Warehouse Claims-How to Respond, Defend, Settle

Upon receiving a claim from a customer, a warehouse should first notify its insurer. It is imperative to satisfy the policy’s timely notice requirement should coverage be available. The warehouse should assess the claim, including the type of damages sought, and confirm the depositor has provided proper notice of claim by adequately identifying the goods or shipments involved. If the claim was not presented in a timely fashion, the terms of the contract or warehouse receipt may prohibit recovery. Next, the warehouse should determine if the contract provides for a limitation of damages. If the amount sought exceeds the damage limit, the warehouse may have a basis for enforcing this limit. Also, an assessment must be made of whether the claim seeks consequential damages (e.g., lost profits, investigative costs, chargebacks) that may not be recoverable under the contract. Finally, when agreeing to pay a claim, especially when the warehouse has used reasonable care in storing and handling the goods, it is critical to have the customer sign a release acknowledging the specifics of the claim and protecting the warehouse from subsequent estoppel arguments regarding waiver of the reasonable care standard.

Ohio Commercial Activity Tax Audits on the Rise

Operating interstate motor vehicles in and through a jurisdiction where the carrier does not maintain an office, terminal or resident employee may create a state tax filing obligation. There is an increase in Ohio Commercial Activity Tax (CAT) audit activity involving interstate motor carriers with some presence in the state. For example, having owned or leased property in Ohio for more than 13 days during a calendar year, e.g. a truck, can establish CAT nexus. Once a nexus exists, a filing and payment obligation arises if a sufficient amount of the carrier’s transportation revenue is sourced to Ohio under an apportioned mileage formula.

Graves Amendment Shields Lessor From Liability

Owners of intermodal containers and chassis recently received protection from the Graves Amendment (49 U.S.C. § 30106) in a New York appellate case. In Eisenberg v. Cope Bestway Exp., Inc., the court held that the intermodal chassis lessor was not liable for the Plaintiff’s injuries. In reaching this decision, the court determined the lessor was a bona fide commercial lessor of motor vehicles, a chassis qualifies as a motor vehicle under the Graves Amendment, and there was no allegation that the accident was the result of any negligence on the lessor’s part. The plaintiffs’ bar continues to pursue equipment owners in injury litigation as an additional source of liability and damage recovery. The Graves Amendment continues to be a vital defense against such attacks.

First circuit Deals Blow to Hair-Testing

On December 28, 2016, the United States Court of Appeals for the First Circuit dealt a setback to the Boston Police Department’s hair-testing program used to assess an individual’s prior use of banned drugs. Jones v. City of Boston, No. 15-2015 (1st Cir. 2016). The decision may impact the potential use of hair testing programs in the trucking industry in lieu of currently prescribed pre-employment urine-testing.

This is the second time the case has been before the First Circuit. In its earlier opinion, the court held that hair testing had a statistically significant disparate impact on African-American police officers and remanded to the district court to determine whether 1) hair testing was job-related and consistent with business necessity and 2) whether the employer refused to adopt reasonable alternative means that had less of a disparate impact. In this decision, the court held that a jury could reasonably find that hair testing was job-related and consistent with business necessity (thus affirming the district court on that point), but the court also concluded that a jury could find the police department refused to extend an alternative with less disparate impact as required to avoid liability for discrimination. The opinion focused on the alternative approach of administering a urinalysis for officers that tested positive with the hair test.

Some carriers are utilizing hair testing in addition to DOT-mandated urine testing because hair testing has a longer detection window and screens out more users. However, carriers taking employment actions based on hair testing results alone should reconsider in light of the First Circuit decision.