ON TRACK WITH RAILWAY CLAIM SERVICES, Inc.

Volume 14 Issue 1                                                                      January 2007

RAILWAY CLAIM SERVICES, INC.              Our 20th Year of Service

BACKGROUND CHECKS

WORDS TO REMEMBER WHEN SOMEONE TELLS YOU YOUR IDEA IS BAD

LIST OF “JUDICIAL HELLHOLES” STABILIZES IN 2006

FRA PROPOSES DOUBLING FINES TO OFFENDERS

WHEN INSULTS HAD CLASS

OVERRULED: CLAIM ADJUSTERS DENIED OVERTIME

THE 14TH ANNUAL RAILROAD LIABILITY SEMINAR

COLLECTIONS?

RAILWAY CLAIM SERVICES, INC. WEBSITE

MARGIN FOR ERROR

POINTS OF LEGAL INTEREST

RCSI INFORMATION

BACKGROUND CHECKS & 49 CFR PART 172

Railway Claim Services, Inc. (RCSI) can perform background checks for potential job applicants. RCSI can also check injury histories for employees. For further information contact Elizabeth Vineyard of RCSI at 731-967-1796, Fax 731-967-1390, or via email at evinyard@railway-claim-services.com.  

Background checks are required for new employees under the Haz Mat Security Plan implemented by CFR Part 172, Hazardous Materials: Security Requirements for Offerors and Transporters of Hazardous Materials. This rule states in part, “No later than the date of the first scheduled recurrent training after March 25, 2003, and in no case later than March 24, 2006, each hazmat employee must receive training that provides an awareness of security risks associated with hazardous materials transportation and methods designed to enhance transportation security”.

If your railroad has not yet implemented 49 CFR Part 172, Railway Claim Services can assist.

WORDS TO REMEMBER WHEN SOMEONE TELLS YOU YOUR IDEA IS BAD

"I think there is a world market for maybe five computers." Thomas Watson, chairman of IBM, 1943

"Who the hell wants to hear actors talk?" H. M. Warner, Warner Brothers, 1927

"We don't like their sound, and guitar music is on the way out." Decca Recording Company, Rejecting the Beatles, 1962

"Everything than can be invented has been invented." Charles H. Duell, Commissioner., U. S. Office of Patents, 1899

"This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us." Western Union internal memo, 1876

LIST OF “JUDICIAL HELLHOLES” STABILIZES IN 2006

Washington—The American Tort Reform Foundation’s annual list of so-called "judicial hellholes" held steady at six this year, according to the nonprofit Washington organization’s report released in Mid-December 2006.

The fifth annual report defines judicial hellholes as "places where judges systematically apply laws and court procedures in an unfair and unbalanced manner, generally against defendants in civil lawsuits."

All of the jurisdictions cited in the 2006 list were the same as 2005, although their order changed to reflect what the researchers considered to be deterioration or improvement in their respective legal climate.

This year’s list named West Virginia as the worst "judicial hellhole," followed by South Florida; the Rio Grande Valley and Gulf Coast of Texas; Cook County, Ill.; Madison County, Ill.; and St. Clair County, Ill.

"Overall, the type of extraordinary and blatant unfairness that sparked the Judicial Hellholes project and characterized the report over the past few years has decreased across the board," the report stated. "This improvement is a shared result of shining the spotlight on litigation abuse with this report and wise corrections by both the judicial and legislative branches of state governments. It may also indicate that litigation formerly concentrated in a single jurisdiction has dispersed across wider areas."

The chief executive officer of the Washington-based American Assn. for Justice, which represents the plaintiffs’ bar, dismissed the report as "propaganda" in a statement issued a day before the report’s issuance.

You can find the complete report on American Tort Reform Foundation’s website, www.atra.org. The link for the report is: http://www.atra.org/reports/hellholes/report.pdf . A link for the report is also posted on RCSI’s website www.railway-claim-services.com.

FRA PROPOSES DOUBLING FINES TO OFFENDERS

For the first time since 1988 the FRA is proposing to increase most fines for violations of its safety regulations. Most fines would double from current levels. Civil penalties would increase to a minimum of $1,500 and a maximum of $8,500 for violations that FRA deems likely to result in a safety incident. "Willful" violations would be subject to fines from $2,500 to $11,000. Fines for gross negligence including repeated violations would remain capped at $27,000. To review the proposal, click here. Comments may be submitted electronically at http://dms.dot.gov, using docket no. FRA-2006-25274.

WHEN INSULTS HAD CLASS

He has all the virtues I dislike and none of the vices I admire. Winston Churchill

He can compress the most words into the smallest idea of any man I know. Abraham Lincoln

He is not only dull himself, he is the cause of dullness in others. Samuel Johnson

He had delusions of adequacy. Walter Kerr

There's nothing wrong with you that reincarnation won't cure. Jack E. Leonard

He loves nature in spite of what it did to him. Forrest Tucker

He uses statistics as a drunken man uses lamp-posts... for support rather than illumination. Andrew Lang (1844-1912)

OVERRULED: CLAIM ADJUSTERS DENIED OVERTIME (Claims Magazine, 11-06-2006)

A recent ruling by a federal court states that claim adjusters are not eligible to receive overtime based upon the duties they perform as part of their daily routines. According to the Ninth U.S. Circuit Court of Appeals in San Francisco, “insurance adjusters generally meet the duties and requirements for an administrative exemption, whether they work for an insurance company or other type of company, if their duties include activities such as interviewing insureds , witnesses and physicians; inspecting property damage; reviewing factual information to prepare damage estimates; evaluating and making recommendations regarding coverage of claims; determining liability and total value of a claim; negotiating settlements; and making recommendations regarding litigation.” 

Essentially, the court ruled that since adjusters are not involved strictly in administrative matters while working for insurance companies, they do not qualify for overtime. “We hold today that all of the adjusters in this case are exempt,” read the court’s opinion. “The district court’s factual findings establish that, regardless of the type (personal injury v. property) or size (large v. small) of the claims they handle, the adjusters are required to: use discretion to determine whether the loss is covered, set reserves, decide who is to blame for the loss, and negotiate with the insured or his lawyer. If the Department of Labor should choose to distinguish between adjusters based on the type or value of the claims they handle, it is free to amend the regulations and tell employers how to do that. Unless and until that happens, we are obligated to follow [existing laws].”

The ruling overturned a previous decision made in 2003, which eventually led to a judgment award of $52.5 million for 1,700 employees at Farmers Insurance in early 2005. At the time, the award was the largest judgment in a case involving the Fair Labor Standards Act. It involved Farmers employees in Colorado, Illinois, Michigan, Minnesota, New Mexico, Oregon, and Washington. Since the ruling was made in a federal court, it does not reverse any decisions made at the state level, where exemption eligibility may be narrower. To read the complete judgment and opinion, please click here.

THE 14TH ANNUAL RAILROAD LIABILITY SEMINAR

It is not too early to mark your calendar for the 14th Annual, Railroad Liability Seminar to be held at The  Samoset Resort in  beautiful Rockport, Maine; June 26-29, 2007. You can make reservations by calling 800-341-1650.  This seminar is attended by claims managers from all railroads, regional and short line railroad staff, as well as legal and insurance company representatives. Over the years this seminar has proven beneficial to Accounting Managers, Insurance and Legal Departments, and Risk & Claims Managers to name a few. For more information please contact Norma J. Griffiths, Manager Claims, Montreal Maine & Atlantic Railway, Documentation & Reporting, Montreal, Maine & Atlantic Railway, Ltd., 15 Iron Road, Hermon, ME  04401, 207-848-4273-Phone, 207-848-4232-Fax, 207-745-8099-Cell.

COLLECTIONS?

Problems collecting for damages? Increase your chances of collecting that money, or reducing the total you are legally obligated to pay. All without the cost and delays where litigation is involved. Let Railway Claim Services, Inc. handle these collection issues for you. You pay nothing if RCSI fails to collect or fails to reduce the bill for the submitted loss. Email or call Randal Little or Dave Gardner for further information. There is no cost if we are not successful.

 

 RAILWAY CLAIM SERVICES, INC. WEBSITE

Railway Claim Services, Inc. maintains a website containing useful information for our industry. If you haven’t visited our website recently, you may have missed some of the content recently added.

The Code of Federal Regulations, TITLE 49—Transportation, Subtitle B--OTHER REGULATIONS RELATING TO TRANSPORTATION, CHAPTER II--FEDERAL RAILROAD ADMINISTRATION, DEPARTMENT OF TRANSPORTATION. Please visit our website and click on the following link. waycar.htm

Railway Claim Services’ website has the complete General Code of Operating Rules posted for your reference. safety_first.htm

RCSI also has the entire test of the FELA posted on our website: waycar.htm

Also, The Occupational Safety & Health Act of 1970 is available at: waycar.htm

As a part of our ongoing efforts to provide RCSI clients with information vital to the safe and efficient operation, RCSI’s website contains the complete text of the Emergency Response Guidebook: waycar.htm

RCSI is always trying to upgrade our website and make it a place for you to find the information you need. If you have any suggestions, comments, or questions, please feel free to contact me at your convenience. We appreciate your feedback.

MARGIN FOR ERROR (This editorial opinion is presented for your consideration and feedback. If you wish to respond in an open forum we will consider all responses.)

Many of our readers are involved in the operation and management of short line railroads, and in that role they/you are well aware of the ever-increasing cost of litigation. Within the last five years we have seen defense costs, like medical costs, escalate at an alarming rate. There are many reasons for these escalating costs, so please do not consider my oversimplification of the following analysis as ‘the” only reason. But, one reason is that as the years pass, law schools continue to graduate bright, new, eager attorneys, saddled with debt from school loans. The type of accident that did not generate a claim a few years ago now appears to be eagerly accepted and aggressively pursued by an attorney hungry for income. I see minor claims with attorney involvement, and many minor claims result in litigation. With more attorneys driving the system we often see more attorney activity on smaller issues to enhance a claim. Minor errors, or technical rule violations, on the part of the railroad is being identified and magnified to the point that these can become focal points of a claim.

Rule violations are becoming the subjects of Motions for Summary Judgment, and in some instances the courts are granting these Motions even though they may only be causally related (if at all) to the causation. For instance, in a crossing accident, the whistle signal for a crossing is two longs, one short and one long. 49 CFR 222.21 requires that the whistle be sounded at least 15 seconds, but not more than 20 seconds before the train enters the crossing. There is an exception that allows the signal to be sounded not more than 25 seconds before the locomotive enters the crossing, if the locomotive engineer is unable to precisely estimate the time of arrival of the train at the crossing for whatever reason. If a locomotive engineer begins sounding the signal 14 seconds before entering the crossing, this is a technical violation of this rule.

Plaintiffs’ attorneys, especially those who specialize in railroad litigation, often employ experts (in some instances former operating employees from one of a number of railroads) to review files and search for technical operating violations. Some railroad managers view these claims as fraudulent and an unnecessary waste money. (Unfortunately these are not fraudulent, but do cost unnecessarily.) Some railroad managers think claims managers are willing participants in this looting of the railroad. Unfortunately, the underlying fact is that there are more plaintiffs’ attorneys than there are solid claims that in a prefect world would be compensable. In my opinion the creativity of many plaintiff attorneys is driving up the cost of defending all cases. Burdensome defense costs are a consideration in an overall evaluation process that was not so highly weighted a decade ago. The margin for error has become razor thin. It is increasingly important that railroad manages and operators assure that a thorough investigation is made of every reported accident. Even though an accident may appear minor now, all it takes is one bad fact to change the complexion of a claim. Investigate all accidents, or have someone like RCSI to perform this for you. Report all accidents to your insurance carrier. Your liability policy contains reporting requirements, which if overlooked, could jeopardize your coverage. Cooperate with your claims manager to close these files. Eliminate the margin for error; replace it with a margin for success.

POINTS OF LEGAL INTEREST

Defense Verdict in Georgia. CSXT Conductor Claims Injury During Remote Control Operation. Thomas Daigle, a conductor for CSXT, age forty four, alleged that he was standing on the platform of a tank car approximately twenty-six cars to the rear of a locomotive as he moved other cars around the track via a remote control device. A crewman on the engine assisted plaintiff with appropriate lengths of distance. Plaintiff’s co-worker gave Daigle the distance, but a miscommunication resulted in the train on which plaintiff was working sideswiping another train that was moving at five miles per hour. As a result of the collision the plaintiff was allegedly thrown to the ground where he sustained shoulder and back injuries at L5 and S1. These injuries later required epidural injections and led to restrictions on standing, sifting and lifting. Ultimately the plaintiff was assigned a thirty percent partial disability. Plaintiff faulted his co-worker for giving wrong information and for leaving his post. The defense denied liability and claimed that plaintiff was contributorily negligent for violating the rule against standing on a freight car or tank car platform while operating remote control equipment. According to Georgia Trial Reporter, the jury returned defense verdict after deliberating two hours. Thomas Daigle v. CSXT, Inc., Fulton County (GA) Superior Court, Case No. 2005CV72068. James E. Gilson and Glenn C. Tornillo, Atlanta, GA for defendant.

$1.8 Million Verdict in Kentucky. CSXT Machinist claims Toxic Encephalopathy on Exposure to Cleaning Solvents. From 1966 to 2000 the plaintiff worked for CSXT and its predecessor railroad in the company’s Louisville maintenance facility in Corbin, Kentucky. Plaintiff Terry Williams was diagnosed with toxic encephalopathy in 2000. He now claims to suffer from dementia, manifested by memory loss, mood swings and excessive fatigue, which has left him permanently disabled. In his complaint, plaintiff asserted that he was not furnished with a reasonably safe place in which to work. According to plaintiff his brain injury was linked to long-term exposure to cleaning solvents. He faulted the railroad for failing to provide either respirators or warnings, as well as for failing to monitor air quality even after it became aware of the hazards posed by such chemicals. The defense denied liability, asserting that toxic solvents did not cause brain damage. CSXT also argued that plaintiff failed to take steps to protect himself. Following deliberations at the conclusion of a two-week trial, the jury returned a verdict which apportioned 90 percent fault to the railroad and which assessed damages of $2 million. Terry Williams v. CSXT, Inc., Jefferson County (KY) Circuit Court, Case No. 00-7904. David T. Klapheke and Rodney Payne of Boehl, Stopher & Graves, Louisville, KY for defendant.


Defense Verdict in Kentucky. CSXT Carman claims Toxic Encephalopathy on Exposure to Cleaning Solvents. The plaintiff worked for a number of years as a carman in CSXT’s Corbin, Kentucky shop. Toxic encephalopathy was diagnosed after he left the railroad in 1998, complaining of a brain injury. Plaintiff Jimmie Miller claimed to suffer from memory loss and depression that rendered him permanently disabled. In his complaint, plaintiff asserted that he was not furnished with a reasonably safe place in which to work. According to plaintiff his brain injury was linked to long-term exposure to cleaning solvents. He faulted the railroad for failing to provide either respirators or warnings, as well as for failing to monitor air quality even after it became aware of the hazards posed by such chemicals. The defense argued that plaintiff’s proof of causation was inadequate and unreliable. Following deliberations at the conclusion of a twelve-day trial, the jury returned a defense verdict. Jimmie Miller v. CSXT, Inc., U.S. District Court, Eastern District of Kentucky, Case No. 6:99-501. David T. Klapheke and Rodney Payne of Boehl, Stopher & Graves, Louisville, KY for defendant.


Federal Court Grants Defense Motion for Summary Judgment in Illinois. Plaintiff Michelle Lewis allegedly slipped and fell on an accumulation of iron ore pellets while proceeding along Terminal Railroad Association of St. Louis (TRRA) property at the intersection of Edwardsville Road and a set of railroad tracks. According to plaintiff, TRRA had a contractual relationship with United States Steel (USS) by which it would pick up loaded hopper cars at USS’s Granite City facility and then transport those cars. Moreover, she claimed, TRRA was responsible for the stretch of railroad on which she fell and was hurt in that it owned, operated and maintained the tracks. She filed a three-count complaint against both entities.

In a motion for summary judgment, TRRA asserted that it did not own the track in question. Its motion was supported by deposition testimony from both the railroad’s Director of Engineering Services and its Superintendent. Moreover, the railroad argued that it did not own the hopper cars and did not load them with iron ore pellets.

The district court granted the motion as to all claims. Michelle Lewis v. The Terminal Railroad Association of St. Louis, Richard M. Roessler of Gundlach, Lee, Belleville, IL for defendant.


$36,629 Verdict against Third Party in Kentucky. Crossing Accident, Brakeman Jumps From Train to Avoid Collision With Tractor-Trailer. Plaintiff Jeremy Lyons, a twenty-four year-old brakeman, was standing on the back of train as it backed out of the P&L Railway yard in Louisville at a slow speed. As the train approached a crossing, the plaintiff saw a fast-approaching tractor-trailer. Lights and whistles warned of the approaching train. The driver of the truck reportedly attempted to beat the train. As a collision appeared imminent the plaintiff jumped from the train. The train then clipped the back end of the semi-trailer. As a result of jumping from the train the plaintiff complained of a soft-tissue lumbar strain. Plaintiff claimed that he was entitled to both compensatory and punitive damages from both the driver and his employer. The trial court dismissed the punitive damage claim against the employer. The driver never appeared. The employer argued that the trigger for the crossing alarm was very close to the crossing due to the proximity of the yard so that it was not uncommon for trains to come close enough to set off the alarm and then wave vehicles across. Against that backdrop, the employer argued, its driver was merely crossing in front of a slow-moving locomotive, rather than trying to beat fast-moving train. The jury returned a verdict which awarded medical bills and lost wages of $16,629 and $20,000 for pain and suffering. The jury also agreed that plaintiff was entitled to punitive damages. It could not, however, agree on an amount of punitive damages. That was reported to the court which accepted the verdict and discharged the jury.
Jeremy Lyons v. Packaging Unlimited, Kadir Glassic, Jefferson Co. (KY) Circuit Court, Case No. 04-7905.


(Non-Railroad) $10.72 Million Settlement for Family Involved in Tractor-Trailer/Car Accident in California. Plaintiff Ruiz, sixty nine years of age, along with his wife, also sixty nine and their fifty three year old daughter were traveling south on a highway when it was a tractor and its two trailers went out of control and the second trailer turned over and blocked the road. Ruiz’s vehicle collided with the turned over trailer and was then rear-ended by another vehicle. Ruiz’s wife suffered fatal injuries.

Ruiz’s daughter suffered a spinal cord injury at T7-8, resulting in sensory motor paraplegia. She also suffered burns, neurogenic bowel and bladder, ankle and rib fractures, sacral nerve injuries, and a scalp laceration. Her medical expenses totaled about $184,600. Her future life care expenses were projected at about $6.79 million. She had been a bookkeeper earning about $11,400 annually. Her loss of earning capacity was estimated at $76,600.

Ruiz suffered hip, rib, leg, sternum fractures and wrist arthritis. He required bilateral chest tube insertions for hematoma drainage. His medical expenses totaled $102,400. His anticipated future life care expenses are $343,500. Ruiz is retired.

Ruiz, individually and on behalf of his wife’s estate, and Ruiz’s daughter and her husband sued the truck driver for negligence and the owner of the truck under respondeat superior. The plaintiffs alleged that the truck operator lost control of the vehicle and the owner negligently hired and retained the driver and co-driver. The plaintiffs claimed the driver and co-driver had obtained their commercial driver’s licenses through bribery of government officials.

The plaintiffs settled with defendants for $10.72 million, including $8.04 million to Ruiz’s daughter and $00,000 to her husband for loss of consortium, $1.15 million to Ruiz, and $625,000 for the wrongful death of Ruiz’s wife. In Ruiz v. Watkins Motor Lines, Inc., 44 ATLA Law Rep. No. 6 (2001), Tulare County Super. Ct.

I wasn’t certain if you may occasionally handle Freight Claim issues, however, I thought RCSI might be interested in reviewing or communicating to their short line and regional clients on the US Supreme Court decision to grant cert discussed below. It could have an impact on the business model for intermodal shipments based on or including an ocean movement and bill under the Carriage of Goods by Sea. As you know, any briefing or decision would likely be at least 9 months down the road. I hope this information benefits the business or freight claims administration folks. If anyone wishes to discuss these issues please have them call me.

CERTIORARI GRANTED - TRANSPORTATION AND MARITIME LAW (Carmack Amendment - Two-Year Statute of Limitations Does Not Apply Where Bill of Lading Incorporates Carriage of Goods By Sea Act and Its One-Year Statute of Limitations)

The United States Court of Appeals for the Eleventh Circuit held that the Carmack Amendment, 49 U.S.C. Sec. 14706, and its minimum two-year statute of limitations, does not apply to the inland leg of a multimodal shipment under the Carriage of Goods by Sea Act if the inland carrier does not issue a separate bill of lading.

Buyer Altadis USA, Inc. (Altadis), contracted to ship cigars from Puerto Rico to Florida.  Carrier Sea Star Line, LLC (Sea Star Line), carried the goods on the ocean leg of the voyage and contracted with a freight company for the inland leg.  The cigars were stolen during the inland leg and Altadis argued for application of the Carmack Agreement, 49 U.S.C. Sec.

14706, which states that carriers cannot establish a statute of limitations of less than two years.  The United States District Court for the Middle District of Florida (District Court) held that Altadis’ claims were barred by a one-year statute of limitations found in the bill of lading and the Carriage of Good by Sea Act, 46 U.S.C. Sec. 1303(6) (COGSA).  Altadis appealed the judgment and Sea Star Line appealed the denial of their cross-claims to the United States Court of Appeals for the Eleventh Circuit (Court of Appeals).  The Court of Appeals affirmed and held that the Carmack Agreement did not apply unless a separate bill of lading covered the inland, domestic leg.  In this case, the whole trip was covered by one bill of lading with a one-year statute of limitations, consistent with COGSA. The Court of Appeals did not address Sea Star Line’s breach of contract cross-claim because the District Court’s opinion did not discuss the issue. The United States Supreme Court granted Certiorari. Altadis USA, Inc. v. Sea Star Line, LLC, Certiorari granted: 01/05/07, No. 06-606 Court below: 458 F.3d 1288 (11th Cir. 2006)  http://caselaw.lp.findlaw.com/data2/circs/11th/0514988p.pdf

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RCSI welcomes your input. If you have any questions or comments of interest to our industry, please contact either Dave Gardner or Randal Little at (731) 967-1796 or FAX your message to (731) 967-1390.

Visit the Railway Claim Services, Inc. webpage located at www.railway-claim-services.com. Railway Claim Services, Inc. is the recognized leader in independent railroad claims management, which includes investigation, negotiations, and all those things in between. If RCSI is not already a partner in your loss control and claims management program are you accepting too much risk?

For further information contact:

dave_gardner@railway-claim-services.com  or  randal_little@railway-claim-services.com

Corporate Offices at: 52 South Main Street Lexington, Tennessee 38351

Phone: 800-786-5204, Fax: 731-967-1390 or visit us on the Web at www.railway-claim-services.com

Railway Claim Services, Inc. has offices THROUGHOUT THE UNITED STATES.