception to apply.11 The United States Supreme Court denied certiorari in Miller on June 27, 2022.

More recent decisions in other jurisdictions have expressly rejected the holding in Miller, instead holding that the safety exception does not negate broker preemption. In Lee v. Werner Enterprises, Inc.,12 a plaintiff who sustained serious injuries sued not only the motor carrier, but also the broker and the shipper, for negligence. Both the broker and the shipper filed motions to dismiss based on FAAAA preemption. In

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TLA Feature Articles and Case Notes the order granting both motions, the Ohio district court explained how the plaintiff’s negligence claims against the transportation broker and shipper “fall[ ] squarely within the preemption of the FAAAA.”13 Addressing the safety exception, the court disagreed with Miller, ruling that “[t]he plain meaning of the words [‘]safety regulatory authority of a State[’] does not support the inclusion of private tort claims.”14 The court further noted that “if the safety exception preserved all claims related to motor vehicles … all preempted claims would then be ‘saved’ by the exception.”15 In the court’s view, “the FAAAA’s preemption provision protects precisely parties such as the shipper and broker, who did not have direct involvement in the accident that injured Plaintiffs.”16 The Eleventh Circuit, in Aspen American Insurance Company v. Landstar Ranger, likewise construed the statute’s safety exception as using specific and intentional language that does not accommodate general state law negligence claims, regardless of whether they implicate safety concerns and fall within the state’s safety regulatory authority.17 Although Aspen addressed a negligence claim involving stolen property as opposed to a claim for personal injury, the Eleventh Circuit found the distinction between property damage and personal injury irrelevant to its analysis, stating that it makes little sense for the safety exception to turn on whether a plaintiff seeks damages for property loss or bodily injury—the common law negligence standard is the same no matter the damages a breach has caused.18 Most recently, in Ye v. GlobalTranz Enterprises, Inc.,19 the Seventh Circuit agreed with the logic of Landstar Ranger and held that personal injury claims asserted against a broker under a theory of negligent hiring were expressly preempted under the FAAAA. In rejecting Ye’s assertion that the FAAAA’s safety exception applied, the court observed that although the statute broadly preempted state laws related to the prices, routes, and services of motor carriers, there is no mention of either brokers or broker services in Section 14501(c)(2)(A)’s safety exception.20

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Other recent decisions, however, follow the Miller analysis. For example, in Ruff v. Reliant Transportation, Inc.21 (a case predating the Ye decision), a Nebraska district court addressed removal of a wrongful death claim against a broker as the result of an accident involving the motor carrier with which the broker had arranged a shipment.

In holding that the statute’s safety exception applied to preclude removal of the claim to federal court on the basis of FAAAA preemption, the court observed that both [Aspen American and Miller] accepted at more or less face value the assertion that a negligent hiring claim seeks to regulate broker conduct at the core point of service. But presumably, Reliant did not hire the carrier to kill the [plaintiffs]—it hired the carrier to transport and deliver a shipment. The fatal crash thus [being] a detour well outside the scope of service, Plaintiffs’ negligent hiring claim asks not so much whether Reliant erred in selecting a carrier to deliver a shipment, but whether it so erred as to select a carrier that both failed to deliver and killed two bystanders in the process. … It is hard to see how wrongful-death liability significantly impacts the market for interstate motor carriage if liability only arises after the market has failed in a particular instance.22 Although the U.S. Supreme Court declined to review the Ninth Circuit’s decision in Miller, it did so at a time when no circuit court conflict existed. The recent Seventh Circuit decision in Ye, however, is directly at odds with Miller, creating a conflict among the federal appellate courts regarding interpretation of a federal statute and thus now setting the table for consideration by the high court. The Seventh Circuit denied reconsideration of Ye on August 16, 2023, making a petition for writ of certiorari to the Supreme Court due on or before November 14, 2023.23

Double-Brokering

Exposure also exists for a broker in cases involving double brokering. As stated

in Millam v. Northern Freight, LLC, [d]ouble brokering involves the practice of a broker receiving a shipment from a shipper and subsequently tendering the shipment to another broker for movement by a motor carrier. It is frequently done without the shipper’s knowledge or the motor carrier’s knowledge. No written or even oral contracts exist between the motor carrier ultimately used and the initial broker.24 In light of the wording of the federal regulations, double brokering is often considered illegal.25 See 49 U.S.C. § 13901(c), requiring a motor carrier or broker registrant to “specify, in writing, the authority under which the person is providing such transportation or service.” A purported motor carrier that double-brokers a shipment tendered to it is violating this statute unless its transportation or service agreement specifies in writing that it is acting as a broker.

The primary double-brokering risk is the non-payment of freight charges, particularly when a shipper pays the freight charges to an intermediary that does not transmit payment to the ultimate motor carrier. As at least one court has stated, “[t]he bedrock rule of carriage cases is that, absent malfeasance, the carrier gets paid.”26 The Fourth, Fifth, Sixth, Ninth and Eleventh Circuits support carrier recourse against shippers (or even their vendors or consignees) for payment,27 explaining that “the shipper, and not the carrier, is in the best position to avoid liability for double payment by dealing with a reputable freight forwarder, by contracting with the carrier to eliminate the shipper’s liability, or by simply paying the carrier directly.”28 In these cases, the shipper is contractually liable to the carrier via the bill of lading. Although some such cases hold that the carrier is not entitled to recover payment from shippers, primarily where the bill of lading is marked “prepaid,” thus setting up an estoppel defense, those cases are in the minority.29 As a result, when the shipper pays the broker, the broker pays the carrier it hires, and that carrier double-brokers to another carrier (with which the broker

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TLA Feature Articles and Case Notes doesn’t have a contract) and absconds with the funds, there is a good chance that the broker ultimately is left holding the bag when the actual delivering carrier comes looking for payment.

Fraudulent brokering appears to have been involved in a recent freight collection case, P.A.M. Transport, Inc. v. Schell & Kampeter, Inc. d/b/a Diamond Pet Foods.30 Diamond, the shipper, engaged P.A.M. via an unidentified broker to transport hundreds of shipments from Arkansas to a facility in Mexico, racking up over $1 million in transportation fees in the process.

Although Diamond paid the broker, the broker did not pay P.A.M., and the carrier sued Diamond for payment. Diamond moved to dismiss the suit for failure to state a claim and failure to join the broker as a necessary party, asserting that it already had paid the freight charges to the broker and should not have to pay the charges twice. In denying Diamond’s motion, the court held that double payment “is a fact outside the pleadings which the Court is not permitted to consider at this stage … [and] is a matter more appropriately addressed at the summary judgment stage after the parties have conducted discovery.” Although Diamond argued that P.A.M.’s failure to join the broker prejudiced its defense, the court noted that Diamond had not met its burden of explaining “why [Diamond could not] simply join the broker to this case by filing a third-party complaint.” Although not stated in the opinion, the likely reason neither party joined the broker was because that entity couldn’t be found and/or did not exist.

Another risk of double brokering involves theft of the cargo, when the party engaged by the broker arranges for transportation by a third party to a different location. The delivering carrier is told by the “broker” that the delivery destination has changed, resulting in the delivery of the cargo to a compromised warehouse or location. Because the original broker has no information regarding the delivering carrier, it has no way to locate the cargo.31 Again, the broker may well be left bearing the loss, by virtue of its contract with the shipper.

Collection/Other Lawsuits and Intangible Costs to the Industry

With the proliferation of supply chain fraud, shippers and brokers alike are being hit with collection lawsuits for the payment of transportation charges due to the fraudulent intermediary’s failure to pay carriers.

And assuming the shippers and brokers are successful in defending such claims, the carriers remain unpaid for their services.

According to Transportation Intermediaries Association President and CEO Anne Reinke, brokerage fraud is costing brokers, carriers, shippers and consumers $800 million or more.32 Those losses, along with the attendant legal fees and costs, are the obvious damages resulting from the fraud. But there are others, as well, such as the increased costs associated with guarding against fraud (including but not limited to extra staff hours devoted to vetting carriers), loss of business, and reputational harm.

For example, overzealousness in guarding against double-brokering can backfire and expose legitimate brokers to liability for defamation. In Jets Prolink Cargo, Inc. v.

Brenny Transportation, Inc.,33 Joyce Brenny contracted for Jets to serve as a carrier for a shipment. Brenny alleged that Jets double brokered the shipment and fraudulently tried to get additional money from her company, Brenny Transportation. Brenny obtained an authorized carrier profile on Jets from an Internet site and, after making a few calls, formed the belief that Jets had engaged in similar practices with other transportation brokerage companies. Brenny then sent a letter, on Brenny Transportation letterhead to “one and all in the trucking industry” warning brokers and carriers to “beware” of Jets. This and subsequent letters indicated that other individuals and companies that Brenny had contacted—but that did not participate in drafting or publishing the letters—joined in her views. Jets sued all of the identified parties, claiming that the letters contained multiple defamatory statements. Fortunately, three of the named parties (not including Brenny) were able to obtain dismissal of Jet’s claims, but only after incurring legal fees in the defense of the matter.

Additionally, aggressive collection efforts can result in damage to a broker’s reputation and a loss of business.

In Sunteck Transport Co., Inc. v. Baxter Bailey & Associates,34 Sunteck sued Baxter Bailey, a collection firm, for breach of contract, tortious interference with business relationships and fraudulent misrepresentation. Baxter Bailey had previously sued Sunteck, a transportation logistics and freight management provider, for shipping debts owed to motor carriers by Sunteck’s brokers. The parties had entered into a release agreement, wherein the firm had agreed to accept $10,000 in satisfaction of certain debts allegedly owed by one of its brokers for shipments arranged on behalf of Sunteck customers R.R. Donnelly, PepsiCo and Nestle; the release included a confidentiality agreement. One month after entering into the release, Baxter Bailey contacted several other of Sunteck’s customers directly seeking payment for the debts and stating to those customers that Sunteck had resolved claims on behalf of two of the customers involved in the released claim.

The firm also allegedly engaged in harassment of both Sunteck and its customers via email, mail and telephone calls, resulting in Sunteck’s alleged loss of customers and other damages.35 Although Sunteck obtained summary judgment against Baxter Bailey on liability for breach of the confidentiality clause in the release agreement,36 any damage award that Sunteck ultimately received likely did not fully compensate it for the long-term harm that the company sustained to its business relationships.

Similarly, in Canning Logistics Services, LLC v. Baxter Bailey & Associates,37 Canning— which provided freight-hauling services as both a carrier and a broker—discovered that Baxter Bailey was attempting to collect debts allegedly owed by Canning to Cyclone Carriers for freight-hauling jobs. Cyclone had sued Canning for those claimed debts, and the litigation had been stayed pending arbitration. Apparently, however, Canning had assigned the debts to Baxter Bailey, and an employee of the firm sent a series of emails to Canning, copying its customers, accusing Canning of dishonesty and of sending checks without sufficient funds.

Additionally, Baxter Bailey sent letters to

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TLA Feature Articles and Case Notes two of Canning’s major customers stating that they were liable for the debt due to Canning’s nonpayment. Shortly thereafter, a Canning customer informed Canning that it was suspending payments to Canning pending an investigation into allegations that Canning engaged in double-brokering and failed to pay its carriers. Canning sued Baxter Bailey, alleging tortious interference with business relationships and defamation.

The court entered a temporary restraining order and a preliminary injunction restraining Baxter Bailey from attempting to collect any debt allegedly owed by Canning and from contacting current Canning Customers to attempt to collect any debt owed by Canning to Cyclone.38 Both Sunteck and Canning Logistics illustrate the aggressive tactics utilized to collect debts—whether owed or not—and the reputational harm that can result therefrom across the supply chain.

Combating Fraud in the Industry

In 2020, the Federal Motor Carrier Safety Administration (“FMCSA”) within the United States Department of Transportation (“USDOT”) issued a “Broker and Carrier Fraud Identity Theft” alert with recommendations of steps to take in the event of suspected fraud and identity theft in the transportation industry.39 More recently, the FMCSA has undertaken steps to combat fraud, such as validating information received via paper applications, verifying that applicants’ principal places of business are physical addresses recognized by the U.S. Postal Service, publishing guidance regarding the definition of a broker and dispatch services, and focusing additional resources on detecting, preventing and stopping unlawful brokerage.40 However, and despite the foregoing, the perception is that the FMCSA simply has not done enough to stem the rising tide of fraud in the transportation industry.

In response to the increase in supply chain theft, several lawmakers have written the USDOT’s Office of the Inspector General (“OIG”) to request the creation of a permanent task force to address these issues.41 In a May 22, 2023 letter, these lawmakers wrote “to share concerns regarding an

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area of increasing supply chain fraud and theft,” stating that approximately 3,500 such schemes are conducted each year.42 Specifically, their letter urged the OIG to consider creating a special unit, in consultation with both the FMCSA and the U.S. Department of Justice (“DOJ”), “to investigate, refer and prosecute cases of transportation fraud in a systematic, concerted manner.”43 On August 22, 2023, the OIG responded to the letter, stating that “[i]nvestigating double-brokering amongst freight carriers is [an] area in which we are committed to collaborating with FMCSA, U.S. Attorneys’ Offices within DOJ, and other stakeholders, when appropriate.”44 The OIG has successfully assisted in taking down fraudulent brokers in recent years. As a result of an OIG investigation, the government prosecuted Nicholas Lakes and Viacheslav Berkovich in 2009. For over three years, Lakes and Berkovich had repeatedly hacked the FMCSA’s SAFER system to temporarily change contact information for legitimate brokers and trucking companies to addresses and phone numbers of their own choosing, then negotiated with brokers on load boards to transport cargo.

Once contracted, Lakes and Berkovich would then arrange for another trucking company to deliver the cargo, posing as the legitimate broker whose identity they had hijacked. The fraudsters would issue their invoice once the cargo was delivered and would pocket the incoming funds (ultimately totaling over $2.7 million) without paying the motor carrier. Because they contracted for loads at a lesser rate than what they agreed to pay the motor carriers, they more than doubled the shipper’s/initial broker’s out-of-pocket losses.45 As part of their plea agreement, Lakes and Berkovich were each sentenced to prison for several years and ordered to pay over $2.7 million in restitution.46 Prior to Lakes’ and Berkovich’s conviction, William Francis Hickey III had pled guilty to a three-year scam in which he and his co-conspirators engaged in doublebrokering loads, receiving over $1 million in transportation fees for loads he brokered to legitimate trucking companies; the trucking companies that transported the goods were not paid. The OIG participated in the

investigation that led to Hickey’s arrest and conviction.47 In a similar scheme, the Avetyan family (a father and two sons) were sentenced in 2011 for their fraudulent double-brokering of loads. They had provided false information to the FMCSA to obtain a DOT motor carrier registration number enabling their company, State Transport, to obtain loads from brokers. The Avetyans would then use a different name to broker those loads to other carriers. State Transport got paid for the delivered loads; the delivering carriers did not. Following investigation by the OIG jointly with other agencies, the Avetyans were sentenced and ordered to pay over $1 million in restitution.48 In 2021, the OIG worked with the DOJ to arrest Alexis Castillo Padilla in Italy and extradite him to the United States on charges of fraudulent brokering. Padilla, operating out of Mexico, had stolen the identity of a California-based carrier and agreed to make deliveries under that entity’s name. Instead of delivering the loads, he posed as a shipper and re-brokered the same loads to other carriers. Padilla collected payments for completed deliveries, but (surprise) did not pay the actual delivering carriers.49 Unfortunately, the OIG’s August 22 letter suggests that its partnership with the FMCSA and the DOJ will be limited to investigating only “the most egregious allegations of … double-brokering fraud, in addition to [its] primary focus on cases that align with OIG’s top investigative priorities.”50 The letter also falls short of committing to a specialized task force that would address such issues. It thus appears that only sizeable broker fraud will warrant scrutiny by the OIG. In terms of alternative remedies, some observers have suggested that fraudulent brokering activities may be subject to federal civil and criminal prosecution under the Racketeer Influenced and Corrupt Organizations Act (“RICO”).51 RICO, which provides both criminal and civil remedies, is particularly appealing because its civil remedies include treble damages, injunctions and attorney’s fees.52 To establish a criminal or civil RICO violation, a criminal

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TLA Feature Articles and Case Notes indictment or a civil complaint must allege four essential elements: (1) a pattern of racketeering activity, (2) a culpable person, (3) the infiltration of an enterprise, and (4) an effect on interstate commerce through (a) investment of income derived from the pattern of racketeering activity in the enterprise, (b) the acquisition or maintenance of an interest in the enterprise through the racketeering activity, (c) the conduct of the affairs of the enterprise through a racketeering activity, or (d) conspiracy to commit any of the foregoing acts.53 Of the options listed with respect to element (4) above, the one most likely to apply would be the conduct of the affairs of the enterprise through a racketeering activity.54 The primary challenge in asserting a RICO claim is to allege a “racketeering activity” as enumerated in the statute.55 Case law indicates that where a claim is not based on a statutorily enumerated “racketeering activity,” but rather on a state-law crime (such as theft), tort or breach of contract, it cannot form the basis of a RICO claim.56 Notably, RICO defines “racketeering activity” as including any act that is indictable under 18 U.S.C. § 659, relating to theft involving interstate or foreign shipments.57 Upon a closer reading, however, Section 659 is limited to the theft of goods in the possession of a common carrier or in storage, when part of an interstate shipment, or money from a common carrier moving in interstate or foreign commerce (or any passenger thereon).58 Thus, while interstate cargo theft may give rise to a RICO claim under this provision, broker fraud that results in only a loss of funds presumably would not.59 Mail fraud60 and wire fraud61 also fall within the definition of racketeering activity. For mail or wire fraud to qualify as a RICO claim, a claimant must prove “(1) a scheme or artifice to defraud or obtain money by false pretenses, representations

or promises; (2) a use of the mails [or interstate wires] for the purpose of executing the scheme; and (3) a specific intent to defraud either by devising, participating in or abetting the scheme.”62 In Update Traffic Systems, Inc. v. Gould,63 a transportation broker survived a motion to dismiss his RICO claims against a freight forwarder, based on allegations that the freight forwarder and its principal had created a criminal enterprise using two different entities. The purpose of the alleged enterprise was to engage in a series of fraudulent activities involving the alteration of bills of lading and double brokering of loads with the intent of defrauding both the broker and the United States government with which one of the entities had a contract. There, the court declined to dismiss the broker’s RICO claim, finding that the broker had adequately and sufficiently pled, among the other RICO elements, specific acts of fraud committed via the mailing of letters, posting of checks, and transmission of improper bills of lading, to maintain its claim.64 Notably, the court observed that the broker’s allegations of wire fraud “include, but are not limited to interstate telephone calls to plaintiff and other transportation brokers to arrange for the shipment of goods, and false promises of future payments.”65 Another significant challenge to asserting a RICO claim where broker fraud is involved is alleging the existence of an enterprise that is separate and distinct from the culpable party itself, to establish Section 1962(c)’s requirement that such party be “employed by or associated with” an enterprise.66 The RICO statute defines an “enterprise” as “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.”67 As clarified by the United States Supreme Court, RICO “liability depends on showing that the defendants conducted or participated in the conduct of the ‘enterprise’s affairs,’ not just their own affairs.”68

In the case of a corporation, the enterprise cannot “consist merely of a corporate defendant associated with its own employees or agents carrying on the regular affairs of the defendant.”69 Needless to say, the assertion of a RICO claim, much less the maintenance of such a claim, is a complicated process involving a number of statutory hurdles. As one author has noted, “many courts have utilized Rule 9 of the Federal Rules of Civil Procedure, requiring fraud to be pled with particularity, to bludgeon RICO cases to death at an infantile stage.”70 The fact that the OIG and FMCSA do not appear to have prosecuted supply chain fraud under RICO, combined with the absence of reported civil cases in this area, suggest that the chance of a successful conviction or civil recovery does not outweigh the time and expense likely involved in pursuing such action.

Conclusion

There is no dispute that brokers face legal exposure to damages on multiple fronts, primarily in the areas of negligent selection and supply chain fraud. With respect to negligent selection, FAAAA preemption appears to prevail where cargo claims are involved, but is inconsistently applied across the circuit courts in personal injury cases. With respect to the latter cases, the Ye decision is a positive development and hopefully will warrant Supreme Court consideration of the issue. Supply chain fraud and, in particular, double brokering, has become more prevalent in recent years and has added to the due diligence burdens in the marketplace. Moreover, the negative economic impacts appear to have caught the attention of lawmakers and enforcement agencies alike. One can only hope that intervention—whether judicial, legislative, or administrative—will have an impact on these issues. In the interim, brokers must remain vigilant and cautious when hiring carriers.

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TLA Feature Articles and Case Notes Endnotes 1

49 C.F.R. § 371.2(a).

Federal Motor Carrier Safety Administration Frequently Asked Questions, What are the definitions of motor carrier, broker and freight forwarder authorities?, May 22, 2023, https://fmcsa.dot.gov/faq/what-are-definitions-motor-carrier-broker-and-freight-forwarder-authorities.

3 See, e.g., Schramm v. Foster, 341 F.Supp.2d 536 (D. Md. 2004); CGU Int’l Ins., PLC v. Keystone Lines Corp., No. C-02-3751 SC, 2004 WL 1047982 (N.D. Cal. 2004).

4 See Sperl v. C.H. Robinson Worldwide, Inc., 946 N.E.2d 463, 470 (Ill. App. 2011) (addressing a claim of vicarious liability against a broker for the actions of a driver).

5 49 U.S.C. §14501 (c)(1) (emphasis added). See also 49 C.F.R. § 371.2(a), (c) and 49 U.S.C. § 13102(23) for support.

6 See, e.g., Ameriswiss Tech., LLC v. Midway Line of Illinois, Inc., 888 F. Supp. 2d 197, 205-06 (D. N.H. 2012) (“Ameriswiss’s negligence claim and all three of MB Insurance’s claims are expressly preempted by the ICCTA.”) (collecting cases); Alpine Fresh, Inc. v. Jala Trucking Corp., 181 F. Supp. 3d 250, 257 (D. N.J. 2016) (“[T]he Court concludes that the express prohibition against state regulation of “intrastate services of any ... broker,” and “related to a price, route or service of any .... broker,” precludes the claims at issue here against Super Logistics, which Alpine has alleged acted as a broker.”); Marx Cos., LLC v. W. Trans Logistics, Inc., No. 14-751 JAP, 2015 WL 260914, at *3 (D.N.J. Jan. 21, 2015) (“Many other courts, under facts similar to the instant case, have found common law claims against a freight broker preempted by Section 14501”); ASARCO LLC v. England Logistics Inc., 71 F.Supp.3d 990, 1006-07 (D. Ariz. 2014) (holding that a negligence claim against a broker would affect its “services” and so was preempted under the FAAAA/ICCTA); AIG Europe Ltd. v. Gen. Sys., Inc., No. RDB-13-0216, 2014 WL 3671566, at *4 (D. Md. July 22, 2014) (mem. op.) (holding that common-law negligence claim asserting that broker “negligently failed to select a different motor carrier” was expressly preempted). See also Enbridge Energy, LP v. Imperial Freight Inc., No. H-14-2615, 2019 WL 1858881, at *2 (S.D. Tex. April 25, 2019).

7 See Mann v. C. H. Robinson Worldwide, Inc., No. 7:16-CV-00102, 2017 WL 3191516 (W.D. Va. July 27, 2017); Montes de Oca v. El Paso-Los Angeles Limousine Exp., Inc., No. CV 14-9230 RSWL (MANx), 2015 WL 1250139 (C.D. Cal. Mar. 17, 2015); Owens v. Anthony, No. 2-11-0033, 2011 WL 6056409 (M.D. Tenn. Dec. 6, 2011).

8 76 F.3d 1016 (9th Cir. 2020).

9 49 U.S.C. §14501 (c)(2)(A) (emphasis added).

10 Miller, 976 F.3d at 1026, 1030.

11 Id. at 1031-32 (Fernandez, J., dissenting).

12 No. 3:22 CV 91, 2022 WL 16695207 (N.D. Ohio Nov. 7, 2022).

13 Id. at *4 (quoting Creagan v. Wal-Mart Transp., LLC, 354 F.Supp.3d, 808, 813 (N.D. Ohio 2018)).

14 Id. at *5.

15 Id. (quoting Creagan, 354 F.Supp.3d at 814).

16 Id. 17 65 F.4th 1261, 1271-72 (11th Cir. 2023).

18 Id. at 1269.

19 74 F.4th 453 (7th Cir. 2023).

20 Id. at 460-62.

21 No. 8:23CV92, 2023 WL 3645719 (D. Neb. May 25, 2023).

22 Id. at *2.

23 Sup. Ct. R. 13.1, 13.3.

24 No. 20-cv-00797-JPG, 2023 WL 423114, *3 (S.D. Ill. Jan. 26, 2023) (mem. op.) (citing Jets Prolink Cargo, Inc. v. Brenny Transp., Inc., No. Civ. 02-1294 ADMRLE, 2003 WL 22047910, *1 n.1 (D. Minn. Aug. 29, 2003)).

25 See James C. Hardman, Third Party Contract Issues Concerning Motor Carriers, Brokers, and Shippers, 34 Transp. Law J. 307, 310 (2007).

26 Exel Transp. Servs., Inc. v. CSX Lines LLC, 280 F.Supp.2d 617, 619 (S.D. Tex. 2003).

27 See Hawkspere Shipping Co. v. Intamex, S.A., 330 F.3d 225, 237-38 (4th Cir. 2003); Strachan Shipping Co. v. Dresser Indus., Inc., 701 F.2d 483, 489-90 (5th Cir. 1983); Oak Harbor Freight Lines, Inc. v. Sears, Roebuck & Co., 513 F.3d 949, 959-60 (9th Cir. 2008); Nat’l Shipping Co. of Saudi Arabia v. Omni Lines, Inc., 106 F.3d 1544, 1546-47 (11th Cir. 1997).

28 Oak Harbor Freight Lines, 513 F.3d at 959.

29 See, e.g., Olson Distributing Sys., Inc. v. Glasurit America, Inc., 850 F.2d 295 (6th Cir. 1988) and Farrell Lines, Inc. v. Titan Indust. Corp., 306 F.Supp. 1348 (S.D.N.Y.), aff’d, 419 F.2d 835 (2d Cir. 1969), cert. denied, 397 U.S. 1042 (1970).

30 No. 5:23-cv-5002, 2023 WL 2465788 (W.D. Ark. Mar. 10, 2023).

31 Fuller, C. “It’s time for massive load board players to take responsibility for fraud.” Web blog post. FreightWaves, 16 May 2023. Online at: https://www.freightwaves.com/news/its-time-for-massive-load-board--players-to-take-responsibility-for-fraud. Accessed 9 Oct. 2023. See also: Putzger, I. “US shippers put on high alert over double-brokering fraud.” Web blog post. The Load Star, 24 May 2023. Online at: https://theloadstar.com/us-shippers-put-on-high-alert-over-double-brokering-fraud. Accessed 9 Oct. 2023.

32 Campbell, C. “Brokerage fraud costs could surpass $800M, TIA president says.” Web blog post. Transport Dive, 18 May 2023. Online at: https://transportdive.com/news/brokerage-fraud-costs-could-surpass-800-million-dollars-transportation-intermediaries-association/650595. Accessed 9 Oct. 2023.

33 No. 02-1294 ADMRLE, 2003 WL 22047910 (D. Minn. Aug. 29, 2003) (mem. op.).

34 No. 3:13-cv-00271, 2014 WL 12642571 (M.D. Tenn. Sept. 15, 2014).

35 Id. at *2.

36 Id. at *4.

37 No. 8:17CV116, 2017 WL 2178350 (D. Neb. May 16, 2017) (mem. op.).

38 Id. at *4.

39 Federal Motor Carrier Safety Administration, Broker and Carrier Fraud and Identity Theft, June 11, 2020, https://www.fmcsa.dot.gov/mission/help/broker-and-carrier-fraud-and-identity-theft.

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Hawes, C. “Truckers deal with fallout after fraudsters steal DOT numbers.” Web blog post. FreightWaves, 3 Aug. 2023. Online at: https://www.freightwaves.com/news/truckers-deal-with-fallout-after-fraudsters-steal-dot-numbers. Accessed 9 Oct. 2023.

41 Schremmer, M. “Lawmakers ask DOT to create supply chain theft task force.” Web blog post. Land Line, 25 May 25 2023. Online at: https://landline.media/ lawmakers-ask-dot-to-create-supply-chain-theft-task-force. Accessed 9 Oct. 2023.

42 Id. 43 Id. 44 Letter from Eric J. Soskin, U.S. Dept. of Transp. Inspector Gen., to The Honorable Mike Braun, U.S. Senate, et al. (Aug. 22, 2023) (“Soskin letter”) at 2, available at https://www.oig.dot.gov/sites/default/files/Letter%20to%20Congress%20on%20Investigating%20and%20Prosecuting%20Household%20Goods%20 Moving%20and%20Double-Brokering%20Fraud_8.22.2023.pdf.

45 Press Release, U.S. Dept. of Justice, Central Dist. of Cal., Second Defendant in Internet Scheme that Defrauded Trucking Companies Sentenced to Federal Prison, Aug. 10, 2009, https://www.justice.gov//sites/default/criminal-ccips/ccips-press-releases-2009.

46 Id. 47 Press Release, U.S. Attorney’s Office, Dist. of Md., Maryland Man Pleads Guilty to Federal Wire Fraud Charges in Connection with a Scheme to Defraud Trucking Companies and Brokers of More Than $1 Million, Sept. 27, 2019, https://www.justice.gov/usao-md/pr; see also Soskin letter at 3.

48 U.S. Dept. of Transportation Office of Inspector General, Father and Sons Sentenced to Jail and Ordered to Pay $1 million in a Consumer Fraud Scheme, Mar. 4, 2011, https://www.oig.dot.gov/library-item/29764.

49 Overdrive Staff, Busted double broker pleads guilty to stealing carrier’s identity, fraud, Overdrive, Oct. 25, 2022, https://www.overdriveonline.com/regulations/article/15302134; see also Soskin letter at 3.

50 Soskin letter at 3.

51 18 U.S.C. §§ 1961 to 1968.

52 See id. at § 1964(a), (c).

53 Id. at §§ 1962 to 1964.

54 18 U.S.C. §§ 1962(c).

55 See id. at § 1961(1).

56 Cargo On Demand v. Polar Air Cargo Worldwide, No. 22-CV-10243, 2023 WL 4472167, *3 (S.D.N.Y. July 11, 2023) (noting that “ordinary corporate fraud, conducted by or through employees or agents of a single corporation, cannot be dressed up as a RICO claim.’”); Holland v. Cole Nat’l Corp., No. 7:04CV00246, 2005 WL 1799540, at *3 (W.D. Va. July 28, 2005) (finding that the defendant’s alleged fraud activities “do not threaten the social well-being such that RICO treatment is warranted”); Stangel v. A-1 Freeman N. Am., Inc., No. 01-CV-2198, 2001 WL 1669387, at *1 (N.D. Tex. Dec. 27, 2001) (mem. op.) (holding that wrongful acts allegedly committed by defendants, including breach of a settlement agreement, did not constitute racketeering activity); Annulli v. Panikkar, 200 F.3d 189, 192 (3d Cir. 1999) (holding that theft by deception, breach of contract, and intentional interference with contract were not predicate RICO acts), abrogated on other grounds by Rotella v. Wood, 528 U.S. 549 (2000).

57 Id. at § 1961.

58 Id. 59 See Annulli, 200 F.3d at 199.

60 18 U.S.C. § 1341.

61 Id. at 1343.

62 Update Traffic Sys., Inc. v. Gould, 857 F.Supp. 274, 282 (E.D.N.Y. 1994) (quoting Morrow v. Black, 742 F.Supp. 1199, 1205 (E.D.N.Y. 1990); see also 18 U.S.C. § 1341.

63 857 F.Supp. 274 (E.D.N.Y. 1994).

64 Id. at 281-82.

65 Id.at 281.

66 18 U.S.C. § 1962(c); see Cargo On Demand, 2023 WL 4472167, at *3.

67 18 U.S.C. § 1961(4).

68 Reves v. Ernst & Young, 507 U.S. 170, 185 (1993) (emphasis in original).

69 Cargo On Demand, 2023 WL 4472167, at *3 (quoting Cruz v. FXDirectDealer, LLC, 720 F.3d 115, 121 (2d Cir. 2013) (cleaned up)).

70 Mark E. DuVal, A Trial Lawyer’s Guide: Everything You Always Wanted to Know about RICO Before Your Case Was Dismissed, 12 Wm. Mitchell Law Rev. 291, 311 (1986) (footnote omitted).

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TLA Feature Articles and Case Notes

Sunshine on My Shoulder: Reptile Smiting in the Sunshine State!

And an Update on Legislative Nuclear Verdict Reform Elsewhere Eric L. Zalud* Megan K. MacCallum**

Reptile theory litigation tactics and commensurate nuclear verdicts have become a recurring problem for motor carriers, transportation brokers, and now, even shippers, in high stakes, catastrophic casualty litigation. There are many effective ways to counter Reptile theory tactics before litigation and in the heat of litigation itself.

However, defense counsel can be aided in litigation by legislatively enacted state laws, which codify more rational decision-making processes for these cases. Such legislation can serve to curb the inflammatory and nonproximate causally related aspects of that type of litigation. That helps smite Reptile tactics, at least in part. Several states have already enacted legislative reforms that will assist transportation industry defendants in litigation, to achieve results that are not tainted by prejudice. The most noteworthy of these is Texas, but efforts have also been made in states such as Missouri, Iowa, West Virginia, Louisiana, West Virginia and Montana.

Now, the Sunshine State has also weighed in. The Florida state legislature recently enacted Florida Tort Reform H.B. 837 (§768.0427 Fla. Stat: the “Act”). That Florida statute is chock full of helpful

codifications for motor carriers, brokers, and others in Reptile theory, high value casualty litigation. First, the Act reduces the statute of limitations for general negligence cases (which would encompass all MVA casualty litigation) from four years to two years (this change applies to claims that have occurred after the effective date of the legislation, which is March 24, 2023). Clearly, this temporal ambit reduction compresses the time within which plaintiffs can file their lawsuits. It thus commensurately reduces the exposure period for motor carrier and broker defendants. This reduction also helps with exposure, analysis and projections – and of course, reduces actual risk.

The Act next also changed Florida’s comparative negligence system, from a pure comparative negligence system, to a modified comparative negligence system.

By that comparative system, plaintiffs who are found to be more than 50% at fault for their own harm are barred from recovering any damages. Often in these cases, there is significant comparative fault attributable to the noncommercial driver plaintiff. The statute recognizes that that quantum of fault should be a factor. Because of the risk that a plaintiff’s comparative fault may entirely bar the claim, plaintiffs’ counsel thus have a stronger motivation to settle, and settle earlier, to recover at least some portion of damages. Obviously, this scenario leads

* Co-Chair, Transportation & Logistics Practice Group, Benesch (Cleveland, OH) ** Associate, Benesch (Cleveland, OH)

to more leverage for defendants during settlement negotiations and should lower overall settlement amounts, because of the increased litigation risk to plaintiffs. Jury research shows though, that in comparative negligence jurisdictions, jurors are sometimes less likely to take the extra step and find the plaintiff 51%, liable if they know that the plaintiff would not recover at all. So, this is a bit of a wild card at trial. However, it still is nonetheless an excellent settlement tool.

The Act also modifies what evidence is admissible at trial to prove medical treatment and expenses. The Act limits the amount of damages for past or future medical expenses to evidence of the amounts actually paid, regardless of the source of payment. Under the Act, if the claimant has health care coverage, he or she may offer evidence of the amount necessary to satisfy unpaid charges of the amount which such health care coverage is obligated to pay the health care provider, to satisfy the charges for the health care itself. If the claimant does not have health care coverage, evidence of the Medicare reimbursement rate effective at the time of trial for claimant’s incurred medical treatment or services will be the evaluation tool. If there is no applicable Medicare rate for service, 140% of the applicable state Medicare rate will be applied. These measures, among others

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TLA Feature Articles and Case Notes related to medical payments, should dramatically reduce actual and future medical expense recovery under the Act. Similar proof parameters apply to future medical treatment and services. Consequently, to evaluate the cost of past and future medical expenses in these cases, defendants will need to know and understand reimbursement rates, and carefully assess the medical bills in each case, for admissible dollar value versus face value. This undertaking may require retention of expert witnesses to determine the actual value of the medical bills. Importantly though, it is the plaintiff’s burden to prove their medical damages.

The Act also makes a good attempt to curtail the cottage industry of plaintiff’s counsel referring plaintiff/”patients” to particular doctors, to create inflated injuries, and commensurate medical expenses. The Act deems that referrals by plaintiff’s counsel to treating physicians are no longer privileged and may be explored in depositions. Consequently, defense counsel is now permitted to inquire as to who recommended particular courses of treatment, and why that treatment was recommended.

Defense counsel will also be permitted to explore the doctor’s relationship with plaintiff’s counsel on a financial, professional and personal level. These discovery topics, and their availability, should help decrease that particular cost-spiraling cottage industry. This provision of the Act further serves to level the playing field in Reptile theory litigation.

The plaintiff’s bar in Florida recognized the dramatic impact that the Act would have on plaintiff’s recovery on claims in Florida.

To that effect, the Florida state court system was deluged with eleventh hour filings prior to the statute’s effective date. To wit, there were 90,593 civil cases filed in the five days between March 17 and March 22, 2023. This statistic is obviously a very clear signal that plaintiffs’ counsel realized the dramatic limitations on their recovery, that are propagated by the Act. It also might mean slower docket times in Florida state courts for a while. Either way, the sun is shining a little brighter in the Sunshine State for motor carrier, broker and shipper casualty defendants!

Update on Legislative Reforms Elsewhere (An update from the authors’ prior article on this topic)

Reining in the Reptile: A Lone Star Template As noted in our previous article, in 2021, an ameliorative statute which contained a smorgasbord of bipartisan legislative reforms that benefit motor carriers in reptile theory casualty litigation (VCTA §§ 72.051-055). Right out of the box, the new Texas statute splits the trial into two phases.

The first phase deals only with the motor carrier driver’s fault and liability (truck malfunction and negligent maintenance claims also are addressed in phase one). Notably, this phase excludes unrelated allegations of unsafe motor carrier safety practices. In fact, it is possible that during phase one, the jury may not even know the name of the motor carrier. The second phase allows plaintiffs to sue the carrier itself, but only after the motor carrier driver’s liability has been established. So, phase two concerns liability under respondeat superior and the amount of punitive damages, if any. Consequently, in trial proceedings under this bifurcated process, the evidence, testimony, and more importantly arguments, intimations and innuendo of plaintiffs’ counsel, are confined to actual facts of driver fault and liability and the common law legal principles that relate to those facts. However, the bifurcation is not automatic. It must be requested by a motion to the court, made within 120 days of the defendants answering the complaint—a critical docket date for motor carriers. This bifurcation mechanism thus effectively segregates that first phase from the potentially more Reptilian second phase and should result in a dramatic decrease in vilification of the motor carrier itself for practices that are completely unrelated to the underlying facts of the actual accident.

The statute also limits the admissibility of evidence of failure to comply with non-pertinent Federal Motor Carrier Safety Administration (“FMCSA”) regulations.

Often in these cases, plaintiffs’ counsel conduct exhaustive discovery into the full panoply of the motor carrier’s policies and

practices relating to FMCSA compliance, internal safety audits, maintenance programs, vehicle inspections, the company’s “safety culture” as a whole, and a host of other operational facts, almost all of which typically have no direct bearing on the facts related to the accident. They do this, with an aim toward demonizing the trucking company, by finding some fault in an unrelated policy or practice and attacking that instead of the actual accident and its causation. The law should serve to dramatically limit this inflammatory practice.

Unfortunately, the Act does not apply retroactively,1 but any MVA lawsuit filed in Texas after September 1, 2021—the Nuclear Disarmament Date (“NDD”)—will be governed by the very logical, measured strictures of this statute. Not surprisingly, there was a tsunami of filings before the NDD. In the lone case that has cited to the Texas statute since its enactment, Danny Herman Trucking, Inc. v. Miranda,2 the court, referencing the statute, and one of its provisions that is not particularly helpful to motor carriers, concluded that “negligent maintenance” of an employer motor carrier defendant, does not require a finding of negligence by an employee as a prerequisite. This is a correct statement of what the statute propounds. However, it is not one of the highlights for motor carriers. Other case interpretations coming soon!

Louisiana: A Bayou Bivouac Under the Act, a plaintiff’s recovery of medical expenses is limited if payment has been received by private health insurance or Medicare. The court may only award the plaintiff up to 40% of the difference between the amount billed by the health care provider and the amount actually paid by their hospital or service providers. If damages have been paid by Medicaid or workers’ compensation, damages are limited to the amount actually paid. Then, the calculation of recoverable medical expenses is made by the trial judge after any plaintiff’s jury verdict.

The Act also limits when evidence of insurance is admissible. Per Section 4873, evidence of the defendant’s insurance policy amount is not admissible unless it is in dispute, meaning: (1) there is a factual

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TLA Feature Articles and Case Notes dispute related to the policy at issue, (2) the evidence would otherwise be admissible to attack the credibility of a witness, or (3) a cause of action is brought against the insurer itself. Evidence of the insurer’s identity is admissible only to attack the credibility of a witness. Also, at the opening and closing of a case involving an insurer, the court must read jury instructions indicating there is insurance coverage for the damages claimed by the plaintiff.

Missouri: Show Me Just a Little Punitive Reform Missouri’s Senate Bill 591, codified in the Missouri Uniform Commercial Code §§ 407.020, 407.025, 538.205, 538.210 and in its rules of Civil Procedure § 510, makes it more difficult for Plaintiffs to recover punitive damages. It introduces a complicity rule for vicarious liability, limits the scope of discovery against employers in claims for compensatory damages, and changes the pleading procedure for punitive damages.3 Section 510.261 raises the standard for punitive damages from negligence to intentional harm or reckless disregard: “punitive damages shall not be awarded unless the claimant proves by clear and convincing evidence that the Defendant intentionally harmed the Plaintiff without just cause or acted with deliberate and flagrant disregard for the safety of others.”

Punitive damages cannot be based upon a compensatory award of nominal damages, unless the claim is for a violation of privacy rights, property rights, or “rights protected by the Constitution of the United States or the Constitution of the state of Missouri.” Finally, punitive damages “shall not be based, in whole or in part, on harm to nonparties.”

This statute was recently applied in rather paradoxical fashion by a federal court, interpreting both the statute and its juxtaposition with the Federal Rules of Civil Procedure. In Davis v. ALS Express Trucking, Inc.,4 the court did apply the Missouri statute in a 2023 case involving motor carrier ALS Express Trucking. The court concluded that, consistently with the statute’s mandates, the plaintiff could not include

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a request for punitive damages without obtaining leave of court. However, the court contemporaneously found that the Federal Rules of Civil Procedure, specifically Federal Rule of Civil Procedure 8 regarding notice pleading, applied to essentially trump this portion of Missouri statute. Thus, the first application of the statute by a federal court was a bit self-defeating. This decision could weigh into defense counsel’s decisions as to federal court removal in Missouri.

Montana: The Big Sky Is Not the Limit Montana has recently sought to limit artificially inflated phantom damages involving alleged medical expenses. (The Montana Supreme Court has been included on the “Watch List” of the American Tort Reform’s annual “Judicial Hell Holes” list for the past three years.) Montana Senate Bill 251 is codified in its statutes at Title 27 §§ 1-202, 302, and 307 limits compensatory damages for injuries or death to the actual amount paid or to be paid in medical costs.5 West Virginia: Take Me Home— But Not Without a Seat Belt West Virginia House Bill 3029 allows evidence that the Plaintiff was or was not wearing a seat belt to be admitted for determining damages.6 Iowa: Getting Closer and Watching with a Hawkeye Iowa HF 772/SF 537 limits employer liability and recovery for noneconomic damages in civil actions involving commercial motor vehicles.7 It also modifies rules for pleading punitive damages. In these cases, the employer’s liability would have to be “based solely upon respondeat superior and not on the employer’s direct negligence in hiring, training, supervising, or trusting the employee, or other similar claims that the employer’s negligence enabled the employee’s harmful conduct.” The Iowa statute also limits noneconomic damages for personal injury or death in civil actions involving commercial motor vehicles to $1 million, thus potentially eliminating the nuclear verdict risk. These limitations are bolstered by the passage of SF 228 in Iowa, which also state that if an employer admits that the driver in an accident is its employee and was acting

under its direction and control, no claim for negligent hiring may be made at all.8 In addition, the new statute places a $5M cap on pain and suffering damages in lawsuits involving crashes with trucks and other commercial motor vehicles.9 Finally, in Iowa a claim for punitive damages cannot be included in any initial claim for relief until after the plaintiff establishes the existence of a triable issue (the court may then allow for additional discovery).

Conclusion: Leveling the Playing Field The factfinding process, during discovery, pretrial proceedings and trial, in state and federal courts has always been intended to be fair, measured and deliberative, with each party in a civil case, the plaintiff—and the defendant—being able to tell their side of the story without an emotional rush to judgment. That process is intended to be guided by principles of logic and equity, and by a rationally balanced assessment of the facts under applicable law. It was never intended to be dominated by inflammatory, Reptilian efforts to inspire passion and prejudice for matters completely unrelated to the underlying facts of the accident. These principles are fair to both sides and are certainly not unfair to plaintiffs. The legislatures in the states discussed in this article have taken rational and measured responses to tactics that often result in bountiful bonanzas for plaintiffs’ lawyers; windfalls beyond fair compensation to injured plaintiffs; and seismic, destructive reckonings for motor carrier defendants who are vilified, demonized, and pilloried for matters beyond the scope of the accident at hand, often driven out of business as a result of inflated nuclear verdicts. These state legislatures are taking action in response to a problem that is evolving within their state’s borders and are seeking to do so in a manner that not only protects defendants from unfair and irrelevant inflammatory evidence, but simultaneously maintains the rational, logical and equitable judicial factfinding process for the plaintiffs. Time will tell how this legislation affects catastrophic accident litigation in the motor vehicle world, but at the very least—it is a start.

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TLA Feature Articles and Case Notes Endnotes 1 2 3 4 5 6 7 8 9

Section 6 makes clear that “[C]hanges in law made by this Act only apply to an action commenced on or after the effective date of this Act, which is September 1, 2021.”

No. PE:21-CV-043-DC, 2022 WL 2719629 (W.D. Tex. Apr. 5, 2022).

See Mo. Ann. Stat. tit. 26 §§ 4.020; 4.025; 36 § 538.205, 210; 510.265.

No. 4:20-CV-1672 RLW, 2022 WL 3153712 (E.D. Mo. 2022).

See Mont. Code Ann., MONT. STAT. tit. 27 §§ 1-202, 302, 307-308.

See Code of W. Va. STAT. tit. § 17-C-15-49.

See Iowa Code Ann., IOWA STAT. tit. 4 § 3.147.136A. Iowa Code Ann. § 668.12A (West).

Iowa Code Ann. § 668.15A (West).

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TLA Feature Articles and Case Notes

Amendments To the Limitation Act: Small Passenger Vessels Are Restricted From Limiting Their Liability For Marine Casualties Katie Matison* Matthew A. Stoloff**

Limitation is an Ancient Legal Principle

The concept of allowing a shipowner to limit liability for marine casualties has existed in some form for seafaring nations since Roman times and was frequently utilized in the 16th and 17th centuries.

Limitation of liability has been an important federal remedy and procedural vehicle in the United States for more than 170 years.

Significantly, recent amendments to the statutory provisions eliminated the eligibility of owners of certain small passenger vessels to seek to limit liability for a marine casualty.1 The amendments categorize a small passenger vessel as a vessel less than 100 gross tons (i) carrying no more than 49 passengers on an overnight domestic voyage or (ii) 150 passengers or less on an overnight non-domestic voyage. The amendments recodified the Limitation Act in 46 U.S.C. §§ 30521 – 30530.

The Basic Legal Framework of the Limitation Act

In 1851, Congress enacted the Limitation of Shipowners’ Liability Act (“Limitation Act”) for the underlying purpose to “encourage ship-building and to induce capitalists to invest money in this * Shareholder, Lane Powell PC (Seattle, WA) ** Associate, Lane Powell PC (Seattle, WA)

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branch of industry.”2 There is a general consensus among legal scholars that the sinking of the Lexington in 1848, which caused substantial loss of life and destruction of cargo, motivated Congress to enact the Limitation Act to place the United States on equal footing with other maritime nations.3 The United States Supreme Court ignored the provisions of the contract of affreightment and held the shipowner of the Lexington liable for the loss of cargo specie.4 The Limitation Act grants only a shipowner—or a bareboat charterer (also known as a demise charterer)—the right to seek limitation and does not apply to either a time charterer or voyage charterer.5 Accordingly a shipowner—or bareboat charterer—without negligence, may either be exonerated from liability for a loss or alternatively allowed to limit its liability to third party claimants to a limitation fund equivalent to the post-casualty value of the vessel and the pending freight.6 The claims subject to limitation are defined within 46 U.S.C. § 30524. The Limitation Act does not allow a shipowner to limit liability for Coast Guard fines or oil pollution under The Oil Pollution Act of 1990, 33 U.S.C. §§ 2701 – 2761.

Federal courts have exclusive jurisdiction to adjudicate claims under the Limitation Act. The benefit of a proceeding under the Limitation Act is to compel all claimants to assert their claims against the shipowner in a single federal court.

The claimants comprise a concursus. Once a concursus is formed, the federal court issues a monition or injunction, prohibiting any other claimants from asserting their claims in another court arising out of the

casualty. The procedure for actions under the Limitation Act are contained in Rule F of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions.

Foreign-flagged vessels are entitled to file a petition seeking limitation in U.S. courts under certain circumstances. In 1881, the Supreme Court, in a landmark decision, held that a foreign vessel owner was entitled to seek limitation of liability in a United States court applying the Limitation Act.7 Among the shipowners who petitioned to limit their liability are the owners of the RMS Titanic. Although the vessel was flagged as a British ship, the United States Supreme Court held that the owners of the Titanic could limit their liability under the Limitation Act.8 Similarly, the owners of the SS Princess Sophia, where 364 people died, sought to limit their liability.9 And the SS Eastland, which capsized in the Chicago river and claimed at least 835 lives, is yet another example in which the owners sought to limit their liability.10 But after a fire on the SS Morro Castle claimed the lives of approximately 123 passengers and crew11 on September 8, 1934, in which the owners sought to limit their liability to just $20,000, Congress amended the Limitation Act and enacted the Sirovich Amendments, which provided a Supplemental Fund for personal injury

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TLA Feature Articles and Case Notes or death claims.12 The Supplemental Fund applies only to seagoing vessels seeking to limit liability for personal injury or death claims.13 The pivotal factor in whether a shipowner is entitled to limit liability is whether the shipowner was negligent, or had privity or knowledge of the cause of the loss.14 This is a fact intensive two-step process and can be simplified as follows: (i) What negligent acts or conditions of unseaworthiness caused the accident? (ii) Did the vessel owner have knowledge or privity of those negligent acts or conditions of unseaworthiness that caused the accident?15 If a claimant is unable to prove the cause of the injury or loss, a vessel owner is “entitled” to a limitation of liability.16 Thus, if there is no evidence of negligent acts or conditions of unseaworthiness, the inquiry should end there and the court should grant the vessel owner’s petition to limit liability.17 For example, if the vessel was structurally fit and reasonably safe for the voyage, the equipment on the vessel functioned as required, there was sufficient safety gear on board, and an experienced captain was piloting the vessel, the court is likely to grant the vessel owner the limitation of liability under the Act.18 However, if there is evidence of an act of negligence or condition of unseaworthiness that caused the accident, the vessel owner has the burden to establish lack of knowledge and privity. Privity or knowledge may be “actual or constructive” and “may be established even if the owner has not availed himself of whatever ‘means of knowledge are reasonably necessary to prevent conditions likely to cause losses.’”19

the amount of the limitation fund in the 1957 Convention is calculated in Poincaré Francs corresponding to the tonnage of the vessel and is based upon the pre-casualty of the vessel. The 1957 Convention applies only to seagoing vessels.

The International Convention on Limitation of Liability for Maritime Claims (1976) (“1976 Convention”) is applicable to seagoing vessels and expanded the category of individuals who could seek limitation. For example, the 1976 Convention allows charterers and insurers to seek limitation, contrary to the U.S. Limitation Act. The 1976 Convention sharply increased the size of the limitation fund available to claimants. The 1976 Convention—like the 1957 Convention—grants the right of limitation for wreck removal and breach of contract. Similar to the U.S. Limitation Act, the 1976 Convention excludes liability for oil pollution. Further, the 1976 Convention in increases the burden on a claimant in limitation seeking to prevent limitation of liability. Article 4 provides that proof is required to prevent limitation if the “loss resulted from his personal act or omission committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.”

The 1996 Protocol modified the 1976 Convention. The 1996 Protocol and the 1976 Convention provide that the limitation fund is comprised of Special Drawings Rights, or units of account created by the International Monetary Fund for uniformity among maritime countries.

The Right to Limitation Under International Conventions

Until recently, owners of commercial small passenger vessels, including vessels within the ambit of the Passenger Vessel Safety Act of 1993, 46 U.S.C. § 2101, could file a complaint to limit their liability under the Limitation Act regardless of the number of passengers onboard. For example, in 2018, the owner of a 72-foot water taxi that had carried 37 passengers filed suit seeking to limit liability to just $27,300 when a fire resulted in numerous injuries and one death.20

The legal principle of limitation of liability has been incorporated into international conventions ratified by nearly all seafaring nations. The International Convention Relating to the Limitation of Liability of Owners of Seagoing Ships, Brussels, October 10, 1957 (“1957 Convention”) contains fundamental differences from procedures utilized in the United States. For example,

The 2022 Amendments to the Limitation of Liability Act Are Significant

Similarly, when a fire on the MV Conception caused the deaths of 33 passengers and 1 crew member off the coast of California, the owners alleged that “The wreck and wreckage of the Conception was determined to have zero residual value and the Conception is a total loss due to the Fire and has zero value as a result of the Fire.”

Matter of Truth Aquatics, Inc., No. 2:19-cv07693, Dkt. 1 (C.D. Cal. Sept. 5, 2019).

Congress reacted to the public outcry on the loss of the Conception. On December 23, 2022, an amendment to the Limitation Act was enacted (as part of the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023) to restrict owners of small passenger vessels from limiting their liability. Senator Dianne Feinstein said that the proposed amendment was drafted “to update maritime liability rules in the wake of the Conception boat fire because current law is fundamentally unfair to victims of maritime tragedies. . . . Basing current maritime liability rules on a law written in 1851 is ridiculous. Owners of small passenger vessels who are found to be legally responsible for damages should be required to make those payments.”21 As a result of the 2022 amendments, shipowners and bareboat charterers of vessels are now precluded from limiting their liability if any wooden vessel constructed prior to March 11, 1996 carries at least one passenger for hire; if a vessel carries up to 49 passengers on an overnight domestic voyage; or if a vessel carries up to 150 passengers on any voyage that is not an overnight domestic voyage.22 The amendments to the Limitation Act spawned the following issues: • The amendment is a significant development in the history of Limitation Act because it means that larger numbers of vessel owners are at risk of liability that exceeds the post-casualty value of the vessel and its pending freight.

Vessel owners, particularly those who own wooden vessels constructed prior to March 11, 1996 are now exempt from the Limitation Act. • It is somewhat unclear why the amendment targets “wooden vessels constructed prior to March 11, 1996,

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TLA Feature Articles and Case Notes carrying at least one passenger for hire.”

According to the National Transportation Safety Board’s report of the MV Conception tragedy,23 the Conception was constructed with fiberglass over plywood and was built in 1981. However, the NTSB noted that Title 46 Code of Federal Regulation Subchapter T was last updated in 1996, which may explain the focus on wooden vessels constructed prior to March 11, 1996.

• It is also unclear what impact the amendment has on wooden vessels that were constructed prior to March 11, 1996, but have been retrofitted to modern standards.

• Except for wooden vessels constructed prior to March 11, 1996, owners of small passenger vessels may be eligible to limit their liability under the Limitation Act if there are 50 or more passengers on an overnight domestic voyage or at least 151 passengers on any voyage that is not an overnight domestic voyage.

• The amendment prohibits covered small passenger vessels from restricting either by “regulation, contract, or otherwise, . . . the period for bringing a civil action for personal injury or death to less than two years after the date of injury or death.”24 Further, if notice is not given to the shipowner for personal injury or death, recovery will not be barred if the shipowner had knowledge and is not prejudiced, there is satisfactory reason that notice could not be given, or the owner fails to object.25 • Notably, the Coast Guard requires that small passenger vessels that are inspected under 46 C.F.R Subchapter H, K, and T, and that carry more than 12 passengers on an international voyage must have an International Safety Management (ISM) plan. Despite these safety requirements, these vessels are excluded from the Limitation Act. • The amendment does not define “passenger” or indicate that the number of passengers include the number of crew members. However, 46 C.F.R. § 70.10-1 contains specific definitions of “passenger,” depending on the nature of the voyage. For example, a passenger on a

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voyage that is not an international voyage include individuals except the owner of the vessel, the master of the vessel, and crew members who are engaged in the business of the vessel and are paid for their services.

• The definition of “small passenger vessels” is a barebones version of 46 C.F.R. §§ 114.110(a) and 175.110(a), both of which are federal regulations that apply to small passenger vessels, depending on the number of passengers and nature of the voyage. However, unlike the amendment, the federal regulations expressly exclude certain vessels, such as oceanographic research vessels. The amendment does not reference any such exclusion, and it is unclear whether owners are entitled to limitation of liability if, for example, their oceanographic research vessels organizes a tour open to the public or invites a photographer onboard.

Wing-in-Ground Craft and Seaplanes

The amendment to the Limitation Act also restricts owners of “wing-in-ground craft” from limiting liability, regardless of the number of passengers and the nature of the voyage. A “wing-in-ground craft” is essentially a “boat-plane hybrid.”

A federal statute defines the word “vessel” to mean “every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water.”26 But as the United States Supreme Court noted, “not every floating structure is a ‘vessel.’”27 Seaplanes—also referred to as floatplanes or flying boats (depending on the size)—are plentiful throughout the Pacific Northwest and in Alaska. These amphibious aircraft take off and land on water and are frequently used for tourism and to transport goods such as food and medicine. Although the amendment makes no mention of seaplanes, courts in various jurisdictions have held that owners of seaplanes may not limit their liability under the Limitation Act. In 1939, a district court in New York denied limitation of liability and held that the primary purpose of the seaplane “was to travel

through the air. It was practically incapable of being used as a means of transportation on water, although its construction enabled it to embark on its journey from the sea and to alight on the water when it had reached its destination, but this was purely incidental to its flight through the air.”28 Nearly forty years later, another district court in the Virgin Islands denied limitation of liability and observed that “The Congress intended this benefit for owners of ships, vessels which plied the seas from port to port, their only function being that common to waterborne craft. It is certain that no type of aircraft, whatever its capability might be, was in the mind and contemplation of Congress.”29 Then, in a case involving the Jones Act, the Circuit Court of Appeals for the Fifth Circuit observed that “Virtually every court confronted with the question has decided that a seaplane is not a vessel, either under the Jones Act or in other contexts. . . . An airplane flying through the ozone does not appear to be a vessel within the meaning of an act addressed to the relief of seamen.

The definition is not altered by the fact that the plane is equipped with gear that enables it to begin and end an airborne trip on water.”30 The Fifth Circuit appears to have overlooked Lambros Seaplane Base v. the Batory,31 which held that a seaplane is a vessel for purposes of salvage. This, however, is a different issue.

Conclusion—The Aftermath of the Amendments

The amendment significantly impacts owners of small vessels, particularly wooden vessels constructed prior to March 11, 1996 because there is no minimum number of passengers for owners to shield their losses under the Liability Act. For example, the amendment impacts owners who offer charters on historic wooden schooners, which are often used for pirate adventures and sunset cruises at various parts around the country, including Seattle, San Francisco, New Orleans, Key West, New York, Boston, and Portland, Maine.

Companies seeking to acquire additional wooden vessels for their business will need to weigh their options and determine

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TLA Feature Articles and Case Notes whether it makes business sense to purchase wooden vessels constructed prior to March 11, 1996. And even if a company chooses to purchase a wooden vessel constructed after March 11, 1996, the company will still need to determine if it makes business sense to purchase larger vessels to accommodate a certain number of people

in order to shield their losses under the Limitation Act. In contrast, owners of small passenger vessels that are constructed from other materials—regardless of when such vessels were constructed—will need to ascertain that there is a minimum number of passengers on the vessels (depending on the

voyage) to limit their liability.

Finally, owners of wing-in-ground craft and seaplanes must ensure that their equipment is in good working order and complies with the latest federal regulations, that the pilot and co-pilot are qualified and well trained, and that there is sufficient liability insurance to cover potential losses.

Endnotes 1

46 U.S.C. § 30502(b).

Lewis v. Lewis & Clark Marine, Inc. 531 U.S. 438 (2001), citing Norwich Co. v. Wright, 80 U.S. (13 Wall.) 104, 121 (1872).

3 Schoenbaum, T.J. Admiralty and Maritime Law, 6th ed., Vol. 2, §15.1, p. 186.

4 New Jersey Steam Navigation Co. v. Merchants Bank of Boston (LEXINGTON), 46 U.S. (6 Howe) 344 (1848).

5 46 U.S.C. § 30501(2). For a clear and succinct explanation of the differences between these charters in a case involving the Limitation Act, see In re Tidewater Barge Lines, Inc., No. 03-CV-1225-ST, 2005 WL 3992463, at *6-7 (D. Or. Oct. 21, 2005).

6 46 U.S.C. § 30523(a); see also Pickle v. Char Lee Seafood, Inc., 174 F.3d 444, 449 (4th Cir. 1999).

7 The Scotland, 105 U.S. (15 Otto) 24, 31 (1881).

8 Oceanic Steam Nav. Co. v. Mellor (THE TITANIC), 233 U.S. 718, 731-34 (1914).

9 The Princess Sophia, 61 F.2d 339, 355 (9th Cir. 1932), cert. denied, 288 U.S. 604 (1933).

10 The Eastland, 78 F.2d 984 (7th Cir. 1935), cert. den. 297 U.S. 703 (1935).

11 According to the presiding court, 81 passengers out of 318 were dead and missing and 34 crew members out of 231 were dead or missing. New York & Cuba Mail S.S. Co. v. Continental Ins Co. of City of New York, 32 F. Supp. 251, 255 (S.D.N.Y. 1940). However, on appeal, the Second Circuit noted that 89 passengers out of 316 were dead or missing, though the number of crew considered dead or missing was consistent with the lower court. 117 F.2d 404, 405 (2d Cir. 1941).

Other courts have given conflicting numbers. One case cited legislative discussion that there were 124 deaths on the SS Morro Castle: In The Pocahontas, 20 F. Supp. 1004, 1009 (D. N.J. 1937). In later cases, the number of deaths have mysteriously increased. One case suggested that there were 135 deaths. U.S. v. S.S. Helena, 295 F. Supp. 610, 611 (E.D. La 1969). And the court in In re Bell suggested that there were 134 deaths. No. C12-1126JLR, 2014 WL 129642, at *3 (W.D. Wash. Jan 13, 2014). It is unclear why the numbers of fatalities on the Morro Castle have varied throughout the years.

12 In an admiralty case addressing the retroactivity of the Sirovich amendments, the district court of New Jersey quoted Representative Sirovich as stating, “‘If my bill which is now being considered as passed, the Morro Castle victims, instead of having had only $20,000 against which the victims could sue, would have had at least $600,000 and $700,000.’” The Pocahontas, 20 F. Supp. 1004, 1009 (D. N.J. 1937).

13 See 46 U.S.C. § 30524.

14 See 46 U.S.C. § 30523(b).

15 See, e.g., In re BOWFIN M/V, 339 F.3d 1137 (9th Cir. 2003) (per curiam).

16 Washington State Dept. of Transp. v. Sea Coast Towing, Inc., 148 Fed. Appx. 612, 614 (9th Cir. 2005).

17 See, e.g., Matter of the Complaint of William and Myo Shears, C14-1296RSM, 2016 WL 30019 (W.D. Wash. Jan. 4, 2016).

18 See, e.g., In re Anderson, 847 F.Supp.2d 1263 (W.D. Wash. 2012).

19 Schladetzky v. Doe, No. C19-0493JLR, 2021 WL 1063201, at *4 (W.D. Wash. Mar. 18, 2021) (quoting Wash. State Dep’t of Transp., 148 Fed. Appx. at 613).

20 Matter of A.B.K. Enterprises, Inc., No. 8:18-cv-191-T-30TGW, 2019 WL 3068786 (M.D. Fl. June 18, 2019).

21 “Feinstein Applauds House Passage of Maritime Accident Compensation Liability Reform,” at https://web.archive.org/web/20230929143035/https://www. feinstein.senate.gov/public/index.cfm/press-releases?ID=A32291B5-FD38-437F-9612-91A5CA2A05B6 Accessed 9 Oct. 2023.

22 46 U.S.C. § 30501(1).

23 National Transportation Safety Board, “Fire Aboard Small Passenger Vessel Conception Platts Harbor, Channel Islands National Park, Santa Cruz Island, 21.5 miles South-Southwest of Santa Barbara, California, September 2, 2019 (NTSB/MAR-20/03). Online at: https://www.ntsb.gov/investigations/AccidentReports/ Reports/MAR2003.pdf Accessed 30 Sept. 2023.

24 46 U.S.C. § 30526 (b).

25 46 U.S.C. § 30526(c).

26 1 U.S.C. § 3.

27 Lozman v. City of Riviera Beach, Fla., 568 U.S. 115, 125 (2013).

28 Noakes v. Imperial Airways, 29 F. Supp. 412, 413 (S.D.N.Y. 1939).

29 Hubschman v. Antilles Airboats, Inc., 440 F. Supp. 828, 845-846 (D.V.I. 1977).

30 Smith v. Pan Air Corp., 684 F.2d 1102, 1114 (5th Cir. 1982).

31 215 F.2d 228 (2d Cir. 1954).

2

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TLA Feature Articles and Case Notes

Railways: Complex, Vast, and Cyber-connected

William B. Pentecost, Jr., Esq.*

Henry J. Sienkiewicz, M.S.**

David M. Olive, Esq.***

For almost 200 years, railways have served as arteries of transportation and engines of economic growth. They have enabled the movement of goods and passengers while adapting to the changing needs and technology of the era. With a global estimated value of USD 45.82 billion in 2022,1 and over 800,000 miles of track, the rail industry has become a vast and highly interconnected network of tracks, stations, and signaling systems. A disruption in any one part of the network can have a cascading effect on the entire system, with weather, incident or equipment failure creating a ripple effect of delays and logistical headaches network-wide.

The management and maintenance of this vast infrastructure requires meticulous planning, constant monitoring, and substantial investment. The precise coordination of trains, their scheduling, and the constant optimization of routes present a series of daunting challenges, not least of which is the need to defend this complex network against attacks by malign actors.

The targeting of railroads is far from a new concept. During World War II, German saboteurs attempted to disrupt rail service to America’s east coast by destroying a choke point in Altoona, Pennsylvania,

known as the “Horseshoe Curve”.2 The railroad industry’s digitalization makes the industry an easier target than ever before.

around the world have been the victims of a variety of cyber incidents that have highlighted the critical need for enhanced cybersecurity measures. Notable incidents include the Stuxnet attack targeting transportation control systems3 and the 2015 Ukrainian grid attack,4 which rippled through rail systems.

Just this past summer, on August 25, 2023, two Polish men disrupted more than 20 trains in Poland.5 Initially, the focus of the ensuing investigation was on Russia, as Poland’s rails serve as a key piece of infrastructure for supporting Ukraine’s war effort; however, the investigation concluded that the disruption was not the result of a sophisticated cyber intrusion, but a rather simple radio hack that sent a “radio stop” command to the Polish trains over an unencrypted and unauthenticated system.

These incidents underscore the farreaching impacts of cyberattacks on railways, ranging from service delays to potential threats to passenger safety.

Rail Industry Digitalization

The ongoing digitization of the rail industry represents a leap forward. It offers both promise and peril as it integrates digital tools, data analytics, and automation to modernize many aspects of rail operations.

Digitization continues to improve operational efficiency and safety by enabling the real-time monitoring of tracks, trains, and equipment. Advanced signaling systems, automated train control, and optimized scheduling have reduced delays and improved on-time performance; now, freight is transported more safely and efficiently and passengers have access to real-time information for a smoother travel experience. Adding Artificial intelligence (AI) into the existing scheme of predictive maintenance allows for early detection of potential problems, while AI-based cyber security can reduce cyber threats and vulnerabilities.

Railway Cyber Security Overview

Over the past few decades, rail systems

* Partner, Cipriani & Werner, P.C. (Pittsburgh, PA); Chair, TLA Motor Carrier Committee ** Adjunct Lecturer, Georgetown University’s School of Continuing Studies (Washington, D.C.) *** Of Counsel, Cipriani & Werner, P.C. (Washington, D.C.); Principal, Catalyst Partners (Washington, D.C.)

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Rail Cybersecurity Challenges

One of the more daunting challenges is the digitalization of the rail industry.

Based on survey responses, interviews and findings shared by experts, a recent report by the European Union Agency for Cybersecurity (ENISA) highlighted the

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TLA Feature Articles and Case Notes following cybersecurity challenges:6 • Low digital and cybersecurity awareness in the railway sector.

• Difficulty in reconciling safety and cybersecurity worlds.

• Digital transformation of railway core business.

• Dependence on the supply chain for cybersecurity.

• Geographic spread of railway infrastructure and the existence of legacy systems.

• The need to balance security, competitiveness, and operational efficiency.

• Complexity of regulations for cybersecurity.

Cyber Threats in the Railway System

The railway industry is increasingly vulnerable to a wide range of cyber threats that can have a significant effect on safety, operations, and passenger information.7 A cyber threat refers to any potential danger or malicious activity intended to exploit weaknesses. These include viruses, ransomware, denial-of-service (DoS) attacks, advanced persistent threats (APTs), and social engineering.8 Malicious actors are targeting railroads through a variety of attack vectors, including malware, phishing, and denial of service attacks. Malware, such as ransomware, can disrupt train control systems and hinder operations, potentially resulting in delayed service and economic loss. Phishing attacks that target employees can compromise sensitive data and undermine the confidentiality of passenger information and the details of critical infrastructure.9 Denial-of-service attacks pose a significant threat by overwhelming rail networks with traffic, disrupting service and compromising real-time train control.

Advanced Persistent Threats (APTs) can lead to long-term surveillance and espionage, potentially compromising sensitive railway information.10 The impact of these threats can be far reaching. The safety of passengers and railway staff could be compromised by a cyber-attack on train control systems.

Service disruptions due to malware or denial of service attacks can lead to economic losses, as railways are critical to commerce and transportation. Exposure of passenger, shipper and sensitive cargo information through successful phishing attacks could have legal, financial, and reputational consequences for railway operators.

Cyber Vulnerabilities in Railroad Systems

Cyber vulnerabilities in rail systems expose critical infrastructure to potential threats that impact safety, operations, and data integrity. A cyber vulnerability refers to a weakness, flaw, or gap in a computer system, software, network, or process that could potentially be exploited by cyber threats. This can include unpatched software, weak passwords, misconfigured firewall rules, and outdated antivirus definitions.11 Aging legacy systems are a vulnerability.

Highly reliable, long lasting, and exceptionally cost effective, many rail components were designed without today’s cyber threats in mind. As with other operational technologies, the components were primarily designed to ensure reliability and efficiency.

These systems could be as straightforward as locks, padlocks, and manual keys, mechanical systems which are less operational efficiency, safety and integration compared to the modern digital technology available.

Other systems, equally necessary, might be as complex as train movement control or traffic management.

The lack of regular software updates and patches, firewalls, threat detection, standardized integration methodologies, and risk management frameworks leaves these systems vulnerable to exploitation.

The ongoing integration of digital technologies into rail operations introduces complexities that can be exploited by cybercriminals.12 Communication protocols and wireless connections that are fixtures in modern railways can be exploited by attackers to gain unauthorized access. These vulnerabilities can be exacerbated by inadequate security controls and the lack of comprehensive security standards. Cybercriminals can

exploit these vulnerabilities to compromise train control systems, potentially resulting in service disruptions or unauthorized access to sensitive data.13 The interconnectedness of rail systems with other critical infrastructure, such as power grids, amplifies the potential impact. A cyber-attack on the railways could have cascading effects on other sectors, increasing the potential for economic and societal consequences.14

Unique Legacy Systems and Interoperability Challenges

There are challenges and unique aspects to cybersecurity in the rail industry, with legacy systems and interoperability issues posing significant hurdles. Many rail systems continue to rely on legacy infrastructure that lacks modern security features. These systems were not designed with cybersecurity in mind, making them vulnerable to cyber threats. The integration of these legacy systems with newer digital technologies is a source of complexity that can be exploited by malicious actors.

The problem is compounded by interoperability challenges. Rail operations involve multiple systems, including train control, signaling, communications, and passenger information systems. These systems are often developed by different vendors. Ensuring that these different systems can communicate and share data seamlessly, while remaining secure, has proven to be difficult. The European Union Agency for Cybersecurity (ENISA) highlights interoperability as a key challenge in ensuring railway cybersecurity.15

Complex Supply Chains & Third Parties

Complex supply chains and third-party involvement introduce intricate challenges to railroad cybersecurity. Rail systems rely on an extensive network of suppliers and contractors for various components, systems, and services. However, this interconnectedness can expose railways to vulnerabilities stemming from third-party relationships.

Third-party vendors might have differing security standards or insufficient cybersecurity practices, potentially serving

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TLA Feature Articles and Case Notes as entry points for cyber attackers. Thirdparty vendors may have different security standards or inadequate cybersecurity practices. They can serve as entry points for cyber attackers. The 2013 Target breach highlighted such risks, where attackers exploited a third-party HVAC contractor to infiltrate Target’s systems.16 Complex supply chains and third-party involvement present intricate challenges to rail cybersecurity. Rail systems rely on an extensive network of suppliers and contractors for a wide variety of components, systems, and services. This interconnectedness, however, can expose railroads to vulnerabilities that arise from their relationships with third parties.

In addition, supply chain disruptions caused by cyber incidents can have an impact on railroad operations. If a vendor’s systems are compromised, the interconnectedness between railroads and suppliers can lead to delays or disruptions.

Comprehensive supply chain risk management is required to address these challenges. Rail operators should establish stringent cybersecurity requirements for suppliers. They should conduct assessments to ensure compliance. Collaboration and transparency between railroads and vendors are critical to mitigating cyber risk.

Additionally, supply chain disruptions due to cyber incidents can impact rail operations. The interconnectedness between railways and suppliers could result in delays or interruptions if a vendor’s systems are compromised.

Addressing these challenges requires comprehensive supply chain risk management. Rail operators should establish stringent cybersecurity requirements for vendors, and regularly conducting assessments to ensure compliance. Collaboration and transparency between railways and third-party vendors are crucial in mitigating cyber risks.17

Railway Specific Cybersecurity Safety Concerns

Railroad cybersecurity faces many concerns. Three major concerns include: (i) communications-based train control; (ii) operational disruptions causing delays and

economic losses; and (iii) data breaches compromising passenger and shipper information and confidentiality. To maintain the safety and integrity of rail systems, it is critical to address each of these issues.

Communication-based Train Control (CBTC) Vulnerabilities

Communications-Based Train Control is the term used to describe the modern railway signaling system. To monitor and manage train movements and improve safety, efficiency and capacity through precise control and real-time tracking of trains, modern rail systems increasingly leverage digital technologies for real-time monitoring, control and communication.18 However, these systems are vulnerable to cyber threats to passenger safety and operational integrity. An intrusion into these systems could compromise the accuracy of the signals, which could lead to incorrect routing or timing. In extreme cases, attackers could manipulate train movements, potentially leading to collisions or derailments.19

Operational Disruptions

Another major challenge is the disruption of operations due to cybersecurity incidents and the resulting service delays and economic impact. Malware, system breaches, or network intrusions can compromise critical rail infrastructure components and disrupt communications, signaling, and control systems. These disruptions cause service delays, inconvenience to passengers, and ripple effects through the transportation network.

The economic consequences of these events can be far reaching. Freight delays can disrupt supply chains, affecting industries that rely on just-in-time inventory management. Passenger rail disruptions can result in lost revenue, customer dissatisfaction, and reputational damage.20

Data Breaches

As in other industries, railway data breaches can lead to identity theft, fraud, and privacy violations by compromising personal information, travel records, shipping records, and payment details. This

includes sensitive information like passenger data, employee data, and operational data. The 2018 British Airways data breach is an example of the potential consequences in a related transportation sector. Passenger information, including payment card data, was compromised. The airline faced legal penalties and reputational damage.21 Like all major industries, railroads are subject to and must comply with various privacy regulations. Data breaches can result in significant legal penalties. The European Union’s General Data Protection Regulation (GDPR) requires organizations that target or collect data related to people in the EU to protect personal data. For the rail industry, strong security practices, including encryption, secure data storage, and access management, are critical to maintaining the confidentiality of passenger information and public trust.22

Enhancing Railroad Cybersecurity: Establishing a Standard of Duty

The rail industry is on the path to establish a Duty of Care/Standard of Practice.

Similar to other industries, such medical, legal, and engineering, these standards outline a professional’s responsibilities to passengers and customers.23 Risk assessment and mitigation strategies, along with the transparent implementation of security standards and best practices, are collectively essential.

Risk Assessment and Mitigation Strategies

Risk assessment involves identifying vulnerabilities and potential threats throughout the rail ecosystem and is necessary to strengthen rail cybersecurity. This process considers both technological vulnerabilities, such as outdated systems, and operational vulnerabilities, such as inadequate employee training.

Mitigation strategies must prioritize critical assets and vulnerabilities identified in the assessment. The implementation of multiple security controls, such as access control, encryption, and intrusion detection systems, can help protect against cyber

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TLA Feature Articles and Case Notes threats. Performing regular vulnerability assessments and penetration tests can be a proactive way to identify weaknesses and vulnerabilities that could be exploited by attackers.24 The National Institute of Standards and Technology (NIST) provides a comprehensive framework for securing critical infrastructure, including rail. This framework emphasizes continuous monitoring and adaptation. This is critical in the everevolving threat landscape.25

Implementing Security Standards and Best Practices

Founded in 1922 in Paris, the International Union of Railways (UIC) offers a comprehensive framework for railway cybersecurity.26 This framework outlines security guidelines, risk management practices, and incident response procedures specific to the rail industry.27 Utilizing industry-specific standards such as the Common Criteria for Information Technology Security Evaluation (ISO/IEC 15408) can guide the evaluation and selection of secure rail systems.

Adopting the National Institute of Standards and Technology (NIST) Cybersecurity Framework helps tailor cybersecurity strategies to address rail-specific vulnerabilities. The framework’s core functions – Identify, Protect, Detect, Respond, and Recover – can be tailored to the rail use case.28

Automation’s Impact

Automation offers improved efficiency, reduced human error, and enhanced operational capabilities. As automation becomes more prevalent, rail systems are increasingly reliant on interconnected digital components, sensors, and autonomous systems.

There are cybersecurity implications to this shift toward automation. While automation streamlines operations, it also expands the attack surface for cyber threats.

Malicious actors are poised to exploit vulnerabilities in automated systems to compromise train control, signaling, and communications networks.

The integration of Internet of Things

(IoT) devices and machine-to-machine communications into automated rail systems adds to the complexity of cybersecurity.

Each connected device becomes a potential entry point for cyber-attacks. As a result, the protection of these systems requires a strong focus on device-level security, data encryption, and continuous monitoring.29

Securing IoT Devices

As rail networks become more digitized and interconnected, the attack surface for cyber threats expands. Robust cybersecurity measures are essential. The proliferation of IoT devices, such as sensors, cameras, and communication nodes, provides valuable real-time data for the efficient management of the railways. However, these same devices can also serve as a potential point of entry for cyber attackers if they are not adequately protected.

Device-level security, network segmentation, and strong authentication mechanisms are part of a comprehensive security approach. The use of secure boot mechanisms and encryption protocols on IoT devices can prevent unauthorized access and data manipulation. The implementation of network segmentation isolates critical train control systems from less secure components, reducing the impact of a potential breach.30

Future Innovations

Intrusion Detection Systems (IDS) ENISA highlights the importance of intrusion detection systems in protecting critical infrastructure, including rail systems.

These sensors can detect unauthorized attempts to manipulate system behavior or access sensitive data. Rail networks can strategically deploy IDS sensors throughout their infrastructure. This enables real-time monitoring of communications between train control systems, signaling devices, and other critical components.31 Integrating IDS with security information and event management (SIEM) platforms can provide a holistic view of network security and enable rapid incident response. By leveraging real-time data analytics, IDS not only detects potential breaches, but also helps trace the origin of attacks.32

Secure Communication Protocols for Train Control ENISA stresses the importance of secure communication protocols for the protection of critical railway infrastructure.33 Significant progress has been made in the development of secure communication protocols tailored to train control systems. These protocols ensure the confidentiality, integrity and authenticity of data exchanges between trains, signaling systems and control centers. It is also useful to adopt some of the principles of zero-trust architecture to protect data in transit and at rest, encryption and secure communication protocols.34 Network segmentation and access controls limit unauthorized access to critical systems.35 Erickson’s Future Railway Mobile Communications System (FRMCS) is an example of technology that may resolve these issues. A 5G based framework, the FRMCS provides dedicated 5G bands for railways.36 AI and Machine Learning for Anomaly Detection Another area of innovation is the integration of AI and machine learning (ML) techniques for anomaly detection, scheduling optimization, and predictive maintenance in railway systems. AI and ML algorithms analyze large amounts of data from train control systems, network traffic, and operational behavior.37 AI and ML can also detect anomalies indicative of cyber threats, such as attempted unauthorized access or anomalous system behavior. These innovations also give rail operators the ability to go beyond rule-based methods of detection.

AI and ML can identify novel attack patterns that may evade traditional security measures. 38 Blockchain for Secure Data Sharing Rail operations involve multiple entities, including operators, regulators, and maintenance providers. This requires seamless and secure data exchange.

Blockchain technologies enable secure sharing of data related to train schedules, maintenance logs, and safety records without the need for intermediaries by providing

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TLA Feature Articles and Case Notes a decentralized and tamper-proof platform.

It ensures the accuracy and immutability of the shared information, as each transaction is recorded in a tamper-proof manner.39

Conclusion

The “why” behind rail cybersecurity is simple. Without security in place, the rail system can be neither reliable nor safe.

The continuing digitization and connectivity across this vast network steadily increase the opportunities for cyber-attacks on critical networks, i.e., the control networks responsible for safe and reliable operations.

While many vendors, service providers, and operators are designing in protection for personally identifiable information and corporate confidential information, far fewer

companies are designing robust cybersecurity measures for the networks that are critical to safety and reliability and are tailored for the rail industry. Establishing industry-specific security standards for connected rail systems requires collaboration between rail operators, technology vendors, and cybersecurity experts.

Endnotes 1

Maximize Market Research. “Railway System Market: Global Industry Analysis and Forecast (2023-2029) by Type, Application, System Type, and Region.” Web blog post. MMR, September 2023. Online at: https://www.maximizemarketresearch.com/market-report/railway-system-market/183999/. Accessed 9 Oct. 2023.

2 Taylor, D.A. “The Inside Story of How a Nazi Plot to Sabotage the U.S. War Effort Was Foiled.” Web blog post. Smithsonian Magazine, 28 June 2016, updated 26 June 2017. Online at: https://www.smithsonianmag.com/history/inside-story-how-nazi-plot-sabotage-us-war-effort-was-foiled-180959594. Accessed 9 Oct. 2023.

3 Langner, R. “To Kill a Centrifuge: A Technical Analysis of What Stuxnet’s Creators Tried to Achieve.” Web blog post. The Langner Group, November 2013. Online at: https://www.langner.com/to-kill-a-centrifuge/. Accessed 9 Oct. 2023.

4 Cybersecurity & Infrastructure Security Agency, “Cyber-Attack Against Ukrainian Critical Infrastructure.” ICS Alerts, 20 July 2021. Online at: https://www.cisa.gov/ news-events/ics-alerts. Accessed 9 Oct. 2023.

5 Greenberg, A. and Couts, A. “Security News This Week: 2 Polish Men Arrested for Radio Hack That Disrupted Trains.” Web blog post. WIRED: Security, 2 Sept., 2023. Online at: https://www.wired.com/story/poland-train-radio-attack-security-roundup. Accessed 9 Oct. 2023.

6 Liveri, D., Theocharidou, M., Naydenov, R. & European Union Agency for Cybersecurity (ENISA), Railway Cybersecurity: Security Measures in the Railway Transport Sector. ENISA, 13 Nov. 2020. Online at: https://www.enisa.europa.eu/publications/railway-cybersecurity. Accessed 9 Oct. 2023.

7 Touhill, G.J. and Touhill, C.J., Cybersecurity for Executives: A Practical Guide. 1st ed., Wiley-AIChE (2014).

8 Id. 9 International Union of Railways (UIC), Guidelines for Cyber-Security in Railways. 1st ed., UIC Argus WG (2018). Online at: www.uic.org: https://shop.uic.org/en/ other-documents/9228-guidelines-for-cyber-security-in-railways.html. Accessed 9 Oct. 2023.

10 Id. 11 Touhill, supra note 7.

12 Sienkiewicz, H.J., and Walker II, T.K, “Capturing The Sun: Solar and Cybersecurity”. Web blog post. United States Cybersecurity Magazine, Summer, 2023. Online at: https://www.uscybersecurity.net/csmag/capturing-the-sun-solar-and-cybersecurity. Accessed 9 Oct. 2023.

13 Id. 14 Id. 15 ENISA, supra note 6.

16 Harris, E.A. and Perlroth, N. “Target Missed Signs of a Data Breach.” New York Times, 13 Mar. 2014. Online at: https://www.nytimes.com/2014/03/14/business/ target-missed-signs-of-a-data-breach.html?smid=url-share. Accessed 9 Oct. 2023.

17 Id. 18 Liu, X., Wijesekera, D., Wang, Z., Jablonski, M., Wang, Y., Yavvari, C., Holt, K. and Sykes, B., Cyber Security Risk Management for Connected Railroads. Federal Railroads Administration (June 2020). Online at: www.dot.gov: https://railroads.dot.gov/elibrary/cyber-security-risk-management-connected-railroads. Accessed 9 Oct. 2023.

19 Yu, Z., Wang, H. and Chen, F. “Security of railway control systems: A survey, research issues and challenges.” High-speed Railway, vol. 1, no. 1, March 2023, pp.

6-17. Online at: https://www.sciencedirect.com/science/article/pii/S2949867822000071?via%3Dihub. Accessed 9 Oct. 2023.

20 ENISA, supra note 6.

21 Tidy, J. “British Airways fined £20m over data breach.” BBC News, 16 Oct. 2020. Online at: https://www.bbc.com/news/technology-54568784. Accessed 9 Oct. 2023.

22 Sienkiewicz, H.J. “Cybersecurity Impacts of the EU GDPR.” Web blog post. United States Cybersecurity Magazine, Spring 2018. Online at: https://www.uscybersecurity.net/csmag/cybersecurity-impacts-of-the-eu-gdpr/. Accessed 9 Oct. 2023.

23 Sienkiewicz and Walker, supra note 12.

24 Just as this article was going to print, on October 23, 2023, TSA renewed for an additional year and made revisions to three previously issued Security Directives regulating passenger and freight railroad carriers’ cyber assessment and response plans. Specifically, the revisions require covered rail owners and operators annually to submit an updated Cybersecurity Assessment Plan for TSA review and approval. Rail owners and operators are also required to test a minimum of two objectives in their Cybersecurity Incident Response Plan. Online at: https://tsa.gov/sd-and-ea. Accessed 3 Nov.2023.

25 Barrett, M. “Framework for Improving Critical Infrastructure Cybersecurity Version 1.1.” National Institute of Standards and Technology Cybersecurity Framework (Gaithersburg, MD: 2018). Online at: https://www.nist.gov/publications/framework-improving-critical-infrastructure-cybersecurity-version-11. Accessed 10 Oct. 2023.

26 In order to provide a common understanding and reduce potential confusion, the UIC has established standard international railway terminology and a trilingual (English-French-German) thesaurus of terms. See https://uic.org.

27 Guidelines for Cyber-Security in Railways, supra note 9.

28 Stine et al., supra note 25.

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ENISA. (2021, November 25). Railway Cybersecurity - Good Practices in Cyber Risk Management. Retrieved from ENISA Publications: https://www.enisa.europa. eu/publications/railway-cybersecurity-good-practices-in-cyber-risk-management.

30 Id. 31 ENISA, supra, note 29.

32 ENISA, supra, note 6.

33 ENISA, supra, note 6.

34 Stine et al., supra note 25.

35 Guidelines for Cyber-Security in Railways, supra note 9.

36 Melero, J.M. “This is why railway communications needs great network design.” Web blog post. Ericssom Blog, 13 Sept. 2021. Online at: https://www.ericsson. com: https://www.ericsson.com/en/blog/2021/9/railway-communication-network-design. Accessed 9 Oct. 2023.

37 ARC Advisory Group. “Artificial Intelligence in Rail.” Web blog post, 24 April 2020. Online at: https://www.arcweb.com/blog/artificial-intelligence-rail. Accessed 9 Oct. 2023.

38 Van Themsche, S. “Is AI indispensable to protect railways against cyber-attacks?” Web blog post. Cylus Blog, 22 July 2022. Online at: https://www.cylus.com/post/ is-ai-indispensable-to-protect-railways-against-cyber-attacks. Accessed 9 Oct. 2023.

39 Popke, M. “Technology disruptor: Blockchain is a potential game-changer in the rail realm, industry adopters say.” Progressive Railroading, April 2018. Online at: https://www.progressiverailroading.com/internet-digital/article/Technology-disruptor-Blockchain-is-a-potential-game-changer-in-the-rail-realm-industry-adopters-say--54395. Accessed 9 Oct. 2023.

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TLA Feature Articles and Case Notes

International Aviation Liability, Its History and Evolution

Jonathan R. Todd*

Vanessa I. Gomez **

Sara Mishic***

Air carriage is unique in many ways including its history and law. As a relatively recent modality the twentieth century technology emerged with near immediate application to international commerce. This speed of change necessitated the quick and pragmatic development of applicable international law. Air carriage has been governed by convention practically since its inception. The Warsaw Convention and the later Montreal Convention helped to advance the technology through standardized liability limits, available defenses, claims procedures, and similar critical aspects necessary to achieve efficient global movements.

Today these standards have become so ubiquitous that they are often adopted as accepted measures even for domestic United States interstate and intrastate air traffic, which are largely unregulated from a liability perspective.

This article provides a comparative sampling of the key liability provisions in the two Conventions and their application to this intense, fast-paced, complicated, and fact-specific business.

nascent airline industry regarding damage claims, the potential for bankruptcy risk if those claims are unlimited, and related insurance pressures.1 Warsaw addressed these issues by establishing a limitation of liability and devising uniform rules governing air transport claims.2 The Convention was subsequently amended between 1955 and 1966, but given that it had many signatory nation states, the amendments created a degree of confusion over what was intended to be a uniform international system. In 1999, the United Nations’ International Civil Aviation Organization released the Montreal Convention with the goal of addressing air carriers’ cries for clarity following the onslaught of amendments. Montreal generated a more cohesive system of air carrier liability. It became effective in the United States in 2003 and has now been ratified in over 130 countries.

against the carrier under the Convention.

Montreal additionally created a two-tier liability system that shifted the burden put on plaintiffs to recover: (i) a near strict-liability regime for claims up to a threshold that is stipulated in Special Drawing Rights (SDRs); and (ii) a negligence standard for claims over that threshold.

Other key updates brought by the Montreal Convention are explained here, including changes made to limitations of liability, claims periods, defenses to claims, force majeure provisions, and undisclosed transportation substitutions across modes.

International Law Emerges

The Warsaw Convention was drafted in 1929 primarily to address concerns in the * Partner, Benesch (Cleveland, OH) ** Associate, Benesch (Cleveland, OH) *** Paralegal, Benesch (Cleveland, OH)

International Law Evolves

The Montreal Convention notably updated the Warsaw Convention to provide carriers with more predictability regarding their respective rights and obligations. For example, Montreal explicitly states that the rules are intended to include servants and agents of the carrier as well as contracting carriers. Plaintiffs cannot, however, aggregate damages to a level that exceeds the highest amount which could be awarded

Limitations of Liability

Establishing an agreed-upon floor for liability limits is a fundamental objective of both Conventions and, as one would expect, it has evolved over time. No longer established in Gold Francs, the Montreal Convention updated the standard to SDRs which are a monetary standard based upon five currencies and established by the International Monetary Fund. The precise value of SDR fluctuates with monetary exchanges, and the liability threshold (expressed in a number of SDRs per kilogram) is periodically updated under the Convention to account for the effects of inflation.

Specifically, Article 22 of the Warsaw Convention limits cargo liability of the carrier to 250 Francs per kilogram, which

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TLA Feature Articles and Case Notes amounts to approximately $9.75 USD per kilogram of cargo. The Montreal Convention changed the recovery measurement from Francs to SDRs. In 1999, Montreal’s parallel Article 22 increased the limitation of liability to 17 SDRs per kilogram or about $23.21 USD per kilogram. The most recent update brought the recovery limit to 22 SDRs per kilogram, which in today’s exchange amounts to around $30.04 USD per kilogram. Unlike the Warsaw Convention, Article 25 of Montreal brought flexibility to a new level by specifying that parties may waive the limits of liability set in Article 22 and contract for either higher limits of liability or none at all.

The limitations of liability established under the Conventions are closely adhered to by the courts. In one example, the US Court of Appeals for the Eleventh Circuit capped a logistics provider’s liability to 17 SDRs per kilogram, which was the thencurrent liability limit provided for by Article 22 of Montreal Convention.3 The Eleventh Circuit applied the Montreal Convention as referenced in the respective air waybill.

The court disagreed with the pharmaceutical shipper’s contention that a service agreement executed 11 months before the Montreal Convention became effective could include a stipulation waiving limits on liability, and as a result of that timing, determined the Warsaw Convention – which did not allow for parties to waive limitation of liability by contract – should apply.4

Claims Periods

While both Conventions lay out periods for damage, delay, and legal claims, Montreal notably updated those periods.

Articles 26 and 29 of the Warsaw Convention establish claims periods for loss, damage, and delay. According to Article 26, damage claims must be brought within seven days from the date of receipt of goods and delayed claims must be made within 14 days from the date of delivery. In contrast, Article 31 of the Montreal Convention extends the claims period for damaged goods to 14 days from the date of receipt, and likewise extends the claims period for delayed goods to 21 days from the date of delivery.

A two-year limitation on bringing suit is found under each Convention. On the one hand, litigation under Article 29 of the Warsaw Convention must be brought “within two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.” The Montreal Convention analog, Article 35, also imposes a two-year claim.

Interestingly, this bar is not absolute. Courts have held that Montreal’s plain language does not include claims for contribution and indemnification within this two-year limitation.5

Defenses to Claims

Defenses available in response to damage or delay claims differ between the two Conventions. Article 20 of the Warsaw Convention exempts liability if a carrier proves that it has “taken all the necessary measures to avoid the damages or that it was impossible for [it] to take such measures,” or that the damage was caused by negligent pilotage or negligence in handling of the aircraft. Article 21 additionally provides air carriers a defense to liability if the damage was “caused by or contributed to by the negligence of the injured person.”

The Montreal Convention created a more comprehensive set of familiar defenses. Article 18 details a wide range of exemptions from air carrier liability: inherent defect, quality, or vice; defective packing by a third party; act of war or an armed conflict; and act of public authority carried out in connection with the entry, exit, or transit of the cargo. Article 20 also excludes liability analogous to Warsaw’s Article 21 where the damage was “caused or contributed to by the negligence or other wrongful act or omission of the person claiming compensation.”

Force Majeure Provisions

While neither Convention contains “force majeure” or “Act of God” language, each expressly exempts liability for carriers in circumstances beyond the carrier’s control. Montreal brought about updates to account for the “extraordinary circumstances” noted in both Conventions although the net effect of said changes was

minor.

Article 20 of the Warsaw Convention exempts a carrier’s liability if it has “taken all the necessary measures to avoid the damage or that it was impossible for [it] to take such measures.” Article 34 of the Convention additionally notes that it does not apply to “carriage performed in extraordinary circumstances outside the normal scope of an air carrier’s business.” Warsaw does not define “impossible” and “extraordinary circumstances,” but the terms can generally be construed to include weather conditions or political unrest as defenses for carriers in the case of delayed or damaged cargo.

Article 19 of the Montreal Convention contains a similar provision regarding the impossibility for the carrier to take measures to prevent damage. The Illinois Northern District Court reasoned that the impossibility defense under Article 19 of the Montreal Convention, as applied to delay liability, turns not on the fact of a delay but instead on the reasonableness of the airlines attempts to mitigate damage caused by that delay.6 Also, Article 18 of the Montreal Convention includes an explicit defense for damage caused by an act of war or armed conflict. The New York Southern District Court determined that a hijacking of a plane by terrorists constituted an accident as opposed to an extraordinary circumstance that would exclude coverage under the Warsaw Convention.7 If those circumstances were reconsidered today under Montreal, this type of event would be categorized as a force majeure event under Article 18.

Undisclosed Substitutions of Carriage

The Warsaw Convention is silent on remedy for instances in which a carrier agrees to provide a consignor with carriage by air and, without the consignor’s consent, wholly or partially substitutes carriage by another mode of transport. In those instances, Article 18 of the Montreal Convention treats carriage by another mode of transport the same as carriage by air.

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TLA Feature Articles and Case Notes Certain International Law Keystones Remain

The harmonizing effect of each Convention has served the industry well.

Updates are to be expected over time; however, as with any well-reasoned body of law, some common themes remain largely unchanged over the years as Warsaw and then Montreal matured. Some key similarities include maintaining provisions regarding the usage of inland and combined carriage as well as the freedom to contract to account for unique terms.

Inland and Combined Carriage

The concept of “international carriage,” defined in Article 1 of both Conventions includes any carriage in which the nation states of departure and destination are parties to the Convention. If one country is not a party and the other is a party then the Convention will cover carriage to the extent there is an agreed upon stopping place in another country regardless of whether that country is a party. Combined carriage that has temporary break in transit or is performed by different carriers as a single through operation are also included in the definition of “international carriage.”

Article 31 of the Warsaw Convention, Article 38 of the Montreal Convention, and Article 18 of both limit applicability to carriage by air and do not extend to inland portions of travel, except for carriage “for the purpose of loading, delivery, or

transshipment.” Under that exception, both Conventions presume any damage, “subject to proof of the contrary, to have been the result of an event which took place during the carriage by air.” The practical result is that the presumption of loss during air carriage may indeed exist in the absence of evidence to the contrary, which may be difficult to establish particularly for concealed damage.

Some courts have recognized the simplifying effect of this approach. The US Court of Appeals for the Second Circuit found that an air carrier may be presumed liable for loss occurring during ground transport regardless of whether it is provided for on a waybill.8 The Second Circuit explained both the purpose behind and drafting history of Article 18 of the Warsaw Convention, finding that this clause took into account the shipper’s expectations to have door-to-door service, which could only exist via combined carriage, while seeking to avoid the sometimes impossible task of evidencing precisely where loss occurred.9 In these situations where inland carriage is expected, if contracting parties wish to clearly delineate terms between modalities then that is of course permitted. The Conventions allow the parties the freedom to include terms relating to other modes of carriage in their contracts as long as the provisions of the Convention apply to the carriage by air. The Warsaw Convention explains this in Article 31 and the Montreal Convention does so in Article 18.

Freedom to Contract

Finally, a critical point in contracting for all international air transportation services is that the parties have long enjoyed freedom to largely contract around Convention provisions. Article 33 in the case of Warsaw and Article 27 in the case of Montreal stand for the proposition that commercial and even legal terms can be negotiated provided that no party is deprived of the fundamental minimums established under the respective Convention. This gives flexibility to business teams when negotiating the particular details of service, while maintaining a limit to those terms. For example, the terms of an Air Transportation Services Agreement or an Air Waybill issued by an air carrier or indirect air carrier may establish a lengthier claims period or a recovery amount in excess of the then-current SDR cap on liability established by Montreal.

However, attempting to establish terms lesser than the respective Convention, risks a court reinstating those terms to the extent that the Convention applies. The US Court of Appeals for the Fifth Circuit rejected an air carrier’s contract of carriage expressly disclaiming liability and instead applied the liability limit provided by the Montreal Convention.10 In Muoneke, the Fifth Circuit applied the Montreal limit of liability to loss experienced during air travel that occurred just weeks after Montreal went into effect.11

Endnotes 1

Atia v. Delta Airlines, Inc., 692 F. Supp. 2d 693, 698–99 (E.D. Ky. 2010).

Id; El Al Israel Airlines v. Tseng, 525 U.S. 155, 169, 119 S.Ct. 662, 142 L.Ed.2d 576 (1999) (quoting Eastern Airlines, Inc. v. Floyd, 499 U.S. 530, 552, 111 S.Ct. 1489, 113 L.Ed.2d 569 (1991)).

3 Eli Lilly & Co. v. Air Exp. Int’l USA, Inc., 615 F.3d 1305, 1308 (11th Cir. 2010).

4 Id. 5 Chubb Ins. Co. of Eur. S.A. v. Menlo Worldwide Forwarding, Inc., 634 F.3d 1023, 1026-28 (9th Cir. 2011).

6 Pumputiena v. Deutsche Lufthansa, AG, No. 16 C 4868, 2017 WL 66823, at *5, 10-11 (N.D. Ill. Jan. 6, 2017).

7 Karfunkel v. Compagnie Nationale Air France, 427 F. Supp. 971, 977–78 (S.D.N.Y. 1977).

8 Com. Union Ins. Co. v. Alitalia Airlines, S.p.A., 347 F.3d 448, 464–66 (2d Cir. 2003).

9 Id. 10 Muoneke v. Compagnie Nationale Air France, 330 F. App’x 457, 460–62 (5th Cir. 2009).

11 Id. 2

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TLA Feature Articles and Case Notes

The Statute of Limitations in Freight Charge Collections: The Case for a Lengthier State Law Approach Edgar Davison* Richard L. Grant**

I. Introduction

The statute of limitations serves as a cornerstone in freight charge collections, decisively impacting the legal terrain of the transportation sector. While many perceive the 18-month window from the delivery date as the standard timeframe for carriers to pursue outstanding freight charges from brokers, shippers, or consignees, it is crucial to examine the benefits of applying a longer state law statute of limitations in these cases.

This article embarks on a journey through this multifaceted domain, seeking to understand the nuances of state versus federal limitations and emphasizing the advantage of extending the statute of limitations.

II. The Federal Framework

A. Title 49 U.S. Code § 14705 and Its Implications Title 49 U.S. Code § 14705, “Limitation on actions by and against carriers,” mandates an 18-month period post-delivery for carriers to initiate civil actions in charge recovery endeavors. This framework, established by federal law, prioritizes the swift reconciliation of conflicts, ensuring transportation services remain efficient and streamlined.

However, the strict 18-month federal regulation does not always reflect the complexities carriers face in the real * Davison Law Firm (Memphis, TN) ** Grant Law (Irvine, CA)

world. Disputes in the transportation sector often entail intricate contractual intricacies, demanding an in-depth investigation, negotiation, and evidence gathering; all of which may not feasibly conclude within such a short window.

B. Necessity for a Uniform Rule The transportation sector operates on intricate networks spanning state borders, making a standardized rule a rational choice.

The federal 18-month statute inherently offers standardization, presenting carriers with a consistent framework to navigate regardless of where they operate. This not only streamlines operations but also fortifies the overall transportation industry, ensuring swift dispute resolution and bolstering accountability.

However, it is equally important to acknowledge the diverse needs and characteristics of different states. A one-size-fits-all approach, such as the federal 18-month statute, may overlook the unique challenges and requirements of individual states, potentially leading to inefficiencies and operational bottlenecks. A lengthier statute of limitations allows for more comprehensive investigations into grievances. In the intricate realm of transportation, where multiple stakeholders are involved, it is imperative that all angles of a dispute are scrutinized. This ensures that any legal action is grounded in a full understanding of the facts, thereby promoting fairness and justice.

III. State Law: A Case for Lengthier Statutes of Limitation

A. Varying State Laws and Their Potential Benefits Certain precedent-setting court cases,

like Kennedy Tank & MFG Co., Inc. v. Emmert Industrial Corp.,1 have illuminated the potential benefits of applying state law statutes in place of the federal 18-month regulation.

State laws, often shaped by local industrial nuances and intricacies, can be more in tune with the unique challenges and expectations of businesses operating within their jurisdiction.

The court in Kennedy Tank held that state collections actions are unlikely candidates for federal regulation because there is no uniformity vital to national interests.

The court based this conclusion on the fact that Interstate Commerce Commission Termination Act (“ICCTA”) removed the federal cause of action for collection of freight charges and that breach of contract collection cases do not demand exclusive federal regulation merely because they involve interstate transportation. The court noted that when it imposed deregulation Congress foresaw and acquiesced to the application of both federal and state law in the interstate transportation context, which indicated that Congress no longer desired to preempt the field of economic regulation of motor carriers.

After a comprehensive analysis of the preemption issue, Kennedy Tank further held that Indiana’s ten (10) year statute of limitations was not preempted by the ICCTA’s eighteen-month statute of limitations.2 Specifically, in applying a conflict

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TLA Feature Articles and Case Notes preemption analysis, the court concluded that “Congress’s purpose for [49 U.S. Code] section 14705(a) was not to impose a standard national statute of limitations, and therefore Indiana’s longer period does not do ‘major damage’ to the federal scheme.”3 Kennedy Tank concluded that Congress did not intend to preempt state law statutes of limitations applicable to actions for the collection of freight charges. Kennedy Tank, then, proves to be the rare case in which a holding that federal preemption does not apply in the interstate transportation context is of benefit to motor carriers.

Most states will have statutes of limitation based upon breach of contract, quasi-merit, open book, acct. that are much longer than the 18-month federal statute, allowing motor carriers more time to file suits to collect freight charges and reducing the ability of shippers to raise the federal statute of limitations as a defense. Take California, for instance, where the statute of limitations spans four years for cases of breach of contract or open book account claims. This extension not only grants plaintiffs a more substantial window to present valid claims but also acknowledges the often-convoluted nature of transportation disputes, requiring ample time for adequate preparation and resolution.

B. Championing Justice and Fairness Choosing between state and federal statutes is not merely a matter of timeframe but also about ensuring justice and equity. A longer state law statute of limitations, such as California’s four-year limit, recognizes the need for a comprehensive approach to legal challenges, allowing carriers adequate time to address grievances and seek legal redress.

Furthermore, when carriers operate across different states, the ability to rely on a lengthier state-specific statute can prove invaluable, especially in situations where damages or misconduct become apparent only after an extended period post-delivery.

Adopting a longer statute ensures victims are not denied justice simply due to time constraints. Smaller carriers, which may lack extensive legal resources, can particularly benefit from the additional time afforded by lengthier state statutes, allowing for a more equitable playing field.

IV. The Broader Implications of Lengthier State Statutes

A. Legal Consistency and the Balance of Power While the federal statute provides an overarching framework, longer state statutes can cater to specific local challenges.

This duality, however, might lead to a tug of war between federal and state powers.

However, as seen in Kennedy Tank, courts have sometimes favored the application of longer state laws, emphasizing the value of such laws in the broader legal ecosystem.

B. Economic Impacts on the Transportation Sector Financial ramifications in the transportation sector, due to unpaid charges, can ripple throughout the industry. A lengthier state statute allows for thorough evaluation and negotiation, potentially leading to more equitable settlements and ensuring the economic stability of the sector.

The extended timeframe facilitates negotiation. Instead of rushing towards litigation, parties can engage in dialogues, exploring common ground and potential solutions. This environment not only fosters collaboration but also paves the way for more equitable settlements. Such resolutions, which prioritize fairness over expediency, can restore faith in the system and ensure that both carriers and clients feel validated.

V. Legal Precedents Reinforcing State Statutes

While there has not been much precedent addressing this specific issue, several

cases, beyond Kennedy Tank, have touched upon the interplay between federal and state statutes. These cases serve as crucial reminders of the complexities involved in navigating the legal landscape where federal and state laws intersect.

In these cases, courts have illustrated the potential for state laws to supersede the federal 18-month statute, revealing a growing legal consensus towards the benefits of longer state laws. In essence, these rulings underscore a judicial inclination towards acknowledging state-specific nuances and the inherent value in providing adequate time for thorough examination and redressal of disputes. We intend to delve into additional case law on this issue in a future article, offering a detailed analysis and commentary.

Endnotes 1

M67 N.E.3d 1025 (Ind. 2017).

Id. at 1034.

3 Id. at 1029.

2

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VI. Conclusion

The freight charge collection landscape, underlined by the statute of limitations, is at a pivotal crossroads. While the 18-month federal window offers uniformity, the increasing recognition of lengthier state laws underscores the necessity for a more flexible, localized approach.

Title 49 U.S. Code § 14705, despite its merits, may not always address the multifaceted challenges carriers face, making the case for states to champion their own lengthier statutes stronger than ever. The quest for legal fairness, combined with the sector’s operational nuances, implies that while the federal law lays the foundation, state laws often provide the necessary scaffolding for comprehensive justice.

As the transportation industry continues to evolve, legal paradigms must adapt, ensuring that they not only facilitate operational efficiency but also uphold the sanctity of justice and equity for all stakeholders. Whether governed by federal or state law, the ultimate aim remains unwavering: to bolster justice and fairness in the transportation domain.

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TLA Feature Articles and Case Notes

East Palestine Derailment Lawsuit Expands in Scope: The Latest Developments and Issues Presented1 Andrew J. Steif* The Northern District of Ohio lawsuit regarding the Norfolk Southern Railway (“NS”) derailment in East Palestine, Ohio has significantly expanded in scope.2 The facts underlying the derailment are well known: on February 3, 2023, a number of rail cars in NS Train 32N derailed, causing the release of hazardous materials. The Ohio Attorney General’s (“AG”) lawsuit against NS was filed on March 14, 2023.

The AG originally asserted 57 causes of action against NS. The Complaint was substantially amended and narrowed on May 19, 2023. The AG, at the request of various federal agencies, asserts claims against NS relating to both the derailment and the response to the derailment. The core of the Complaint is premised upon the requirements of the federal Clean Water Act,3 which prohibits the discharge of pollutants without permission of the Environmental Protection Agency and the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”),4 which governs the required response to releases of hazardous materials. NS filed an Answer to the Amended Complaint.

The case took an interesting turn on June 30, 2023, when NS filed a ThirdParty Complaint against various parties, including Dow Chemical Inc., Union Tank Car Co., Oxy Vinyls LP and others. The Third-Party Complaint is premised upon an allegation by NS that as a common carrier under 49 U.S.C. § 11101, it was required to transport the hazardous chemicals at issue and that in light of the derailment and under federal law, all responsible parties *Shareholder, Gunster (Jacksonville, FL)

must contribute to the cleanup costs. NS’s causes of action are based in-part upon the requirements of CERCLA, 42 U.S.C. §§ 9607 and 9613, which cover liability and responsibility for the costs of cleanup. NS also asserts a cause of action under Ohio law for alleged negligence relating to the Third-Party Defendants’ compliance with the rules (including rules set forth by the Association of American Railroads) relating to hazardous shipments. NS contends that the Third-Party defendants own, are responsible, or are the shipper for the derailed rail cars that carried hazardous materials and that each entity is liable for response and cleanup costs under CERCLA. NS further contends that the rail cars carrying one particular hazardous chemical were not properly maintained or had improper parts.

Each of the Third-Party Defendants filed Motions to Dismiss on September 15, 2023.

The Third-Party Defendants have signaled an aggressive defense on the interpretation of the relevant federal statutes. Essentially all of the Third Party Defendants contend that under CERCLA, a common carrier that accepts a hazardous substance for transport (here, NS) is the owner or operator while the cargo is being transported, citing 42 U.S.C. § 9601(20)(B), which states: “[i]n the case of a hazardous substance which has been accepted for transportation by a common or contract carrier…the term ‘owner or operator’ shall mean such common carrier or other bona fide for hire carrier acting as an independent contractor during such transportation.” A subsequent portion of the same statutory subsection insulates the shipper from liability but only where the release occurred due to circumstances that

are entirely outside of the shipper’s control.

The Third-Party Defendants contend that NS’s CERCLA claims are legally inapplicable based upon the statutory language.

Certain Third-Party Defendants also assert that they cannot be liable under Section 107(a) of CERCLA “which requires that at the time of disposal of any hazardous substance [that a defendant have] owned or operated any facility at which such hazardous substances were disposed of”. The Third-Party Defendants contend that because the facility at which hazardous materials were disposed was in East Palestine and not any facility owned or operated by the Third Party Defendants, the CERCLA claims are not legally valid.

The Court has not entered any rulings on the now pending Motions, which are not yet fully briefed. The pending Motions, and the larger case, present significant legal issues relating to financial responsibility for derailments and/or releases of hazardous materials. The Court’s interpretation of CERCLA in relation to the pending dispute will likely have larger implications for the liability of third parties other than common carriers in relation to hazardous materials derailments.

Endnotes 1

This article was first published in Association Highlights (Association of Transportation Law Professionals: September 27, 2023) Case No. 4:23-cv-00517 (N.D. Oh.).

3 33 U.S.C. § 1311.

4 42 U.S.C. § 9601 et. seq.

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CTLA Feature Articles and Case Notes

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CTLA Feature Articles and Case Notes

Is it Wise to Use a Smart Contract?: Benefits and Risks of Smart Contracts in Transportation and Logistics 1

Ian Breneman* Michael Furyk**

What is a Smart Contract?

A smart contract is a digitized agreement that automates at least part of its execution. In other words, while a traditional contract creates obligations that the parties can enforce, a smart contract enforces at least some of those obligations automatically.2 Vending machines are often used to describe the basic operation of a smart contract. Once the customer pays and selects a product, the vending machine delivers the product automatically. There is almost no delay - and no human intervention - between selecting and receiving the product.

Smart contracts operate as programs stored on a blockchain, which is a digital ledger that is updated automatically and can be viewed by the contractual parties.

Blockchains are meant to prohibit changes or avoidance to ensure that the smart contract is satisfied according to the agreed parameters.3

Benefits of Smart Contracts in Transportation & Logistics

Smart contracts have significant potential benefits.4 One benefit is increased speed and efficiency. New information can

be added instantly to a blockchain without human error and payment can be made as soon as the service parameters in the contract are complete.

Smart contracts also promote transparency and certainty to processes that might otherwise be convoluted and confusing, because the blockchain is a permanent chronological record of transactions that the parties can access at any time. Blockchains can also enhance security by having information added directly and automatically to the blockchain rather than communicated by email, text, or phone.

Taken together, these features have the potential to significantly reduce costs of fulfilling contracts and to reduce mishaps and disputes.

Smart contracts have significant implications in the transportation and logistics industry. In particular, smart contracts can automate routine transportation documentation such as bills of lading, waybills, and other shipping documents. Smart contracts could require that information about the carriage of cargo be uploaded automatically to a blockchain and thus visible to all relevant parties. Shippers and consignees could receive automatic updates about the status and condition of their cargo without delay.

Recording shipping documents on a blockchain could also facilitate the simultaneous receipt of goods by the consignee and release of payments to the shipper and

* Associate Counsel, Alexander Holburn Beaudin + Lang LLP ** Associate, Alexander Holburn Beaudin + Lang LLP

the carrier or third-party logistics provider.

According to Trade Finance Global, the use of bills of lading on a blockchain can speed up a process that usually takes weeks to one that will take mere minutes.5 Although digitization is not necessarily synonymous with the use of a smart contract on a blockchain, McKinsey and Company recently estimated that the adoption of electronic bills of lading (eBLs) could save $6.5 billion in direct costs while allowing $40 billion in global trade by streamlining trade documentation, which is usually a very paper-intensive and resourceconsuming process.6 The changes that smart contracts and eBLs will bring to the transportation and logistics industry are forecasted to arrive swiftly. For example, while only 1.2% of bills of lading were issued electronically in 2021,7 the Digital Container Shipping Association’s goal is 100% adoption of eBLs in container shipping by 2030.8 As of September 2023, electronic trade documents are now legally recognized under English law pursuant to the recentlyenacted Electronic Trade Documents Act. This will increase the use of digitized trade documentation in international trade, which in turn, will likely lead to the further adoption of smart transportation contracts and smart trade documents.

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CTLA Feature Articles and Case Notes The Canadian Legal Perspective on Smart Contracts

While the blockchain technology underpinning the use of smart contracts has evolved rapidly, Canadian law on the use of smart contracts has not. Smart contracts are not expressly regulated in Canadian statutes or and they have not been directly considered in case law.

Canadian jurisdictions predominately take a functional equivalency approach to technological advancements. This means that existing legal frameworks are applied when new technologies are used with both contracts and documents used to fulfill contracts. For example, all Canadian common law provinces statutorily require that a contract for the carriage of goods “be carried out in writing or by using a written record is satisfied if the activity is carried out using one or more records in electronic form.”9 The courts will also use existing laws and the functional equivalency approach to interpret and enforce smart contracts.

Although not in a transportation context, a Saskatchewan court recently determined that a thumbs-up emoji was sufficient to accept an offer and form a contract.10 In other words, existing legal requirements and standards will be used to interpret and enforce smart contracts even though they use radically new technologies.

Legal Risks and Considerations

While the functional equivalency approach provides some flexibility and does not preclude the use of smart contracts, the lack of specific rules and standardization raises a number of challenges and considerations.

Parties choosing to use smart transportation contracts will need to be diligent in choosing a reputable logistics provider or other entity that hosts a smart contract platform. In 2020, the United States Securities and Exchange Commission fined a blockchain-based logistics company called ShipChain for unregistered sales of securities the company used to raise financing. ShipChain closed as a result, but thankfully did not yet have any customers.11

52

Nonetheless, this example demonstrates that the novelty and lack of regulation of blockchain technologies means that some risks of using smart contracts are outside of the control of the parties to the smart contract.

There are also contractual terms that warrant specific attention in the context of a smart contract, including the parameters of automatic execution. The vending machine analogy provides a cautionary tale.

Although it may work perfectly most of the time, there is also the potential for the product to get stuck. The machine knows it has been paid and thinks it has delivered the product. It also cannot listen to complaints.

This leaves the customer without the means to remedy the unintended breach of contract in a timely or proportionate way, and probably hungry.

In transportation, one obvious use case for automatic execution is immediate payment between shipper and consignee and payments to brokers and carriers. It may be tempting to have those payments made immediately upon delivery determined by location tracking. However, while promoters of blockchain technology often refer to blockchain as containing immutable truth, all technologies and the people using them are capable of errors. The GPS data may be wrong and cargo can of course still be damaged. The terms of a smart contract will need to reflect those realities, such as by giving the consignee the right to confirm delivery or at least enough time to dispute that the cargo was in fact received and in good condition before payments are made.

Similarly, parties should be cautious about the assumptions a smart contract makes about calculating laytime usage or the cause of delays and the consequences of those assumptions to ensure that they are realistic and fair. While automating the tracking and calculation of those elements of a transportation contract can create efficiencies, there needs to be a mechanism to addresses errors and unforeseen circumstances.

Another key consideration will be whether a smart contract preserves – or even can preserve – traditional rights and responsibilities under international

conventions and statutes, including limitations of liability.

As the Federal Court of Canada recently reiterated, an ocean bill of lading must have certain characteristics for the limitations of liability and other rules in the Hague-Visby Rules to apply.12 Describing an electronic document as a “smart bill of lading”, alone, will not satisfy those criteria, particularly if it is not intended to act as a document of title.

In Canada, a road carrier’s liability is often limited by the standard conditions of carriage pursuant to provincial regulations. Although the rules vary somewhat from province to province, the contract of carriage may require specific information for the standard conditions of carriage to apply. As with an analog contract, a smart contract of carriage should thus include the prescribed information to ensure that these standard terms are in effect.

Similarly, some provinces require an excess value declaration to be included on the “face” of the contract of carriage. As mentioned above, a contract of carriage in electronic form is valid. However, questions could arise if the terms of the contract of carriage exist only on a blockchain and not in a printable form.

Therefore, parties should not assume that ordinary rules will apply in the context of a smart contract. Even if they take steps to conform the smart contract to the requirements of conventions or legislation, the best practice will be to expressly incorporate the intended limits of liability into the terms of the contract. For now, it also remains important that the terms of the contract be accessible in a standard electronic form that can be disseminated.

Conclusion: Contracts can be Smart but not Infallible

Smart contracts have significant potential to save costs, create efficiencies, and reduce uncertainty. However, the blockchain technology that smart contracts is highly sophisticated, relatively new, and largely unregulated. This can create inherent risks in partnering with start ups offering to facilitate smart contracts.

For now, the lack of standard protocols in smart contracts may prevent them from

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CTLA Feature Articles and Case Notes fulfilling their promise. Indeed, if encrypted documents and information cannot be made readily available off the blockchain to third party stakeholders, using a smart contract could increase rather than decrease delays.

Smart contracts also do not obviate

real world problems or their legal consequences. The benefits of automation and efficiency should not eliminate the proper calculation of delays or time to confirm that cargo is delivered in good condition.

Parties should also not assume that the rules in conventions or statutes will

continue to apply to transportation governed by a smart contract. They should turn their minds to the parties’ rights and responsibilities and ensure that the smart contract is consistent with those expectations. Indeed, as with any agreement, a contract can only be as smart as the parties make it.

Endnotes 1

The authors are grateful to articling student Anika Garlic for her research and drafting contributions to this article.

Andrew Luesley, Unravelling Smart Contracts: Smart Contracts and the Law of Rescission in Canada, 2019 19 Asper Review of International Business and Trade Law 155, 2019 CanLIIDocs 4082, p.1, available online at https://www.canlii.org/en/commentary/doc/2019CanLIIDocs4082#page_1.

3 Id. at 4.

4 IBM: Benefits of smart contracts, available online at https://www.ibm.com/topics/smart-contracts#:~:text=Smart%20contracts%20are%20simply%20 programs,intermediary's%20involvement%20or%20time%20loss.

5 Brian Canup, Digitalising trade: CargoX sees growth in electronic bill of lading usage, Trade Finance Global, Jan. 2023, available at https://www.tradefinanceglobal.com/wire/digitalising-trade-cargox-sees-growth-electronic-bill-lading/.

6 Didier Casanova, David Dierker, Ludwig Hausmann, Bjørnar Jensen, and Jaron Stoffels, The multi-billion-dollar paper jam: Unlocking trade by digitalizing documentation (“Casanova”), available online at https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/the-multi-billion-dollar-paperjam-unlocking-trade-by-digitalizing-documentation.

7 https://dcsa.org/wp-content/uploads/2022/12/12-23-2022-DCSA-standard-for-Bill-of-Lading-v2.0-final.pdf.

8 https://dcsa.org/100-percent-ebl/.

9 For example, Alberta: Electronic Transactions Act, SA 2001, c E-5.5, s. 31; and, Ontario: Electronic Commerce Act, 2000, S.O. 2000, c. 17, s. 23.

10 South West Terminal Ltd. v Achter Land, 2023 SKKB 116.

11 https://www.freightwaves.com/news/logistics-provider-shipchain-which-built-on-blockchain-shutting-down-after-big-payment-to-sec.

12 Arc-En-Ciel Produce Inc. v BF Leticia (Ship), 2022 FC 843.

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CTLA Feature Articles and Case Notes

Electronic Logging Devices — Finally Here, With A Major Surprise!

Jean-Sébastien Tremblay Mimeault*

After a delay of two and a half years, last February 1st Quebec’s government has finally published the Regulation Respecting the Hours of Driving and Rest of Heavy Vehicle Drivers (“Regulation”) in order to integrate the obligation, for some operators, to equip heavy vehicles with an electronic logging device (“ELD”).

Aside from the ELD obligation, this new regulation has many similarities with its predecessor; however, some important changes have also been incorporated.

This article will discuss the exceptions from the ELD requirement, new and important definitions and certain specific rules.

Exceptions

With a few exceptions, the exemptions from the ELD requirement are the same as the federal Commercial Vehicle Drivers Hours of Service Regulations.

In theory, the obligation to equip a heavy vehicle with an ELD applies to all operators unless they qualify under one of the following exemptions: • Local traffic within a 160 km radius, with daily return to the home port for eight consecutive hours of rest. This exception must be respected at all times; • Vehicles with a model year prior to 2000; • Lease of no more than 30 days duration, which is not an extended or renewed lease of the same vehicle; * Partner, Cain Lamarre LLP

• Vehicle without load on delivery: a) at the vehicle owner’s home terminal following a transfer of ownership (and within 5 days of this transfer); b) to the vehicle lessor; c) to the lease owner during the term of the lease or at its expiry; or d) to a branch of a car rental company for an inventory adjustment.

• Unloaded vehicle on the move or on delivery during or at the end of the manufacturing process.

Definitions

First of all, the term “record of daily status” replaces “daily log”. This term therefore includes both the record of daily status in paper or in electronic format, depending on the case.

Secondly, the term “malfunction” is defined as “any event which results in the automatic recording, in an ELD, of a malfunction code appearing in the Technical Standard”. In the event of such malfunction, the driver must inform the operator as soon as they are parked and must complete a paper record of duty. The ELD must be repaired or replaced within 14 days, or, at the latest, when the driver returns to his home port. In addition, a register of the failure codes of the last six months must be maintained.

Finally, the last important change concerns the “hours of service”. The legislator specified that the waiting time “before” several tasks is now included in the definition, notably, but not exclusively, waiting “before and during” the loading or unloading of a heavy vehicle.

In addition, two new activities have been added to the definition, namely

maneuvering a heavy vehicle off a public road at a station, depot or port, and resting on board a heavy vehicle or occupying it for another purpose, unless such resting qualifies as “hours of rest” within the meaning of the regulation.

Special Obligations

In addition to the obligations described above, there are a number of other obligations that must be met.

The operator must provide the driver with a kit containing a user manual, an ELD system instruction sheet, a malfunction instruction sheet and at least 15 activity reports in paper format. Although the regulation does not specify the format of the kit, it is good practice to keep these documents in paper form in the vehicle to avoid a notice of offence in the event of computer problems.

The legislator has also extended the list of information that the operator must keep for a period of 6 months as “supporting documents”, including, among other things, electronic records of communications between a driver and an operator, the payroll register, documents relating to the loading of the heavy vehicle, the itinerary, the schedule, documents relating to the maintenance, repair, refuelling, inspection or rental of the heavy vehicle, and so on.

In the event of an inspection by a peace officer, a driver must be able to produce his or her activity reports for the last 14 days, along with supporting documents for the current trip, by means of a preview screen, printout or e-mail.

Finally, beyond the regulations, certain best practices are still relevant in terms of training, auditing hours and managing unassigned hours.

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CTLA Feature Articles and Case Notes Surprise, Surprise: New Definition for Daily Rest

You will find here below a comparison of section 13 of the Regulation in force as at the writing of this article with the former version: Prior to the Regulation’s modifications 13. An operator shall ensure that a driver takes and the driver shall take at least 10 hours of rest in a day.

Since April 30th, 2023 13. An operator shall ensure that a driver takes and the driver shall have taken at least 10 hours of rest during each of the 14 days prior to driving a heavy vehicle.

With this modification imposing a monitoring for “each of the 14 days prior the drive”, Quebec has taken a strong position that a driver must stop driving for 14 days if he does not take at least 10 hours of rest on a given day if he wants to avoid

any penalties, which, for the industry, is complete nonsense.

The solution for a carrier in that position would be to use the “Deferral of Daily Rest”, which consists of the driver deferring a maximum of 2 daily hours of rest to the following day if the driver does the following: (1 the driver is not splitting daily hours of rest in accordance with section 16 or 17; (2) the hours of rest deferred are not part of the mandatory 8 consecutive hours of rest; (3) the hours of rest deferred are added to the 8 consecutive daily hours of rest taken in the second day; (4) the total of the hours of rest taken in the 2 days is at least 20 hours; (5) the total of the hours of driving in the 2 days does not exceed 26 hours; (5.1) the hours of driving in a day do not exceed 15 hours; and

(6) the driver indicates in the record of duty status that the driver is deferring hours of rest under this section and whether the driver is driving under day one or day 2 of the deferral period.

Thus, over the two-hour window, the driver would be in violation.

At the time of writing, many professionals and carriers in the Quebec transportation industry are in disbelief following these recent modifications. It is hard to believe that the Quebec government wanted to deprive a driver of his salary for two weeks in cases where the 10 hours of daily rest is not strictly followed. One could say that it is cruel and unusual punishment for a driver, but we will need to wait to see whether the courts will have to address this issue.

Final word

Yes, finally, Quebec’s ELD rules have come into force! While we are ending a chapter, it feels like some pages got stuck together, so we still have work on the table to clarify the story.

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Membership Section

In Memoriam MARÍA ARCELIA IZQUIERDO JORDAN 1955-2023

_____________________________________________________________ It is with heavy hearts that the TLA shares the sad news of the passing of Arcie Jordan on September 7, 2023. Arcie left this world peacefully in the comfort of her own home.

Arcie touched the lives of so many with her kindness, warmth, and unwavering love. Her presence could light up even the darkest days, and her wisdom was a guiding light in the lives of many. She was not only a wonderful mother to Jeffery and Kevin and a loving wife to her husband, Craig, but also an incredible friend to many. Her memory will forever live on in the hearts of all who were fortunate enough to know her.

Arcie was born in Mexico City, Mexico on a March 11, 1955. She was a meticulous and dedicated attorney, graduating from the University of Texas Law School in 1979. With an unwavering commitment to providing exceptional work and counsel throughout her 40+ years as an attorney, Arcie was one of the core members working on the cross-border transportation issues with the U.S. and Mexico. As noted by one TLA member, she was “always active and busy as a bee.”

Arcie was also a generous soul, and a long-time supporter of Girlstart. She was passionate about their mission to empower girls in Science, Technology, Engineering and Math (STEM). Arcie served on the Girlstart board from 2011-2017. Arcie’s family has coordinated with Girlstart, as her chosen charity, to accept contributions in her memory. Anyone who wishes to contribute to a mission so dear to Arcie may do so here: https://give.girlstart.org/give/516953/#!/donation/checkout.

Together, we will honor Arcie's legacy and keep her spirit alive in our hearts. Rest in eternal peace, Arcie. You will forever be missed, never forgotten, and always loved.

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TLA

T h e T r a n s p o r tat i o n L a w y e r

Membership Section

Application for Membership

Please print or type the following information:

1.

Name of Applicant

Last

First

Middle Initial

Spouse’s name ________________________________________ Spouse’s Email 2.

Company/Firm Name Title/Position

(If no title or position, please indicate if sole proprietor, or associate or member of law firm.)

Office Address

Street

City

Office Telephone

State or Province

Country

Zip Code

Country

Zip Code

Website Address

Email 3.

Secretary’s name ______________________________________________ Email

4.

Home Information

5.

Home Telephone I received the following academic degrees: Degree School

Date _____________

Degree

Date _____________

6.

Street

City

State or Province

School

State(s)/Province(s) to which I am admitted:  Yes  No -I am member in good standing of the bar of my current residence. (Please attach a certificate of good standing)

7.

I am involved in the following areas of transportation law:

8.

9.

Who may we thank for referring you to TLA: Member Type:  Active Member ......................................................................................................................... $350  Corporate Counsel Active Member* ......................................................................................... $250  Active Member and First-time Member of Canadian Transport Lawyers Association............... $475  Law Professor ................................................................................................... $100  Government/Judicial Member .................................................................................................... $150  Student Member. .......................................................................................................................... $50 *In order to be part of this committee you must be a corporate counsel member

Please enclose payment with application form.  Check enclosed (please make checks payable to TLA in U.S. Currency)  MasterCard  VISA  Discover  American Express

10.

Amount $

Card No.

Exp. Date________________ CVV_________________

Name as it appears on card

Signature_______________________________________

I hereby make the following representations:  Yes  No - By submitting this application, I verify that I, as required by the TLA’s Bylaws, am a licensed lawyer who is engaged in any field or phase of transportation law which involves representing and/or assisting providers and/or commercial users of logistics and transportation services, and do not hold myself out as one who regularly engages in the prosecution of plaintiff’s personal injury claims against providers of logistics and transportation services.

(If an explanation is suggested by your response to this inquiry, please provide on a separate sheet.)

Signature of Applicant Please send to:

Date

Transportation Lawyers Association 111 West Jackson Blvd., Suite 1412 Chicago, IL 60604 913-222.8652 • Fax: 913-222-8606 • TLA-info@kellencompany.com • www.translaw.org

[NOTES:  Submission and acceptance of this membership application authorizes the TLA Executive Office the right and privilege to email you as a member.  TLA does not sell or distribute in any other manner its member email address list.  TLA does not invoice for services, including membership and event registration.

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Membership Section

TLA Committees Application Form

Please indicate your choices for committee assignments on the following committees:

PRACTICE DIVISION Subject Area Committees

 Alternative Dispute Resolution  Antitrust and Unfair Trade Practices  Brokerage, Logistics and E-Commerce  Casualty Litigation  Commercial a nd Business Litigation and Bankruptcy and Creditors’ Rights

 Federal Regulations  Freight Claims  International Trade and Transportation  Labor and Human Resources

MEMBERSHIP AND ADMINISTRATIVE DIVISION

 Constitution and Bylaws  Corporate Counsel  Diversity, Equity and Inclusion  Memorials/History  New and Young Lawyers  Recruitment and Member Services  Student Scholarship Committee  Technology/Social Media

Modal Committees

 Admiralty and Maritime  Aviation  Motor Carrier  Rail

If you have any questions about membership or member services, please contact the TLA Executive Office at (913) 222-8652 or the Chair of the Committee on Recruitment and Member Services, Fritz Damm, at (313) 237-7400.

Please print or type the following information: Name: Company: Address: City/State/Zip: Telephone: Fax: Email: Please send to:

Transportation Lawyers Association 111 West Jackson Blvd., Suite 1412 Chicago, IL 60604 913-222.8652 • Fax: 913-222-8606 • TLA-info@kellencompany.com • www.translaw.org August 2023

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Transportation Lawyers Association • Canadian Transport Lawyers Association • December 2023, Vol. 25, No. 3

T h e T r a n s p o r tat i o n L a w y e r

Membership Section

MEMBERSHIP APPLICATION Contact Information/Coordonnées Name of Applicant Nom du requérant Date of Birth Date de naissance Company or Law Firm & Street Address Société ou cabinet et adresse civique City, Prov, Postal Code Ville, prov. ou état, code postal Work Phone No. de telephone d’affaires Email Address Courriel

Membership Category/ Catégorie de membre _____________________________________________________________________________________ Private Sector Lawyer (Canadian Resident) Non-resident Lawyer Government/ Public Sector Lawyer Young Lawyer (in practice 5 years or less) In-house Counsel Law Student or Articling Student

$265 _____ $265 _____ $265 _____ $175 _____ $175 _____ $120 _____

Professional Status / Statut professionel In the year _______, I was admitted to practice as a Barrister and Solicitor or Attorney-at-Law by the Bar or Law Society of ___________________________, and I remain a member in good standing. I am engaged in and/or interested in transportation law, regulatory policy and procedure.

En l’an ________, j’ai ete admis pour pratiquer comme avocat(e) par le Barreau de ______________________, et je suis un member en regle. Je suis implique et/ou m’interesse au droit du transport ainsi qu'aux politiques et procédures réglementaires.

JOIN ONLINE AT https://ctla.ca/join Payment Details/Paiement _____________________________________________________________________________________ ___ VISA ___MC

___Amex

____CHEQUE make payable to / A l’ordre de la CANADIAN TRANSPORT LAWYERS ASSOCIATION

Cardholder Name: __________________________________________________ Card Number: ________________________________________ Expiry Date: ____________________________ CSV Number (3 or 4 digits): __________________________ Signed: ________________________________________________ Date:_____________________ Please deliver completed application form with payment to: CANADIAN TRANSPORT LAWYERS ASSOCIATION

c/o Pui Hong, Treasurer Trimac Transportation 700-II, 326 - 11 Avenue S.W., Calgary, AB T2R 0C5 Tel: (403) 298-5140 Email: phong@trimac.com

Transportation Lawyers Association • Canadian Transport Lawyers Association • December 2023, Vol. 25, No.3

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Calendar

Save The Date!

Please see the Upcoming Events and CLE section of the TLA website at www.translaw.org for the latest information on these events.

2024

January

18–19 Chicago Regional Seminar and Bootcamp Chicago, IL

May

1–4 TLA Annual Conference & CTLA Midyear Meeting Río Grande, Puerto Rico

2025

January

23–24 Chicago Regional Seminar and Bootcamp Chicago, IL

April

30– TLA Annual Conference & May 3 CTLA Midyear Meeting Rancho Mirage, CA

November

8 Transportation Law Institute Pittsburgh, PA

60 Transportation Lawyers Association • Canadian Transport Lawyers Association • December 2023, Vol. 25, No. 3

T h e T r a n s p o r tat i o n L a w y e r

TLA

*

Edward S. Brashears** Perry R. Moore** * James W. Wrape** * Franklin J. Van Osdel** * August W. Heckman** War Years * Carll V. Kretsinger * Harris J. Klein * Truman A. Stockton Jr. * Glenn W. Stephens** * Harold G. Hernly * Donald A. Morken * Lee Reeder * Marion F. Jones** * Regan Sayers * S. Harrison Kahn** * Franklin R. Overmyer** * Louis Tarlowski** * Louis E. Smith** * Robert E. Powell * Jack B. Josselson** * George S. Dixon** * Wentworth E. Griffin * Howell Ellis** * Edwin C. Reminger * Ewell H. Muse Jr. * Phineas Stevens * Beverley S. Simms * John L. Bruemmer * John E. Jandera * Leroy Hallman * Walter H. Bieneman * Alvin J. Meiklejohn * James W. Hagar * William J. Lippman * Thomas E. James * Bertram S. Silver John A. Vuono * Charles Ephraim * James C. Hardman * Robert D. Schuler * James M. Doherty * John S. Fessenden

1937–1938 1938–1939 1939–1940 1940–1941 1941–1942 1942–1944 1944–1946 1946–1947 1947–1948 1948–1949 1949–1951 1951–1952 1952–1953 1953–1954 1954–1955 1955–1956 1956–1957 1957–1958 1958–1959 1959–1960 1960–1961 1961–1962 1962–1963 1963–1964 1964–1965 1965–1966 1966–1967 1967–1968 1968–1969 1969–1970 1970–1971 1971–1972 1972–1973 1973–1974 1974–1975 1975–1976 1976–1977 1977–1978 1978–1979 1979–1980 1980–1981 1981–1982 1982–1983

*

**

Charter Members

*

Deceased

Association Business

Past Presidents *

Harold D. Miller Jr. 1983–1984 Wilmer B. Hill 1984–1985 * Frank W. Taylor Jr. 1985–1986 * A. Charles Tell 1986–1987 Richard H. Champlin 1987–1988 Michael J. Ogborn 1988–1989 Kim D. Mann 1989–1990 Richard P. Kissinger 1990–1991 * David R. Parker 1991–1992 Mark J. Andrews 1992–1993 * Edward J. Kiley 1993–1994 * Alex M. Lewandowski 1994–1995 William D. Taylor 1995–1996 * David B. Schneider 1996–1997 * James F. Flint 1997–1998 Ann M. Pougiales 1998–1999 * W. Robert Alderson 1999–2000 Kenneth R. Hoffman 2000–2001 Fritz R. Damm 2001–2002 Robert E. McFarland 2002–2003 Catherine A. Pawluch 2003–2004 Kathleen C. Jeffries 2004–2005 Brian J. Smith 2005–2006 Greg E. Summy 2006–2007 Donald J. Vogel 2007–2008 Eric L. Zalud 2008–2009 Gordon D. McAuley 2009–2010 Sam Hallman 2010–2011 Patrick K. McMonigle 2011–2012 M. Gordon Hearn 2012–2013 Dirk H. Beckwith 2013–2014 Marc S. Blubaugh 2014–2015 Richard A. Westley 2015–2016 Steven B. Novy 2016–2017 Frank C. Botta 2017–2018 Hillary Arrow Booth 2018–2019 Jeffrey R. Simmons 2019-2020 John F. Wilcox, Jr. 2020-2021 Steven M. Canty 2021-2022 Christoper M. Kelly 2022-2023 (*Francis E. Barrett Sr., Honorary) (Leonard R. Kofkin, Honorary) *

CTLA *

C. Douglas MacLeod Gilles J. Belanger * Joseph W. Kanuka Peter G. Green * Hugh G. Morris Jacques Dufresne Dean Saul * Roderick W. Macdonald * François Rouette * Thomas J. Duckworth * David W. Gruchy Robert B. Warren Jocelyn H. LeClerc Robert T. Gabor Michael J. O’Hara Catherine A. Pawluch David F. Blair Mel F. Belich R. Wayne Myles * Douglas C. McTavish Jean G. Bertrand Tobin S. Robbins Steven G. Zatzman Joanne C. Coldwell Louise Baillargeon Alex G. MacWilliam Joan F. Myles Rui M. Fernandes Jean E. Clerk Geoffrey L. Spencer Louis Amato-Gauci Douglas I. Evanchuk Daniel P. Ryall Kim E. Stoll Stéphane Lamarre Marc D. Isaacs Roger Watts Sanj Sood * Myer Rabin Pierre-Olivier Ménard Dumas Israel Ludwig Heather C. Devine Jean-Francois Bilodeau Carole McAfee Wallace Robin Squires *

*

1978–1979 1979–1980 1980–1981 1981–1982 1982–1983 1983–1984 1984–1985 1985–1986 1986–1987 1987–1988 1988–1989 1989–1990 1990–1991 1991–1992 1992–1993 1993–1994 1994–1995 1995–1996 1996–1997 1997–1998 1998–1999 1999–2000 2000–2001 2001–2002 2002–2003 2003–2004 2004–2005 2005–2006 2006–2007 2007–2008 2008–2009 2009–2010 2010–2011 2011–2012 2012–2013 2013–2014 2014–2015 2015–2016 2016–2017 2017–2018 2018–2019 2019-2020 2020-2021 2021-2022 2022-2023

Deceased

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 111 West Jackson Blvd., Suite 1412 Chicago IL 60604  (913) 222-8652  (913) 222-8606  TLA-info@kellencompany.com  Connect with TLA on LinkedIn