Dead men serving

Make sure your process agents are still on the job


We are a small carrier that for years has paid an annual fee for process agents. We have been solicited by companies that offer to provide the service for a one-time fee. We have been directed to you by our current agency for an answer.

I have real concerns about resident agent services that purport to represent motor carriers forever for a one-time fee, although I must disclose that I have a financial interest in the resident agent program that referred you to me. It uses only trained motor carrier lawyers as resident agents in each state, and keeps its list of agents and their current addresses up to date with the Federal Motor Carrier Safety Administration. Agents frequently move or retire, and absent a continuing relationship between the resident agent company and the motor carrier, as well as between the company and its agents, there is no assurance that the company will remain in business or that its agents will be available in perpetuity to receive lawsuits upon you.

The resident agent requirement is serious business. Along with insurance, it is one of two filing requirements necessary to keep your authority. I am aware of numerous instances in which court papers have been served on agents and judgments have been taken against carriers that could not be set aside, either because the carrier appointed a nonlawyer agent as its representative or because the agent on which service was perfected had resigned or was dead or otherwise no longer available.

I have reviewed the list of agents of a number of the one-time fee providers. In some cases, their list of agents has not been modified in years, and I recognize the names of some now-deceased motor carrier lawyers whom they still show as serving. I believe you get what you pay for.

One final caveat is necessary. Many of the one-time-fee operations do not tell you that you should not use their list of agents for state law compliance. Appointing an agent for purposes of complying with state Secretary of State requirements is something you need to update yearly.

If you paid a fee 10 years ago and now used the list provided to you to file with the Secretaries of State where required, how many of those guys do you think are still around? Even with the annual fee, a provider’s compliance with individual state foreign corporation registration requirements is something that should be done only with special authorization and approval. Under both the federal and state systems, they will be your agents, and service on them is the same as service on you at your corporate office until they are replaced.

For the small fees involved, it makes sense to get a resident agent service that keeps an updated list of attorneys in every state that can meet the federal agent requirements and even answer your related federal transportation law questions with competence if you get sued or the need otherwise arises.

– Henry Seaton is a transportation lawyer who represents carriers.


FedEx wins independent contractor case

FedEx Home Delivery, a division of FedEx Ground Package System, scored a major legal victory when a three-judge panel of the U.S. Court of Appeals for the District of Columbia declared that certain drivers are independent contractors and that FedEx, therefore, did not commit an unfair labor practice by refusing to bargain with a union certified as their collective bargaining representative.

The Teamsters union had won elections in 2006 at two terminals in Wilmington, Mass., but FedEx refused to bargain with the union on the grounds that its single-route drivers are not employees within the meaning of the National Labor Relations Act. The National Labor Relations Board disagreed and ruled that FedEx had violated the law by refusing to bargain.

The appeals court found a number of examples of “entrepreneurial opportunity” – the principal standard it uses for distinguishing between employees and independent contractors – in the operating agreement. In addition to an explicit declaration that the contractor is not an employee, the agreement states that FedEx may not prescribe hours of work, whether or when the contractors take breaks, what routes they follow or other details of performance.

Contractors are not subject to discipline and must provide their own vehicles, subject to compliance with government regulations and other safety requirements, the court noted. And contractors are responsible for all costs associated with operating and maintaining vehicles. Contractors may use the vehicles for other commercial or personal purposes provided they remove or mask FedEx Home logos and markings, the court said, nothing that at least one contractor used his truck as a delivery vehicle for a separate business.

Also, under the operating agreement, contractors can assign their contractual rights to their routes without FedEx’s permission. “The logical result is they can sell, trade, give, or even bequeath their routes, an unusual feature for an employer-employee relationship,” the appeals court said. FedEx has no involvement in that decision other than insisting that the new route owner be “qualified,” meaning he must satisfy U.S. Department of Transportation regulations.

NLRB had found differences between FedEx’s business model and those where it had concluded that drivers were independent contractors. For example, FedEx contractors must wear a recognizable uniform and conform to grooming standards. Vehicles of particular color and within a specified size range are required. Drivers much complete a driving course or have a year of commercial driving experience, and the contractors must have a vehicle and driver available for deliveries Tuesday through Saturday, and FedEx can reconfigure routes if the contractor cannot provide adequate service.

The appeals court concluded, however, that “those distinctions, though not irrelevant, reflect differences in the type of service the contractors are providing rather than differences in the employment relationship. In other words, the distinctions are significant but not sufficient.”

FedEx Home’s business model is “somewhat unique” because the service is delivering small packages, mostly to residential customers, the appeals court said. Drivers are not delivering goods that FedEx sells or manufacturers, nor does FedEx move freight for a limited number of large clients. “Instead, it is an intermediary between a diffuse group of senders and a broadly diverse group of recipients. With this model comes certain customer demands, including safety.”

The court cited other case law establishing that incentives to ensure drivers’ performance meets company standards and that a willingness to share part of the risk for fuel price volatility are consistent with an independent contractor relationship.

“The ability to operate multiple routes, hire additional drivers (including drivers who substitute for the contractor) and helpers, and to sell routes without permission, as well as the parties’ intent expressed in the contract, augurs strongly in favor of independent contractor status,” the court concluded. And because indicators of an employment relationship are clearly outweighed by evidence of entrepreneurial opportunity, NLRB “cannot be said to have made a choice between two fairly conflicting views.”

Judge Janice Rogers Brown wrote the decision for herself and Senior Judge Stephen Williams. Judge Merrick Garland dissented. Among FedEx’s supporters in the case were the American Trucking Associations and the U.S. Chamber of Commerce.

The decision follows a verdict earlier this month by a jury in the Superior Court of the State of Washington for King County that affirmed that FedEx Ground single-work-area contractors operating in the state are independent business owners and not employees. The class-action suit, Anfinson vs. FedEx Ground Package System Inc., involved a class of 320 single-work-area contractors in Washington State who sought damages for nonpayment of overtime and reimbursement of uniform expenses.

-Avery Vise


In Brief
Hartford Fire Insurance Co. is not barred by bill-of-lading time limits in its efforts to recover about $3 million the insurance company had to pay a shipper under a theft policy due to fraud by two trucking executives, the U.S. Court of Appeals for the Eighth Circuit ruled in April. Inflated freight charges incurred under an alleged kickback scheme among affiliated carriers are not overcharges subject to a statute of limitations, the appeals court said in overturning a lower court decision.

Texas Oil and Gathering Inc., its owner John Kessel and operations manager Edgar Pettijohn pled guilty in federal court to conspiring to violate hazardous material laws by falsifying bills of lading and driver logs in disposing of wastewater at an unpermitted injection well in Rosharon, Texas, the U.S. Department of Transportation’s Inspector General’s Office reported.

XTRA Lease published the 2009 update of its Size & Weight Guide, which contains state-by-state listings of size and weight regulations as well as information on obtaining various types of trip permits. A free copy is available at www.xtralease.com.

J.J. Keller & Associates (www.jjkeller.com) revised its Hazardous Materials Compliance Pocketbook to include HM-215J and HM-224D, published as a combined final rule by the Pipeline and Hazardous Materials Safety Administration to maintain alignment with international standards.

A former driver for Whole Foods Market Group was convicted May 13 on five counts of false statements regarding his logbooks. The federal district court in Madison, Wis., is scheduled to sentence Michael Kozlowski on July 24 in a case that resulted from a fatal accident that killed five passengers on a bus carrying a high school band.