Authority to operate is what matters

Settlement confirms that FMCSA – not its data – decides

I have read the press release concerning alerts in the Safety Measurement System database, and I have been in conversations concerning whether satisfactory safety ratings should trump all other information, including both the Behavior Analysis and Safety Improvement Categories or the former Safety Evaluation Areas. Is there any stale date on satisfactory safety ratings? Would a satisfactory safety rating from 10 to 20 years ago still be evidence that the Federal Motor Carrier Safety Administration considers the trucker safe and fit? As we all know, truckers change employees often, and different managers look at safety either as important or not.

Safety ratings do not become stale. Plaintiff’s bar, in an effort to chase after deep pockets, has recognized a satisfactory rating as a bar to suing shippers but has pursued shippers using unrated carriers. In this context, one of the important things accomplished by the recent settlement with FMCSA over public release of SMS rankings and alerts was confirmation that the agency certifies carriers as safe to operate and that only carriers deemed unsatisfactory or placed out of service are not fit to operate on the nation’s roadways.

Henry Seaton -- info@transportationlaw.netHenry Seaton -- [email protected]

The reason the suit was brought was to disabuse shippers and brokers of the fear that the Compliance Safety Accountability (CSA) program data was intended for their use in credentialing carriers or somehow was required to escape possible vicarious liability. The case law that so troubles shippers and brokers was in some cases the result of the spurious argument that an unrated carrier was in some sense not fully licensed to operate. As a result of this misconception, many shippers and brokers thought that carriers with a satisfactory rating were in some sense approved, while unrated carriers are not. Nothing could be further from the truth.

In fact, under the current statutes in effect and cited in the agency’s settlement (49 C.F.R. 385), carriers without a safety rating have the equivalent of a satisfactory rating because under any of the agency’s monitoring or scheduling tools, they are within compliance and have not been selected for an audit. Thus, correctly seen, the issue is not whether satisfactory safety ratings should trump all other information, whether BASICs or SEAs.

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What the settlement accomplished was to determine that BASICs or SEAs do not establish some standard for shipper or broker use that should trump the agency’s ultimate safety rating. An important key is the fact that the settlement confirms that an unrated carrier – like a carrier with a satisfactory safety rating, issued 20 years ago or just last month – is authorized for use.

In the settlement, FMCSA confirmed that under existing law, the agency determines who is authorized to conduct operations over the nation’s highways. As a major broker, you are charged by regulations with using authorized motor carriers – nothing more, nothing less. (49 C.F.R. 371)

My traditional advice to broker clients has been to hold out to arrange for transportation using carriers who are licensed, authorized and insured and which enjoy a safety rating of satisfactory or equivalent issued by FMCSA. That remains the federal standard. The settlement in NASTC et al. v. FMCSA makes clear that publication of SMS methodology, which has not even been approved for the agency’s own use, has not changed the law or required brokers to require contractually or hold out to provide a different carrier credentialing standard.

Finally, in an important and thorough 35-page document entitled

“Carrier Selection Framework,” the Transportation Intermediaries Association released its recommendations for carrier selection on April 8. Therein, it refers to the negotiated disclaimer language and recommends best practices, which includes reliance upon the agency’s ultimate determination under Section 385, eschewing any use of SMS methodology. Taken together, the disclaimer and the TIA’s selection document should end the misconception decisively that CSA/SMS methodology is intended as fit for use in the carrier selection process by shippers and brokers.

Nearly 240 carriers sued for infringing patent

Tracking system vendors fighting suit

The apparent owner of a patent issued in 1993 for a Global Positioning System-based vehicle tracking and security system has sued nearly 240 trucking companies, private fleets and logistics providers for patent infringement in nine separate federal courts across the country. The lawsuits, filed by Hewitt, Texas-based PJC Logistics LLC over almost two weeks beginning March 16, charge that each carrier uses or directs others to use electronic position-based fleet management and tracking systems in its fleet of vehicles that infringe on the patent.

Although PJC Logistics chose to sue the carriers using the tracking technology rather than the suppliers of the technology, the suppliers are taking the lead in fighting the litigation. In separate but similar complaints, four mobile communications companies – Qualcomm, PeopleNet, Xata and DriverTech – asked the U.S. District Court in Minnesota to declare the patent invalid on various grounds.

There is little on the public record about PJC Logistics. However, the address listed in the complaints is the same as PJC Properties, whose president is Patrick J. Curry. Curry was an officer of Waco, Texas-based Central Freight Lines from 1997 to 2003, holding several positions. PJC’s holdings include a small trucking company, Austin, Texas-based Cen-Tex Freight Lines, and WalkAbout Transportation, a warehousing and logistics firm also based in Austin.

The U.S. Patent and Trademark Office issued the patent to John P. Mansell and William M. Riley, both of Dallas, on June 29, 1993. Mansell had formed a corporation, Auto-Trac, to develop the concept, but he died a few months before the patent was granted. His widow, Reba Mansell, later sold the company to E-Systems – eventually bought by Raytheon – in a deal that called for royalties of 4 percent of revenues to be paid to Mansell for 10 years. In 2003, Mansell won a $6.8 million jury verdict against Raytheon for failure to pay the required royalties on sales of the automated vehicle location system based on her husband’s invention.

The jury also ruled that Raytheon violated its contract with Reba Mansell by selling the business to Orbital Sciences Corp. without her consent. It was not immediately clear how PJC Logistics came to own the patent.