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LAW OFFICES OF SEATON & HUSK, LP 2240 GALLOWS ROAD, VIENNA, VA 22182 www.transportationlaw.net The Law Office of Seaton
& Husk, L.P. is a commercial litigation firm specializing in the collection
of freight charges, cargo loss and damage claims, bankruptcy and related
litigation. The firm also maintains a concentration in the formation and
review of logistics contracts. Attention is placed on serving the trucking
industry in both federal and state licensing and regulatory compliance. This newsletter is provided
free of charge to our clients and patrons. It will contain topical articles
of interest, including reprints of "Sound Law," a monthly column authored
by Henry Seaton and appearing in Commercial Carrier Journal (previously
Trucking Co. Magazine).
In this Issue: Closing A Loophole:
Do You Have a Bill of Lading? "Do You Have a Bill
of Lading" reprinted from June 2002 CCJ Worldpoint Logistics
Bar Date Established Transportation Contracting
Booklet: Release Scheduled for Summer 2002
Fall Credit and
Collection Seminars Announced
CLOSING A LOOPHOLE Do You
Have a Bill of Lading?
Below is an article which appeared in the June 2002 issue of
the Commercial Carrier Journal.
It points out a train wreck which could easily happen to any truckload carrier
or shipper and logistics company who uses a truckload carrier. It has long
been assumed that general rules of transportation law include concepts such
as reasonable dispatch, salvage rules, uniform time limits for filing claims,
and litigating cargo losses, etc. In fact, it now appears that Congress
has tinkered with motor carrier laws to deprive truckload shippers and carriers
of the general accepted rules of commerce unless appropriate and corrective
action is taken. As the article points out, rail carriers
have a statutory bill, and less than truckload carriers participate in
a tariff which permits them to utilize the uniform bill of lading. With
few exceptions, truckload carriers do not belong to this tariff bureau
and my guess is they will never pay for the subscription fee in any large
numbers. This means that not only are truckload carriers precluded from
using the uniform bill, but shippers and logistics companies who refer
to the uniform bill in their standard contract cannot be confident they
will apply when a claim arises. The solution is simple. Our firm urges
its shipper, broker, and carrier clients to adopt and use the standard
truckload bill of lading which will close the loophole because it can
be used without tariff bureau participation. Bottled on the statutory
rail bill, the standard truckload bill of lading incorporates the general
rules of commerce which have traditionally been accepted. Delta Nu Alpha,
a fraternity for transportation professionals, is hosting the standard
truckload bill of lading on its web site, www.deltanualpha.org, but each
of you are free to download the document from our firm's web site (www.transportationlaw.net)
and to incorporate it by reference into your contracts and rules circulars. It is our recommendation that you expressly
provide by contract and by rules circular that the terms and conditions
of the standard truckload bill of lading shall apply to all transportation
provided and that nonconforming shipping documents are executed by drivers
or shipping supervisors as evidence of receipt of goods only. In order to keep our clients apprised
of special developments concerning the standard truckload bill of lading
and its use, we would appreciate an acknowledgment from those of you who
implement use of this document. We have made arrangements for the STBOL to be reproduced in multiple sets for carriers to purchase and use.
Do You Have a Bill of Lading? A--It appears your company has learned a lesson the hard way. Truckload carriers need to incorporate standard terms of the bill of lading into their rules and contracts. A standard bill of lading is prescribed by regulation for rail carriers, and its terms and conditions have established the general rules of commerce that have been used in the trucking industry since the early 1900s. These general rules of commerce include important concepts such as reasonable dispatch, a definition of cargo liability, consignor and consignee liability for freight charges and salvage rules. Included are rules requiring the filing of written claims within 9 months and the institution of suit within 2 years after declination. The regulations applicable to motor carriers do not specify terms, however, they only state that a motor carrier must allow at least nine months for the filing of a claim and at least 2 years for bringing civil action if a claim is denied. If a carrier wants to bar lawsuits filed after 2 years, it must do so through some type of notice or agreement. The regulations offer no help. Less-than-truckload carriers are virtually all members of a tariff bureau known as the National Motor Freight Traffic Association, which sponsors a uniform bill of lading that includes these important provisions. In 1995, Congress modified the transportation statutes to state that carriers that are not members of rate bureaus cannot use the provisions of their classifications and tariffs. Very few truckload carriers are members of the NMFTA, so the argument is made that they cannot rely upon the NMFTA bill of lading without joining the bureau and paying the annual subscription dues. Moreover, shippers increasingly are tendering traffic on their own bills of lading that do not include the general rules of commerce found on the back side of the rail or NMFTA bill. Every truckload carrier must address this issue to avoid the type of predicament you face. If truckload carriers do not wish to join NMFTA and pay its annual dues, they can get the same benefits of the general rules of commerce and the claims filing deadlines available to LTL carriers by adopting applicable portions of the regulatory language applicable to rail and water. Using the front side of a bill of lading format proposed for use by shippers and the general rules and language of the regulations, I have prepared and edited a ""Standard Truckload Bill of Lading,"" which any carrier is free to use. Small carriers should get the standard terms of the back side of this bill incorporated into their rules circulars and tariffs and specify that their drivers sign nonconforming bills of lading as evidence of receipt of goods only.
WORLDPOINT
LOGISTICS BAR
DATE ESTABLISHED The bankruptcy court has established
July 26, 2002 as the bar date for filing Proofs of Claim. This bankruptcy
proceeding will no doubt be a landmark case. For the first time in modern
history, the major railroads, trucking companies and draymen, have all
united to fight the efforts of Worldpoint's secured creditor, Deutsche
Bank, who claims that it and not a carrier, should get the accounts receivable
entrusted by the shippers to the Court for discharge of their payment
obligations. It appears clear that Worldpoint could
have been sold to one of several suitors and carriers would have been
paid in full. Instead, Deutsche Bank had Arthur Anderson perform a liquidation
analysis and decided to "flush the trade," a banker's term for seizing
a debtor's receivables and leaving the general unsecured creditors high
and dry. The carrier's argument is that Worldpoint (composed of USSI and Riss) was merely an intermediary and received the payment of freight charges in trust to the extent the funds were due and owing to carriers and that the assets the Bank wants to seize are property of the carriers, not the estate. All too frequently, intermediaries like Worldpoint attempt to use freight charge receivables to borrow money for otherwise risky investments which then turn bad. It is high time for sophisticated lenders like Deutsche Bank to recognize that only the intermediary's commission is subject to its security interest.
TRANSPORTATION CONTRACTING
BOOKLET In conjunction with Randall Publishing and CompuNet Credit Services, Inc., Henry Seaton has authored a booklet on transportation contracts for trucking executives. The book is expected for publication in late Summer 2002 and will include chapters on shipper and broker contracts, insurance policies, owner-operator contracts, rules circulars, bills of lading, and factoring agreements. Intended for the non-lawyer, this booklet is intended to provide a road map to contracting with special attention to troublesome issues such as overly broad indemnification clauses, special and consequential damages, unilateral rights of offset, insurance policy exclusions, credit and collections, etc. Compunet subscribers will receive a copy of this publication free of charge. If you are not a Compunet member and would like to receive it, please notify us.
FALL CREDIT AND COLLECTION SEMINARS ANNOUNCED!
Hank Seaton and Frank Agnos will be speaking at a series of Fall Seminars entitled "Credit and Collection Procedures for the Trucking Industry." Sponsored by CompuNet Credit Services and Transportation Revenue Management, these seminars will include a discussion of proactive ways to prevent bad debt, preserve recourse, and recoup otherwise lost revenue. Seminars are scheduled as follows: Jacksonville, FL October 9, 2002 Houston, TX October 10, 2002 Omaha, NE November 6, 2002 Los Angeles, CA November 7, 2002 If you are interested in more information, please contact us by return email or go to www.trmcollect.net.
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