Scopelitis Law Firm

This month, partners, directors, and associates from Scopelitis and KSM (Katz, Sapper & Miller) took time away from their transportation industry work to participate in some friendly competition on the pickleball court. Work hard, play hard, love the transportation industry, repeat. Thanks to Scopelitis Attorney Robert A. Rowlett and KSM Director Logan Stamps for organizing!

Scopelitis President & Managing Partner Greg Feary in the Indianapolis Business Journal on factors weighing on trucking companies right now: “Interest rates are higher than they were a few years ago, making it more expensive to finance a truck purchase. Tighter emissions standards are set to go into effect over the next three years, and carriers are also facing an increased number of class action lawsuits. One hot area of trucking litigation involves drivers suing their employers over privacy issues related to biometric data collected by truck technology.” Feary said he believes the pace of trucking bankruptcies is slowing down and that better times are ahead. “I think the market is correcting itself. We’re hoping that the last half of the year will prove that we’ve hit bottom when it comes to freight levels and freight rates.” Read the full article from the IBJ: https://lnkd.in/ex_CGXZZ

Recently, Scopelitis Transportation Consulting Co-Directors P. Sean Garney and Steve Keppler chatted with recent American Trucking Associations LEAD ATA Program graduates TrueNorth Companies, L.C. Manager of Sales Marketing Manny Hoyt, Scopelitis Partner Chris Eckhart, and CRST The Transportation Solution, Inc. Business Safety & Compliance Director Dana Spencer about how ATA’s LEAD program has significantly impacted their professional lives and careers. Eckhart offered high praise for the program. “It really is an incredible experience—it’s an honor to be involved. We learn a ton about what ATA does for its members, what the pressing issues are in the industry – even for different segments of the industry – and most importantly, you just get to meet great people—learn with them and get to know them on a personal level—talking about families, kids, our jobs. All of that combined really provides the true meaning of the program.” https://lnkd.in/gWuxMNd9

Courts throughout the country have been grappling with the scope of the Federal Aviation Administration Authorization Act (“FAAAA”) and property brokers’ defenses against state law tort claims. However, on July 9, 2024, the Eleventh Circuit sharpened brokers’ defenses in a favorable ruling by holding that FAAAA preempted a plaintiff’s negligent selection claim against a broker. This ruling comes with no surprise and aligns squarely with its previous ruling, 𝐴𝑠𝑝𝑒𝑛 𝐴𝑚𝑒𝑟𝑖𝑐𝑎𝑛 𝐼𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒 𝐶𝑜𝑚𝑝𝑎𝑛𝑦 𝑣. 𝐿𝑎𝑛𝑑𝑠𝑡𝑎𝑟 𝑅𝑎𝑛𝑔𝑒𝑟, 𝐼𝑛𝑐.. Specifically, it confirms that 𝐴𝑠𝑝𝑒𝑛, which found negligent selection claims against a broker preempted in the cargo loss and damage context, is also applicable to cases arising out of bodily injury claims such as 𝐺𝑎𝑢𝑡ℎ𝑖𝑒𝑟. The facts at issue in 𝐺𝑎𝑢𝑡ℎ𝑖𝑒𝑟 are similar to most broker liability cases. The Eleventh Circuit analyzed Mrs. Gauthier’s claims and determined that they were “materially indistinguishable from the claim in 𝐴𝑠𝑝𝑒𝑛.” Thus, it held that her claim fell within the FAAAA’s preemptive scope. Furthermore, it found that her claim “against a broker” is necessarily one step removed from a ‘motor vehicle,’ as articulated in 𝐴𝑠𝑝𝑒𝑛, and thus, not preserved from preemption by the safety exception. In an effort to attempt to distinguish her claim, Mrs. Gauthier contended that her case, which arose from a traffic accident, should be treated differently than cases like 𝐴𝑠𝑝𝑒𝑛, which arise from property loss. However, the Eleventh Circuit cleared up any uncertainty and held the “the nature of the injury is not what matters for purposes of the [FAAAA] Act’s preemption provision. Any claim that a broker negligently selected driver to haul a load of property clearly falls within Section 14501(c)(1)[.]” Furthermore, it reiterated that negligent selection claims against a broker do not fall within the purview of the safety exception because the relevant state law necessarily lacks a direct relationship to motor vehicles. Accordingly, the Eleventh Circuit confirmed that 𝐴𝑠𝑝𝑒𝑛 is binding and affirmed the district court. Though 𝐺𝑎𝑢𝑡ℎ𝑖𝑒𝑟 comes to us at no surprise, this decision quiets any uncertainty that may have existed following 𝐴𝑠𝑝𝑒𝑛, regarding whether FAAAA was limited to property loss claims. For those keeping score, the Ninth Circuit has now ruled against federal preemption of negligent-selection broker claims, while the Seventh and Eleventh Circuits have both found in favor of preemption against these claims. The remaining circuits have yet to make any determinations; however, district courts are issuing opinions on an almost weekly basis, opinions which Scopelitis is monitoring closely. Read the full piece, including further case details, from Scopelitis Attorneys Nathaniel Saylor and Amanda Daoud. https://lnkd.in/g-YwquVb

Prasad Sharma spoke with FleetOwner about how the end of Chevron deference could affect trucking industry regulators and whether agency policies, like some emissions regulations, will still be supported by the judicial system.   “Some have argued it’s not a big deal because courts have been working to interpret statutes to find there is no ambiguity in the first instance (in which case, Chevron did not apply),” Prasad Sharma, partner at Scopelitis and general counsel for the Truckload Carriers Association (TCA), told FleetOwner. “They point to the fact that the Supreme Court has not relied on Chevron to decide a case of late.   However, it’s a longstanding precedent that was largely followed by the lower courts, so it is a big deal. It will shift power from agencies to the judiciary and heighten the importance of Congress legislating with clarity to address issues that arise in the modern world.”   Read the full story, including many more insights from Sharma: https://lnkd.in/gjVvZ-pa  

The latest Case Note from Partners Braden Core and Prasad Sharma focuses on the rise in popularity of arbitration agreements that prohibit class actions: One emerging tactic the plaintiff-side bar has been using is the so-called “mass arbitration” strategy, wherein the plaintiff’s attorney enrolls a larger number of “clients” and then brings a series of individual arbitration cases against the same defendant. The goal is to drive up the arbitration-related fees and gain leverage over the defendant in that way, a maneuver made possible by the fact that many arbitration agreements are drafted to require the business to shoulder most (if not all) of the expenses of the arbitration. Samsung was recently targeted by this tactic. One plaintiff-side law firm filed 50,000 individual arbitrations against Samsung with the American Arbitration Association (AAA). Samsung’s share of the initial filing fees alone was $4,125,000. Samsung balked and refused to pay the fees. The plaintiffs then filed a motion to compel arbitration in court, attempting to force Samsung to arbitrate over 14,000 claims individually. In 𝑊𝑎𝑙𝑙𝑟𝑖𝑐ℎ 𝑣. 𝑆𝑎𝑚𝑠𝑢𝑛𝑔 𝐸𝑙𝑒𝑐𝑡𝑟𝑜𝑛𝑖𝑐𝑠 𝐴𝑚𝑒𝑟𝑖𝑐𝑎, 𝐼𝑛𝑐., the Seventh Circuit rejected this effort because the plaintiffs’ attorneys failed to meet their burden of proving that each of their “clients” actually entered into an arbitration agreement with Samsung. For transportation providers that use arbitration, the impact of 𝑆𝑎𝑚𝑠𝑢𝑛𝑔 may be limited. The case was decided on the basis of the pleading standards under the Federal Arbitration Act, and many drivers and other transportation workers engaged in interstate commerce are exempt from that law. The pleading standard to compel arbitration under state arbitration acts may vary. However, the Court’s insistence that the plaintiff prove the existence of an agreement to arbitrate should generally apply under state arbitration law. In addition, the holding only applies in the Seventh Circuit (which includes Indiana, Illinois, and Wisconsin). In cases within the Seventh Circuit where the parties have agreed to have AAA serve as the arbitration administrator, 𝑆𝑎𝑚𝑠𝑢𝑛𝑔 makes the “mass arbitration” tactic less attractive to plaintiff-side attorneys, as they will be required to obtain evidence from each “client” confirming that they, in fact, had an arbitration agreement with the defendant. And it makes it more likely that defendants facing effective “mass arbitration” maneuvers will simply refuse to pay AAA’s fees and force the plaintiffs to court, where the procedural protections attending class and collective actions make the defense of such claims preferable to the prospect of thousands of individual arbitration hearings. More details on 𝑆𝑎𝑚𝑠𝑢𝑛𝑔 and its potential impact: https://lnkd.in/gKwCHQcv

Earlier today, the U.S. District Court for the Northern District of Texas granted a motion for a preliminary injunction of the Federal Trade Commission’s new rule prohibiting noncompete clauses in the employment context (the “FTC Ban”) with respect to the Plaintiff and Plaintiff-Intervenors in that case only. It declined to expand the injunction nationwide. The Court additionally committed to ruling on the ultimate merits of the case on or before August 30, 2024. This ruling means the anticipated September 4, 2024, implementation date of the FTC Ban will stand for all other entities. In other words, the following restrictions will apply starting on September 4, 2024: -- Noncompete agreements entered into on or after the effective date – all such agreements will be unenforceable, regardless of the position held or the salary earned by the worker. -- All existing noncompete agreements – i.e. those entered into prior to the Final Rule’s effective date – all such agreements will be unenforceable with the exception of noncompete agreements entered into with “senior executives”. The rule defines this term to refer to workers earning more than $151,164 annually who are in a “policy-making position.” There is still a possibility that another court will entertain a different motion for preliminary injunction before September 4 or that this court will enter a final, nationwide injunction against enforcement by August 30. At the very least, we anticipate significant, continuing legal battles over the Federal Trade Commission’s statutory authority to promulgate this rule, as well as the very broad scope of the FTC Ban itself. Although the FTC does not have authority over certain common carriers engaged in common carrier activities, with the sunset of the ICC and the elimination of the distinction between common carrier and contract carrier authorities issued by the U.S. Department of Transportation, the extent to which the FTC Ban applies to motor carriers is unclear. The Firm is continuing to monitor these developments closely. We encourage clients to reach out for further guidance. For more information, please contact David Robinson, A. Jack Finklea, Don Vogel, or Alaina Hawley. https://lnkd.in/gWtaWFSj

Arbitration Case Note from Scopelitis Partners Braden Core and Prasad Sharma: Courts throughout the country have been grappling with the scope of the “transportation worker” exemption under the Federal Arbitration Act (FAA). The FAA embodies a pro-arbitration policy and can promote the speedy and efficient resolution of disputes on an individual basis. Therefore, arbitration agreements often include provisions stating that the agreement is governed by the FAA. For arbitration agreements with transportation workers, however, this may be insufficient to ensure a given dispute actually ends up in arbitration. 𝑅𝑜𝑑𝑔𝑒𝑟𝑠-𝑅𝑜𝑢𝑧𝑖𝑒𝑟 𝑣. 𝐴𝑚𝑒𝑟. 𝑄𝑢𝑒𝑒𝑛 𝑆𝑡𝑒𝑎𝑚𝑏𝑜𝑎𝑡 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐶𝑜., 𝐿𝐿𝐶, No. 23-1812 (7th Cir. Jun. 18, 2024), a case recently decided by the United States Court of Appeals for the Seventh Circuit, highlights the importance of the Scopelitis Law Firm’s long-standing guidance that clients designate a state arbitration law as a “fallback” in the event the FAA is found not to apply. The plaintiff worked as a bartender on a steamboat. She was deemed a “seaman” and thus exempt from the FAA as a “transportation worker.” The arbitration agreement she signed provided that it was governed by the FAA. Oftentimes, when a court determines an arbitration agreement falls outside the scope of the FAA, it will look to see if arbitration is nonetheless available under a state’s arbitration laws. Instead, the Seventh Circuit in Rodgers-Rouzier viewed the parties’ selection of the FAA as a “choice of law” provision and held that under Indiana’s “choice of law” principles, only the FAA (and not state arbitration law) could apply. Because the FAA did not apply, as the plaintiff was exempt, her dispute must be litigated in court, not arbitration. The Seventh Circuit’s decision in 𝑅𝑜𝑑𝑔𝑒𝑟𝑠-𝑅𝑜𝑢𝑧𝑖𝑒𝑟 is a useful reminder of the importance of carefully drafting arbitration agreements for those in the transportation industry. While there are a number of considerations depending on the state, it would be prudent to consider designating a state arbitration statute to govern the agreement in the event the FAA does not apply. https://lnkd.in/g2d5DYsi

Join Scopelitis Partners Greg Feary, Kelli Block, Prasad Sharma, and Shannon Cohen at ATA's upcoming #ATALegalForum24 as they discuss IC developments including the new Department of Labor Independent Contractor rule and what the latest California developments might mean for the rest of the country.

State and local jurisdictions continue to enact sweeping pay transparency statutes – usually focused on equality in wages and detailed informational requirements for job postings. Failure to comply with these requirements can lead to substantial financial penalties. Most notably, there has been a recent increase in class action cases filed against logistics companies based on Washington’s Equal Pay and Opportunities Act. Under that Act, Washington employers must make certain disclosures in job postings. Specifically, each job posting for each job opening must disclose the wage scale or salary range for the position, along with a general description of all of the benefits and compensation that will be offered to the applicant. The Act also provides statutory penalties of up to $5,000 for violations of the Act (per applicant). Other jurisdictions, such as California, Illinois, and New York, have or intend to institute similar wage transparency laws. Employers are urged to immediately review their compliance efforts in this area. If you have questions about Washington’s law or need assistance reviewing or revising your postings to make sure you are complying with the Washington Equal Pay and Opportunities Act and other wage transparency acts, you can contact Partners Adam Smedstad, David Robinson, Kelli Block, and Charles Andrewscavage. https://lnkd.in/gjBanMru