An Attorneys Guide to Brokering - David G. Dwinell · 7/31/92 Mr. Allen I Roberts, Associate Administrator Hazardous Materials Safety Research & Special Program Administration 400

David G. Dwinell [email protected] © 2012

A Jurists Guide to Transportation Brokering By David G. Dwinell: November 2012

Preamble

Brokering (or bartering) was probably the first transportation activity but the misunderstanding of brokering caused this treatise.

Today, in America, brokering is both licensed (individuals) and

unlicensed by trucking companies. The new Law from Congress, (signed 7/6/2012), commonly referred to as “Map 21”, now requires all motor carriers who want to work with another motor carrier become a Licensed Property Broker.

Prior to the new law, truck brokering was the term used in common practice throughout the

$880 Billion trucking segment of Americas’ transportation, where one authorized motor carrier hires another authorized or non-‐ authorized motor carrier, no Property Brokers license or bond required; hence. Now, this type of brokering -‐ truck brokering, as we knew it may be illegal without a License.

Those who want to comply with the Law and become a Licensed Property Broker must now

apply for a license [As defined currently; 49 CFR 371.2]. All license applicants must receive certified broker training or prove 3 years prior brokering experience to work for a brokerage, let alone to obtain a Brokers License and the $75,000 Surety Bond.

The new Law requires all existing authorized motor carriers who want to hire another

motor carrier and all existing licensed property brokers, both brokering transportation, to reapply for their license every 5 years. So, in a way, today all brokering in America must become ”licensed property brokering”, and truck brokering will cease to exist.

The issue that confronts you the Jurist, either in defense or plaintiff cases, is one of “liability”

in the event of loss during an act of transportation. The following information of this treatise is designed to inform you of this arcane world of transportation brokering in its various forms and applications, as it may affect your work.

Motor carriers and all persons who are acting as a motor carrier in their brokering sales and

operations, and all those who purchase transportation have a non delegable duty to provide for the public safety (see Puckrein v ATI Transport cite; NJ Supreme Court -‐ 2007)* Licensed Property Brokers are the exception to this general rule. They are essentially “a travel agent”, excepted from motor carrier rules and concomitant liabilities by the Broker definition. Trucking companies who are also “licensed Property Brokers” use this “exception” notion to avoid liability in the event of loss. The Federal Government, most notably, the Federal Motor Carrier Safety Administration (hereinafter FMCSA) has provided a measure of guidelines for those seeking the “exception” and I rely on them.

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First and foremost, is the definition itself 49 CFR 371.2

(a) Broker means a person who, for compensation arranges or offers to arrange, the transportation of property by an authorized motor carrier. Motor carriers, or person who are employees or bona fide agents of carriers, are not brokers within the meaning of this section when they arrange or offer to arrange the transportation of shipments which they are authorized to transport and which they have accepted and legally bond themselves to transport.

(b) Bona Fide agents are persons who are part of the normal organizations of a motor carrier and perform duties under the carrier’s direction pursuant to a preexisting agreement which provides for a continuing relationship, precluding the exercise of discretion on the part of the agent in allocating traffic between the carrier and others.

(c) Brokerage or brokerage service; is the arranging of transportation or the physical movement of a motor carrier or of property. It can be performed on behalf of a motor carrier, consignor or consignee.

(d) Non-‐Brokerage service is all other service performed by a broker on behalf of a motor carrier, consignor, or consignee.

It is clear in this definition, that the FMCSA is limiting the idea of brokering to a very small

and narrow transportation operation and application meaning, eliminating those trucking companies that broker their loads, from any exception.

Regulations prohibit a broker from a beneficial interest in the cargo (take possession)[49

CFR 371.9; (a) (1)] “ The broker owns or has beneficial interest in the shipment”. It is presumed that Brokers who do have a beneficial interest in or are in possession of property, to not be a broker within the meaning.

Regulations prohibit a broker from misrepresentation [49 CFR 371.7; (b)] a broker shall not

directly or indirectly, represent its operations to be that of a carrier (motor?). Any advertising shall show the broker status of the operation. It is presumed that those brokers who do represent themselves as “carrier”, motor carriers”, “forwarders”, any person acting as a consolidator”, or any person who represents a “beneficial interest in the property” from being considered a broker as defined.

As of this writing, the only regulatory compliance obligation imposed on the Licensed

Property Broker (other than brokers of the property types [49 CFR 37.101 and beyond] Household goods, household property, guns, explosives, and environmental hazardous property) by the FMCSA, is “Records to kept”.

There are no Statute or Regulation(s) that describes or posts some form exception from

motor carrier liability, for a licensed property broker. It is presumed that brokers are the exception, because the mere existence of a broker license, and all of the statutory and regulatory limitations on such person, has a reason. Without that reason, the majority of the brokers in America would be considered “carriers” or persons in possession of cargo.

This definition certainly implies that licensed property brokers who are not acting as a

motor carrier are an exception to the rules and liabilities of a motor carrier. Without this

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implication, why have the license? Motor carriers can hire and broker to other motor carriers at will, without a license as a property broker, but simply by having an “authority” as a motor carrier. The word License implies that there is an exception, as opposed to an Authority. I know the government calls the Brokers License an “Authority”, but they certainly mean that the FMCSA grant is an authority from them to have the license of a property broker. An Authority granted to a motor carrier is in fact, a grant pursuant to Section 8; of the Constitution of the United States of America, to regulate the commerce between the various States… which means those transporters actually in possession of that commerce; not license property brokers, who are never in possession of property as they are an exception by License, not an authority to be in possession, pursuant to Section 8.

The passage of the new Law Map 21 certainly will change this relationship. The net affect of

the new law requiring a broker’s license in application will duplicate the power vested from, time immemorial, and the Constitution, to transporters. Transporters may use any means necessary to complete their dispatch and be responsible and liable for the outcome.. The required ownership of a brokers license will have the affect of being another tax and useless regulation on trucking operations, because truckers with brokers license will become “truck brokers” which will still be liable for loss. The exception of the broker from the carrier may be lost, as both motor carriers and licensed property brokers will assume the same liabilities because of their possession of the property. The intent for an exception may lost in the passage of the Act.

Up to the new Law, I have relied on the following property broker exception from motor

carrier liability outlined in Ms Kaleta’s opinion below. Secondarily, a definition of exception provided Ms. Judith S. Kaleta; Chief Counsel, of the

RSPA of the FMCSA at the time of my request published more specific brokering conduct guidelines [Interpretation NO. 92-‐1-‐RSPA: dated Oct 19,1992]; when asked to opine on whether a Licensed Property Broker is required to register and then assume motor carrier liabilities in the arranging transportation of Haz Mat products, as defined at the time. Kaleta’s opinion is the only brokers’ exception to motor carrier liability I have unearthed, there may be more (see below).

Ms Kaleta’s opinion is the only exception, by government explanation, I have been able to

procure, for the licensed property broker who qualify, and register for the motor carrier liability for Haz Mat. All others must be compliant to motor carrier regulation as it is promulgated in the RSPA Regulation of 1991. It is m y understanding that of this writing, her opinion still stands.

When asked by me and other brokering industry representative such as the Petroleum Carriers Association (PCA), the government provided a narrow definition of the licensed property brokers application and operation exemption from being considered a motor carrier and assuming the liability of same. Ms, Kaleta interpreted the intent of Congress. Without the FMCSA opine, the purpose of the brokers license is moot, because the broker would have to have the same responsibility and liability to the public safety, as a authorized motor carrier, and should insure the risks, and take possession of the property transported, especially as it relates to Haz Mat transport. The net affect of Haz Mat transport is to make the shipper of the Haz Mat goods, as well as liable as the motor carrier in the transport of the goods, in the event of an environmentally dangerous spill. In my opinion, Puckrein v ATI Transport extended this obligation and responsibility to shippers and brokers, a responsibility to provide for the public safety to all cargoes. Brokers are “shippers” as defined, and have that same duty while not in possession of property.

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7/31/92

Mr. Allen I Roberts, Associate AdministratorHazardous Materials Safety Research & SpecialProgram Administration400 7th Street S. W.Washington, D.C. 20590-0001

Dear Mr. Roberts,

I am writing requesting an opinion clarifying the role of ICC Licensed PropertyBrokers, in relation to the Hazardous Material Transportation Uniform Safety Act of 1990.Specifically, are ICC Licensed Property Brokers required to register in compliance with theaforementioned Act.

The Motor Carrier Acts of 1979 and 1981 or 2, I am not sure which, defined PropertyBrokers in such a way as to limit their liability for and in transportation whether surface airor other “mode”. Requiring ICC Property Brokers to register for your Act enabling legislationwill require Property Brokers to become “liable” when they are specifically limited in theirtransportation liability under ICC rules. Essentially, Property Brokers perform the same rolefor freight that a travel agent fills for passengers in air transportation.

We were informed that we are required to register as “one who causes and offers forshipment” hazardous materials as defined primarily in portion E of your circular regardingregistration.

QTI is a licensed “PROPERTY BROKER” MC 203581 as defined by 49 USC 10292& 1045.2 In the enabling legislation, Property Brokers are not considered modes oftransportation, and “do not take possession of freight” like a freight forwarder, or truckbrokers. Property Brokers are facilitators (travel agents for freight) and are not considered“shippers” for purposes of the Motor Carrier Acts. Property Brokers are specifically prohibitedfrom executing a Bill of Lading, publishing a Tariff, or quoting a rate. In fact most brokersnever see the freight they cause to be hauled, or the drivers, or the delivery of a load. Theyare not liable for safety inspections, log books or any form of State compliance with same.This does not mean that some who handle Hazardous Materials, are licensed PropertyBrokers, but that the relationship is incidental to other transportation goals that shipper mayhave. Our brokerage causes properly authorized and insured ICC carriers to haul shippersfreight. Requiring Property Brokers to Haz Mat register is a duplicate activity of the actualplayers who are involved in giving and taking of possession of freight by the actual truckingcompany (mode of transportation) and the shipper. If Property Brokers must register, a greatinsurance burden will fall on them suddenly, as most brokers do not have cargo or liabilityinsurance.

Figure 7a

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Please clarify specifically, are Property Brokers required to register under theHazardous Material Act above? Are Property Brokers liable in the transport of HazardousMaterials, when Brokers are specifically “ not liable for loss or claim” in the transport ofother “freight all kinds”? Property Brokers are not required to insure the load, the public, orthe cargo. There is insurance for errors and omissions for brokers, but is not an ICCrequirement.

Your specific clarification should indicate if we are required to put our DOT Haz Mat# and that of the “carrier” on each bill of lading that our “shippers” prepare for freight wehave caused to move, even though like a travel agent, we are not liable- either from a publicliability- personal liability, or a cargo damage claim.

One of main reasons for requesting this clarification, is that QTI is the PropertyBroker for the CARRIER INFROMATION EXCHANGE- School of Brokering. This schoolinstructs beginning brokers in ICC and DOT compliance among others topics. Obtaining aHAZ MAT # would be a major element of any compliance.

If you render an opinion, would you publish it in the Federal Register, or at least senda copy to ICC attorneys, I would need your permission to make your opinion part of mybook, “BROKERAGE OPERATIONS MANUAL©”, as well. Thank your for resolving whatis a major issue for Property Brokers.

Sincerely,

David G. Dwinell, presidentenclosures- articles & Guide Book

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Mr. David G. DwinellPresidentQTI Service Corporation1810 South Calhoun RoadBox 51599New Berlin, WI 53151—0599

RE: Applicability of HazardousMaterials TransportationRegistration Program to ICC-Licensed Property Brokers

Dear Mr. Dwinell:

I am responding to your July 31, 1992 inquiry concerning registrationrequirements under the July 9, 1992 hazardous materials transportationrule (56 Fed. Reg. 30620—30633). That rule requires that offerors andtransporters of certain hazardous materials register with the Researchand Special Programs Administration (RSPA).

A party’s status as an “ICC Licensed Property Broker” does not determinewhether it is necessary for the party to register. Instead, each brokermust examine his or her activities to ascertain whether any offerorfunctions are being undertaken. To determine whether a party is an“offeror,” it is necessary to determine whether the party performs,attempts to perform, or is obligated to perform, specific functionsrelated to requirements under the Hazardous Materials Regulations (HMR),49 C.F.R. Parts 171-180. This determination is made on a case—by—casebasis and takes into account all relevant facts.

While ownership and contractual assignment of functions are factorsrelevant to the determination of “offeror” status, they are notconclusive. Other factors considered in determining “offeror” statusinclude functions actually performed or undertaken by a party, functionswhich a party contracts to perform, and past practices of the party.“Offeror” functions include, but are not limited to,

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tendering hazardous materials to a carrier, classifying hazardous materials,preparing shipping papers, reviewing shipping papers to verify compliancewith the HMR or their international equivalents, making hazardous materialscertifications on shipping papers, placing hazardous materials markings onvehicles, placarding, and providing placards to a carrier.

I have enclosed “Formal Interpretations of Regulations Issued Under theHazardous Materials Transportation Act” which were published, at 55 Fed.Reg. 6758, on February 26, 1990. Interpretations No. 88-1~RSPA and 89-1—RSPAdiscuss who is an “offeror” under the HNR. Although they do not directlyaddress “brokers,” they contain analyses and illustrations related to theissue you raised.

If you are not undertaking “offeror” or “transporter” activities, you are notrequired to register. However, if your endeavors include performance of anyofferor or transporter activities that are subject to the registrationrequirements, you must register.

RSPA intends to publish a Formal Interpretation in the Federal Register,which will directly address the question of which parties are offerors andthus are required to register under the new registration requirements.

If I may be of further assistance, please do not hesitate to contact me at(202) 366—0656.

Sincerely,

Alan I. RobertsAssociate Administrator for

Hazardous Materials Safety

Enclosure

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[INTERPRETATION NO. 92-1-RSPA]ISSUED: October 19, 1992

SOURCES:

Joanna L. Johnson, Esquire, Counsel,Petroleum Marketers Association of America,Washington, D.C.

Mr. David Dwinell, PresidentQTI Service CorporationNew Berlin, WI

FACTS:

Both parties request clarification of the term “offeror,” for purposes of determining whether aparty is required to register with the Research and Special Programs Administration (RSPA)pursuant to the hazardous materials transportation registration requirements of 49 C.F.R. 107.601-107.620 (57 Fed. Reg., 30620, July 9, 1992; 57 Fed. Reg. 37900, August 21, 1992; See also57 Fed. Reg. 33416, July 28, 1992).

Petroleum Marketers Association of America (PMAA) requests clarification of the requirementthat all motor fuel and heating fuel marketers who “offer” for transportation petroleumproducts in bulk packaging, containers, or tanks having a capacity equal to or greater than 3,500gallons, must register. PMAA requests that RSPA issue an interpretation illustrating the activitieswhich constitute “ offering.” More specifically, PMAA questions whether the act of “selling,”standing alone, is an “offeror” activity which will subject a petroleum marketerto the registration requirements.

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QTI Service Corporation (QTI) requests clarification of the registration requirements as it appliesto “ICC Licensed property brokers,” which QTI describes as “perform [ing] the same role forfreight that a travel agent fills for passengers in air transportation.” QTI states that propertybrokers do not take possessionof freight, execute a bill of lading, publish a tariff, or quote a rate. QTI further states thatproperty brokers “are not considered ‘shippers’ for purposes of the Motor Carrier Acts.” Finally,QTI asks if DOT would require a property broker to place its “DOT ID Number” on each bill oflading covering hazardousmaterials for which it arranges a sale.

Additionally numerous telephone inquiries have been received by RSPA, asking whether personswho load, unload, or store hazardous materials are subject to the registration rule.

INTERPRETATION:

The hazardous materials transportation registration rule mandates registration for persons whooffer of transport certain hazardous materials in commerce. An “offeror” or “transporter” forpurposes of the registration rule is determined in the same manner as an “offeror” or“transporter” for purposes of the HMR generally. See other relevant formal interpretations at 55FR 6758 (February 26, 1990).

Determination of “Offeror” Status

To address the “offeror” inquiries of PMAA and QTI, it is necessary to determine whether therespective fuel marketer of freight broker undertakes, attempts to undertake, or is obligated toperform any specific functions related to requirements under the Hazardous MaterialsRegulations (HMR), 49 C.F.R. Parts 171-180. Each marketer or broker’s activities must beexamined to ascertain whether any “offeror” functions are involved. This determination is madeon a case-by-case basis and takes into account all relevant facts.

While hazardous materials ownership and contractual assignment of functions are factorsrelevant to the determination of “offeror” status, they are not conclusive. The same is true of“selling” motor fuel and heating fuel, or arranging the sale of hazardous materials, which will betransported in commerce.Factors considered in determining a party’s “offeror” status include functions actually performedor undertaken by the party, and functions which the party contracts to perform. Past practices ofthe parties are also considered because they provide evidence of the parties’ division of functions.

(interpretation cont.)

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“Offeror” function include, but are not limited to, selection of the packaging for a regulatedhazardous material, physical transfer of hazardous materials to a carrier, classifying hazardousmaterials, preparing shipping papers, reviewing shipping papers to verify compliance with theHMR or their international equivalents, signing hazardous materials markings or placards onvehicles or packages, and providing placards to a carrier.

Determination of “Transporter” Status

The Hazardous Material Transportation Uniform Safety Act (HMTUSA) significantly amendedthe Hazardous Materials Transportation Act (HMTA) and required the registration of those whotransport certain hazardous materials or cause those hazardous materials to be transported incommerce (49 App. U.S.C. § 1805(c) ). The applicable regulation in the HMR implements thisstatutory registration requirement and applies it to persons who offer those hazerdous materialsfor transportation or transport them in foreign, interstate, or intrastate commerce (49 C.F.R. §107.601). The words “transports” and “transportation” are defined in the HMTA to mean “anymovement of property by any mode, and any loading, unloading, or storage incidental thereto”(49 App. U.S.C. § 1802 (15) ).

Conclusion

A person undertaking no “offeror” or “transporter” activities is not subject to the RSPAregistration requirements. However, is a person undertakes, attempts performance of, or isobligated to perform, any offeror or transporter activities related to the specified hazardousmaterials, then that person must register. Further, any person who loads, unloads, or stores thespecified hazerdous materials, incidental to transportation is subject to the registrationrequirements of the HMR.

PMAA and QTI each submitted hypothetical fact patterns concerning which activities constitutean “offering” for purposes of the RSPA registration requirements. Further, the telephonicinquiries received by RSPA raised similar questions concerning the “transporting” of hazardousmaterials. These “offeror” and “transporter” questions are set forth below, followed by RSPA’sresponse.


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Fact Pattern #1

A is a heating fuel marketer, who buys fuel from B and sells it to C. A does not own transportvehicles, and utilizes common carriers to deliver the fuel which it sells. A is similar to a broker,in that it never takes physical possession of the fuel which it sells.

Question: Is the act of selling, standing alone, sufficient to subject A to RSPA’s hazardousmaterials registration rule?

Answer: Selling a hazardous material of the type and in a quantity covered by the RSPAhazardous materials registration rule will not, standing alone, subject a not-in-possessionmarketer to the rule’s registration requirement. However, if the marketer performs, attempts toperform, is obligated to perform, or agrees to perform any offeror or transporter function, thenthe marketer must register. If, for example, A prepares the shipping papers for the fuel, makeshazardous materials certifications on the shipping papers, places hazardous materials markings orplacards on the transport vehicle, or loads on unloads the transport vehicle, or determines that thepackaging is authorized for the specific hazardous material (see 49 C.F.R. § 173.22(a) (2), (3) ),then A must register.

Fact Pattern #2

X, an “ICC licensed proprety broker, “ arranges the sale of a hazardous material. X does not takepossession of the hazardous material, execute shipping papers, classify the material, or assist inloading, unloading, or storage incidental to shipment of the hazardous material. Further, X doesnot select the carrier which will transport the material.

Questions: Is the act of arranging the sale of a hazardous material, standing alone, sufficient tosubject X to the hazardous materials registration rule? Must X place its registration number onits bill of lading.

Answer: Again, arranging or facilitating the sale of a hazardous material of a type and in aquantity which is covered by the HMR will not, standing alone, subject a not-in-possessionproperty broker to the RSPA hazardous materials registration rule. However, if the brokerperforms, attempts to perform, is obligated to perform, or agrees to perform any offeror ortransporter functions, the broker must register. If, for example, X prepares the shipping papersfor the hazardous material, makes hazardous materials certifications on the shipping papers,places hazardous materials markings or placards on the transport vehicle, or loads or unloads thetransport vehicle, then X must register.


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If X is an offeror subject to the DOT registration rule, it is not required to place its DOTregistration number on any bill of lading. If X is a transporter and must register, it is not requiredto place its hazardous materials registration number on its bills of lading. However, 49 C.F.R. §107.620 mandates maintenance of a copy of the transporter’s registration certificate at itsprincipal place of business. Additionally, it requires that:

After January 1, 1993, each motor carrier subjectto the requirements of this subpart must carry acopy of its current Certificate of Registration issuedby RSPA or another document bearing the registrationnumber identified as the “U.S. DOT Hazmat Reg. No.”on board each truck and truck tractor (not includingtrailers and semi-trailers) used to transport hazardousmaterials subject to the requirements of this subpart.The Certificate of Registration or document bearingthe registration number must be made available, uponrequest, to enforcement personnel.

57 Fed. Reg. 37900, 37902 (August 21, 1992).

An August 21, 1992 rule delayed until January 1, 1993, the requirement that transporters carryproof of registration in their vehicles. However, this delay did not apply to the September 16,1992 deadline for registration and maintenance of a copy of the Certificate of Registration at amotor carrier’s principal place of business. 57 Fed. Reg. 37900, 37901 (August 21, 1992).

Fact Pattern #3

M, a foreign manufacturer of explosives, sends a shipment of explosives on a vessel to theUnited States. Upon arrival of the shipment at a U.S. port facility, S, a stevedoring company, off-loads the shipment and places it on a chassis for through-shipment to its ultimate destination.

Question: Assuming that the explosives are hazardous materials under the HMR, is the act ofoff-loading the hazardous material and placing it on a chassis for through-shipment to its ultimatedestination sufficient to subject a stevedoring company to the requirements of the hazardousmaterials registration rule?


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Answer: Yes, the HMTA states that the definition of “transports” and “transportation” includes“any movement of property by any mode, and any loading, unloading, or storage incidentalthereto.” (49 App. U.S.C. § 1802 (15) ) If S loads or unloads the explosives incidental totransportation, it is subject to the registration rule.

Fact Pattern #4

Upon the arrival of a ship in a U.S. port facility, T, a stevedoring company, off-loads a shipmentof explosives, and places it in temporary storage in its facilities awaiting through-shipment to anultimate destination.

Question: Assuming that the explosives are hazardous materials under the HMR, does thestorage activity by the stevedoring company require it to register?

Answer: T is subject to the registration requirements of the HMR. As indicated above, thisstorage is incidental to the movement of the explosives, and T is, therefore, a transporter of theexplosives.

Judith S. KaletaChief Counsel

This decision was published in FEDERAL REGISTER and made law July 9, 1992 ed note


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MichelleGarcia

Rectangle


Table of Contents Definitions Derived From Common Brokering Practices. Bill of Lading: is title to the property for transport in the form of a contract for transportation, between the consignor and the motor carrier and may state the condition of the property It is also a receipt showing transfer of consignor possession of property to the possession of an authorized motor carrier, and in turn, becomes that motor carriers’ receipt of the transported property from motor carrier to the consignee, for which they retain a beneficial interest [49 USC 80101] for payment of freight charges after the fact of transportation. (See; William W. Porter; member of the Philadelphia Bar, Treatise on the Law of Bills of Lading 1881 available online.) Consignor: a person who may create a Bill of Lading, for origination of property for transport. A consignor may be a motor carrier, or any person who is in possession of property, originating it for transport, consigning the property to another, including another carrier, warehouse, forwarder, shipper. Subject to 49 USC; 14103 among other provisions. Consignee: is a person who executes the Bill of Lading of a Consignor, and is the receiver of the transported property, after the fact, of an act of transportation. Subject to [Stat 49 USC 14103] among other provisions. Consolidator: is any person who takes possession of property of “Less than Truckload” (LTL) freight, and consolidates it into truckloads (TL); and is a motor carrier (drayage) in practice, even though they may never cross a Stateline and be subject to Federal regulation. This person is liable as a freight forwarder would be by definition. Forwarder: is a person who is a shipper by regulatory definition and in common practice, and various times regulated then unregulated by the US Government, who purchases more than one mode of transportation in the arranging of it, and is; according to Miller’s Law of Freight Loss and Damage Claims by Richard R. Sigmon; 1953; ISBN 0-‐205-‐11567-‐5: page 380 and 381; is any person

Definition of Forwarders Section 402 of the Interstate Commerce Act, 49 U.S.C. § 1002, defines the term freight forwarder to include any person who (otherwise than as a carrier subject to parts I, II, or III) holds itself out to the general public as a common Carrier to transport or provide transportation of property, for compensation, in interstate commerce, and who, in the ordinary and usual course of its undertaking (A) assembles and Consolidates or provides for assembling and consolidating shipments of such property, and performs or provides for the performance of break-‐bulk and distributing operations with respect to such consolidated shipments; (B) assumes responsibility for the transportation of such property from point of receipt to point of destination, and (C) utilizes, for the whole or any part of the transportation of such shipments, the services of a carrier or carriers subject to part I, II, or III of the Act. The operations of freight

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forwarders are described in Chicago, Milwaukee, St. Paul & Pacific R. Co. v. Acme Fast Freight, Inc., 336 U.S. 465. Statutory Liability of Forwarders Statutory liability of freight forwarders (as in the case of rail and motor carriers) is found in the Interstate Commerce Act. Section 413, 49 U.S.C. §1013, provides: The provisions of section 20(11) and (12) of part 1 of this Act, together with such other provisions of such part (including penalties) as may be necessary for the enforcement of such provisions, shall apply with respect to freight forwarders, in the case of service subject to this part, with like force and effect as in the case of those persons to which such provisions are specifically applicable, and the freight forwarder shall be deemed both the receiving and delivering transportation company for the purpose of such section 20(11) and II of this Act are utilized by a freight forwarder for the receiving of property from a consignor in service subject to this part, such carrier may, with the consent of the freight forwarder, execute the bill of lading or shipping receipt for the freight forwarder. When the services of a common carrier by motor vehicle subject to part II of this Act are utilized by a freight forwarder for the delivery of property in the consignee named in the freight forwarder’s bill of lading, shipping receipt, or freight bill, the property may, with the consent of the freight forwarder, be delivered on the freight bill, and receipted for on the delivery receipt, of the freight forwarder.

and thus considered liable in a cargo loss, as a receiving or delivering motor carrier would be, subject to: “Carmack”; 49 USC 14706, and having a “beneficial interest” in a cargo [cite 49 USC 80101] and is a shipper and receiver in interstate commerce subject to: 49 USC 14103 among other provisions, as they affect motor carriers and all who are in possession of the property for transport, with the exception of packagers not in possession. Truck broker: is a person with Authority as a “motor carrier”, or any person who holds himself out as providing “truck Service” in common practice, who owns and operates a trucking company and a licensed property brokerage, while in possession of property, and generally accepts the liability for and be responsible for, the property in their possession. A truck broker is a principal hiring another motor carrier (authorized or not) as his agent, and controls that agent’s money, direction, and other forms of control in the exercise of the act of transportation. Although undefined by government regulation, this term and its usage is by far the most common type of brokering in America today. It remains to be seen from the New Law-‐ Map 21-‐ whether motor carriers thus endowed with the License, will be given a free pass on their responsibilities for the provision for the public safety, in the hiring of another motor carrier, as both are 100% liable in the act of transportation. This person is NOT subject to 49 USC14103, as they are a trucking company, who, as a principal, can require his agent carriers’ driver to load and unload, with coercion, and often enough without pay. Licensed Property Broker: is a person who is “shipper” as defined in the Negotiated Rates Acts of 1993, Regulation. This person may not be in possession of property, create a Bill of Lading in originating or receiving, have any beneficial interest in the property [49 USC 80101], quote a freight rate as a motor carrier, issue a tariff, as a motor carrier and is not required to insure that risk to that property or the risk to the public safety, and may not issue and collect a Fuel Surcharge to any shipper since they are not in possession of the property and do not pay for the fuel themselves: [Ex Parte 666] of the Surface Transportation Board (STB) the successor to the Interstate Commerce

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Commission (ICC). This act of collecting a Fuel Surcharge alone is good indicator, if in your case, of a truck broker. A licensed property broker hires no one, (anymore than the travel agent hires American Airlines) and is neither a principal nor agent for either shipper or motor carrier, merely arranging transportation as an agent for that act of transport. A property broker may be an agent for the shipper, or maybe an agent the motor carrier, but assumes either parties responsibility and be liable for that person’s goal during the deal [see 49 CFR 371.2 where motor carriers are excepted from he definition of a broker]. A licensed property broker may not be an agent of both shipper and carrier, as the conflict of interest is extant. This person is subject to 49 USC14103, among other provisions, for shippers or receivers of property.

Typical Patterns of Brokering Conduct The best approach to this review, short of creating inconclusive fact patterns (the realm of the attorney), is describing broker application and operations of each of the following and how

that may apply to your case. Defense of a Licensed Property Broker A licensed property broker need only conduct their business as a “travel agent” to achieve the actual status of a non-‐liable broker. The measure of extent of correct brokering conduct revolves around acts of taking possession of cargo, or creating a “beneficial interest in the cargo as outlined in [Statute 49 USC sec 80101]. A travel agent limits his liability in airplane transportation to the issuance of the ticket, careful not to undertake the activities of the” offeror or transporter” in that process. If a travel agent goes beyond that prescribed, limited conduct, then, in the event of a loss, may be found liable as a transporter. See [Kaleta’s opinion]. Imagine as a travel agent warranting the sobriety of the captain on a three-‐hour boat tour of the harbor, undertaking the acts of a transporter and so being responsible and liable for the outcome. Therefore, any broker activity in your case would center on the conduct of that broker. In defending the licensed property broker, then the level of care the broker exercised in the transportation act, in your case, is critical to your defense. Did the broker create a contract for transportation between the shipper and the motor carrier, the only people who have a beneficial interest in the cargo so far? Or create a Contract between himself and the motor carrier, in affect, creating the broker -‐a principal, and the carrier-‐an agent of that broker? Did the motor carrier that owns the broker or vice verse, represent him or herself as being responsible and thus liable for the actual cargo to the shipper? Then did the motor carrier invoice the shipper for that act of transportation, and then give the cargo to their brokerage to handle? Which by far, is the most common transportation action in practice. This person providing transportation is a truck broker, who is a principal, and the sub hauling motor carrier his agent. Brokers must take care and conduct their business, as a licensed property broker defined, not a truck broker. Only a person who declares a beneficial interest in a cargo, insures the risks involved and is otherwise qualified to haul the cargo by Regulation, is a motor carrier hiring another motor carrier, and that act is described in every truck stop in America as “Truck Brokering”. The words, as used, describe a motor carrier’s act of transportation and its nature. Brokers, in their operations’ should never undertake activities if a transporter, such as requiring the trucker to “call in daily or pay a fine”, an element of driver control. Would it not be simpler and

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without liability for the broker to call carriers dispatch and ask an interrogatory “will the load deliver today?” This is an element of control truck brokers as a principal, exercise over their agent sub hauler. It is also direct evidence that the principal motor carrier is direct control of the agent sub haulers money! These are but a few of the correct broker operational suggestions that are in my “Transportation Brokerage Operations Manual © 1987-‐2013, where I instruct those interested in the brokering activity such as a travel agent, not as a truck broker. Many truck broker’s even one from the nations largest truck brokerage Schneider National carriers, {Mr. Rob Frazier, in 2002}, have graduated from my school, as a Master Broker®, and is brokering as of this writing. The CEO and CFO of he the motor carrier Roads West in Phoenix graduated as well. (As of this writing, this company was purchased by Knight Transportation, of Phoenix, AZ.)

In the case of Hammer & Steel v BTC, a licensed property brokerage; the broker had been

scrupulous in collaboration with the shipper, scrupulous to delete any form of ownership interest in or take possession of the cargo, and was scrupulous in requiring the motor carrier to provide, before the fact of transportation, several extraordinary insurance requirements to the shipper directly, not to himself (shipper is listed as additionally insured vs. the broker as a certificate holder only) and did not by representation or deed, be involved in the actual act of transportation. I believe, but don’t know, if a successful defense was the result in this outcome by settlement, which is typical for those in the forensics field. Defense of a Truck Broker The defense of this kind of broker is problematic, and revolves around the issue of “physical” possession of the cargo in question. Most truck brokers act like a forwarders during the act in that they think of themselves as a trucker and a shipper. If in the act of transportation, the truck broker never “physically” takes possession of the cargo, but merely facilitates other modes in possession, in the act of transportation, the transfer of the property from one mode of transportation to another, then an adequate defense can be sought and then built. The truck broker is then, holding themselves out to shippers of goods as being responsible and liable in the act transportation, for cargo loss only (as opposed to public liability) in that they insure those risks, but are not involved in the actual provision of the act of transportation, in control of the act itself, or in control of those providing the act itself, not in control of the money of those involved in transportation. This person operational activity in the event of a loss, is limited to paying the motor carrier (any mode for that fact) in full and then making a claim for said freight charges, and the actual loss itself, if the fact that freight did make it from A to B exists, and that fact is not in dispute. Otherwise, a claim for loss must be submitted by the truck broker to their insurer for acceptance or rejection, and be responsible for that outcome as well. As in the Elkins Act of 1903, providing that everything in American transportation must be fair to both parties in that act of transportation. From this policy, I would argue that no reasonable and prudent person would undertake an act of transportation, if any legal opportunity existed to not pay that person for that act. From this policy, I would argue that, there can be no lawful claim for loss for a cargo that did go from A to B, and that fact is not in dispute, until the carriers freight bill is paid in full FIRST and SECOND a valid claim for that loss entertained and possibly, and a claim for freight charges themselves can be entertained. All cargo loss; however is subject to adjudication under “Carmack” [49 USC, sec 14706]. In fact the act of transportation stands by itself, separate and above the interest of those who pay for that service. Indeed, in my readings as a student of transportation since 1958, that the LAW comes down of the side of those

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who undertake the risky business of transportation, and against the interests those who pay for that service.

The truck broker then has the power and the rights of a motor carrier, and as a principal, hires another (authorized or not) motor carrier as his agent, (49 FR 371 thru 396) and is responsible, in whole and in part, for the outcome of that act of transportation. In this kind of act, the truck broker is traditionally in control of the sub haulers money, in that they can deduct from sub haulers settlement of charges, for loss, such as a cargo or other loss. Licensed Property Brokers do not have this control, they maybe or are merely the appointed agent of the shipper in the event of loss, and the collection of same, from a motor carrier and may have to pay the carrier in full, and then make that claim as an appointed agent of the shipper. The broker is a mediator of the claim, as he has no beneficial interest in, nor are they in possession of the cargo, and thus the loss in the act of transportation. The truck broker may be liable if negligent, especially in the vetting of that carriers credentials, and is required by the nature of his relationship to the sub hauler, as well as to their obligations for the provision of public safety, to make a determination as the likelihood for safety examining the government ratings. License Property Brokers conduct in this matter is to limit their actions in vetting, to observation and report to the shipper for their evaluation, about public safety. Licensed Property Brokers are not safety experts, trained in the fine art of Log Books and its auditing, and evaluating government safety ratings. Thus, Licensed Property Brokers are limiting their conduct to that of a travel agent, not a trucking company. Truck Brokers on the other hand, have all of the responsibility of a motor carrier hiring another in the act of transportation, and indeed are “strictly liable’ for its outcome, in that they may not barter, contract away, or in any way, give to another, their responsibilities and liabilities. The truck broker who hires a sub hauler carrier and is responsible for their agents transportation activities, and may not escape those responsibilities and liabilities, by contract, especially using a license of a property broker, as truck brokers are excluded by definition. Defense of a Shipper Shippers have a need to improve customer relations by altering their distribution techniques. In normal and common practice, shippers using some form of least cost routing guide to purchase transportation, and the transporter selected shows up for loading creates an arms length type of transaction, (no principal agent relationship intended). No transportation activity other than perhaps creating the contract between themselves and the motor carrier referred to as a Bill of Lading (BOL), where the cargo is enumerated, and its condition described, and possibly a declaration of value is made. This shipper type is easily defended, as their involvement in the act of transportation is extremely limited and purposeful. Shippers like this however, have a non-‐delegable duty to the public safety, in their selection, then vetting the carrier’s safety and fitness for the act of transportation. This duty also applies in government mandated packaging and handling requirements before the act of transportation starts. There are even more stringent requirements, if the shippers cargo is hazardous materials, where government rules not only make the shippers liable in the act of transportation, but provides strict rules of enforcement backed by severe penalties for failing in the exercise of requirements to their duty to provide for the public safety. Puckrein v ATI Transport, I believe, now extends a similar yet more expansive duty to shippers of all commodities. In other words shippers selecting motor carriers must do a very extensive vetting of motor carriers before the act of transportation occurs, even while working with a broker.

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Shippers who have their own fleet, where the integration (trucking/shipping) of trucking operations into their transportation purchasing process, may be extant, or that integration may be in various forms. These types of shippers are more involved in the act of transportation and may have completely integrated their motor carrier operations, and the concomitant safety regulations that accompany each motor carrier, into their distribution programs. These types of shippers are less easily defended because the degree of integration conduct affects their provision for the public safety. In a case I was involved in, (Caballero v Archer), in Federal Court, the Judge ruled that my opinion was incompetent and irrelevant, and thus a shipper who makes a delivery appointment for the carrier, which requires the trucker to drive over the legal number of hours, is not responsible for the wrongful deaths created. I respectfully disagree and subsequent other court decisions such as Puckrein, and Spoerl/Henry case, of Will County, IL, have vindicated my opinion about shippers who act as a motor carrier and assumption of the liabilities of a motor carrier and be responsible for the outcome of that act of transportation. Shippers can be negligent when selecting unqualified or unsafe motor carriers, and also in performance of their own duties of the transporter -‐[Kaleta’s opinion]. Shippers in their purchasing of transportation must not become an “offeror or transporter” within the Kaleta’s narrow ruling. In other words shippers and brokers are narrowly limited in their conduct and actions of purchasing transportation, in order to stay out of the motor carrier liability fray. All in all, shippers who become more involved in the actual transportation act, other than the activities described, may escape the liability of the inherently dangerous activity of trucking, or may be considered an integral part of that that act. Brokers are shippers by Law and Regulation. Truck Brokers are not shippers (also a Forwarder), unless by their conduct in brokering operation is that of their license, as opposed to that of their authority as a motor carrier, separate and distinctly different. All conduct is measured by the act of representing themselves, as taking possession of the cargo, or having any “beneficial interest” in the actual provision for the act of transportation. Shippers who have or own a brokerage and vice versa, are not brokers within the definition of (Ibid: 371.2) or (see 49 CFR 371.9) merely on the basis that one of the parties has a beneficial interest in the cargo, thus extending that interest to the brokerage in the process. Shippers who own a brokerage are merely using the brokerage to wring more profit from the act of transportation and more closely control their distribution, usually at the expense of the carrier simultaneously inflicting more control of the motor carrier. Shippers contemplating operating a brokerage beware. As you can see, the government takes great pains in excluding truckers with authority, and shippers from the realm of license property brokering. Plaintiff Against a Licensed Property Broker A Licensed Property Broker’s liability is determined by his conduct alone. [Ibid; Kaleta’s opinion] Anyone can get a brokers License, and under the new Law will have to qualify, test, and be certified, in order to obtain the License and Bond. (Bondsmen and brokers are now personally liable for the $75,000 of the Bond, in untoward events). Brokers have been generally excluded from the remedies provided by Carmack, in the event of cargo loss. I disagree, however, because those Licensed Property Brokers acting as motor carriers and/or acting negligently, in order to qualify for the shipper’s load tender, must be held accountable in the event of loss. Most shippers are stunned

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to find this out when its crunch time on a cargo loss, regardless of how insubstantial, and those acting as motor carriers believing the brokers license conveys some form of immunity from liability and Carmack). Licensed Property Brokers are confined to a very narrow set of principles in action and in operation, in order to be considered “broker” within the definition (ibid: 49 CFR 371.2.). I have seen no Regulation, stipulation, or other legal means that extend exception of immunity from motor carrier liability. If a person acts as a motor carrier they are a motor carrier, and it’s not by their choice to use a license to escape that liability. There is something diabolical, if a person represents to a shipper, that they can haul, or qualify as a carrier, or guarantee delivery, and then in the event of loss use a broker’s license to escape. Willful misrepresentation comes to mind, but then again, I am not a Lawyer. All of these principles revolve around actions that either convey or by action, the intent to take possession of the property for an act of transportation, whether they insure the risk of not. Possession is the litmus test for determining who is a broker and who is not, and who has a “beneficial interest in” the cargo and who does not. The Bill of Lading (BOL) is not dispositive proof of a brokers beneficial interest in the cargo, unless there is a contract requiring the Brokers name appear on every (BOL). A consignor, who may or may not be shipper, routinely put the brokers name on the BOL, through no fault of the broker, and because the broker was not present at its inception and the action is moot.

Property Brokers are not required to have or insure the risks of the cargo handling or to public safety. (Note the government claims a License can only be granted when insurance is in place, but they can only be referring to the Surety Bond, since insurance companies issue most bonds. Surety Bonds are NOT insurance, but collateralized financial responsibility instruments or contracts).

In the case before you start the discovery process with the shipper. What was their

expectation as a result of that brokers sales approach? Was insurance provided? What did insurance policy representation was presented? Did the shipper require of the broker, “General Liability” and Workman’s Comp policies for all people sent by the broker to the shipper’s premises?

Who invoiced them? To whom did they pay the freight bill? If the freight was destroyed, who paid the shippers loss? During this discovery, if the Broker represented to the shipper that they guaranteed delivery, or insured the risk, then, they can only exercise this control as a truck broker, provide the transportation service, if they are in possession of the cargo, they are acting as a motor carrier. Licensed Property brokers are never in possession of cargo, cannot guarantee delivery, should never represent that they are responsible for delivery and be liable for loss, as they are uninsured. Imagine if you will the travel agent guaranteeing you will not be stranded on the tarmac.

Contracts are generally present in just about every case I have seen. Contracts were at one

time required in every act of surface transportation (1993), but with passage of the ICCTA (Negotiated Rates Act of 1995), that unwieldy provision was altered by a change in verbiage to read the word “must be a contract” to “ there may be a contract”; thus contracts for transportation are no longer a “ legal requirement” in transportation.

Brokers however, like transportation contracts. They attempt to use the contract between

themselves and the shipper and the motor carrier, to limit their liability in an act of transportation. These contracts in general have metamorphosed over time into contracts that bind the broker to

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motor carriers’ liability for the act of transportation. There are usually three (3) contracts, one most verbal, between the broker and shipper, and the other between the carrier and broker referred in common practice as the “Continuing Contract” as required in the 1993 Negotiated Rates Act 1993. The third is one in which the rate and time of service provision are provided as required in every contract, and in common practice is referred to as the “Rate Confirmation”.

A proper contract between a broker and shipper would be casual, indicting that the broker

will collaborate to achieve a purchase of transportation with the shipper knowledge and consent. An improper brokering contract is where the broker makes specific representation and arrangements reserved to actual transporters, in order to get loading consideration from that shipper. [See 49 CFR 371.7]

A proper contract between the broker and motor carrier should indicate that the broker is

an intermediary between the shipper and carrier through the broker, and is limiting his/her liability to collecting a freight rate and invoice for the same, from a shipper and paying the motor carrier his negotiated rate less an honest commission. [See 49 CFR 371.3]

A proper contract for the rate and time of service, the “Rate Confirmation”, should require

the motor carrier to make and keep his own appointments in a manner consistent with the Hours of Service Rules of all motor carrier, and most importantly, limiting any element of broker control, such as requiring motor carrier to call in daily or impose any fines; limiting the Rate Confirmation to issuing the ticket. No stipulations should be included for back or non-‐solicitation, and certainly no stipulations about changes to the settlement amount, and or fines for non-‐performance. (The rate confirmation is a statement of what the motor carrier quoted for this move, because the motor carrier determines the broker’s rate to the shipper, not vice verse.)

Most brokers find creating contracts a daunting prospect, turning this task over to their legal

counsel. I hope this paper will assist attorneys in creating a nice one (1)-‐page contract, for to make them longer, actually creates broker liability rather than relieving it.

In general, contracts that require the carrier to “hold harmless” the broker, in the event of

loss, indicates the broker intended the role of “principal” in their carrier relationship. This clause is indicative of a broker’s beneficial interest in the cargo. I am sure American Airlines provide no such language for the average travel agent and their ticket sales. Language in contracts that denies the rights of the motor carrier in anyway, such as the right to create their own BOL and be named as the carrier of record, and obtain their own Proof of Delivery (POD), the BOL rights thereof, and to collect their debts and full recourse and redress against all parties to the act of transportation or rights to solicit anyone, indicate truck broker control. Back solicitation clause is an exercise of control beyond the pale of the Licensed Property Broker. Imagine, the travel agent making you sign a paper that you never access American Airlines, on your own, again. Back solicitation agreements are the realm of the truck broker, where the existence of other/previous transportation contracts, and, the broker has a far more substantial investment in maintaining that relationship, and has an interest in the cargo, and in the preservation of that shipper/truck broker relationship, than a mere licensed property broker. Truck brokers often control the money of the motor carrier, by contract; money offset, and is indicative of at least an unregulated franchise. Money control provisions are indicative of a principal/agent relationship, and certainly an unregulated franchise. Any form of

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control of money by the broker, means they are a truck broker, because control of the act of transportation are not the actions of a licensed property broker.

There are many other broker conduct aspects you need to examine. I suggest a further study

in my “Transportation Brokerage Operations Manual© 1987-‐2013 downloadable @ www.loadtraining.com, to find other points of broker conduct for your case. Plaintiff Against a Truck Broker Truck Brokers are motor carriers first and foremost. The mere existence of (ibid; 49 CFR 371.2) requires a trucking company who has a license as a property broker operate the businesses completely separated, eschewing any forms of combination of activity for efficiency reasons. Brokering by a motor carrier is the act of one motor carrier (principal) hiring another carrier, his agent, controlling and responsible for the outcome of the act.

The largest brokerages in the country have the same name as their trucking company. Without this process their brokerage would have little if any business by standing on their own devices. Generally the motor carrier or his salesman gets the “order” from a shipper, and then after that representation as a motor carrier, decided by availability alone, to truck it normally, or use their brokerage. Apparently, their legal counsel failed to read 371.2, which prohibits this relationship, and defines the truck broker as something else but a Licensed Property Broker as defined. Indeed, today UPS and FEDEX list themselves amongst America’s largest “brokers”. The fact in their ATA listings and their statements reveal they do not understand the difference between a Licensed Property Broker and a Forwarder. A Forwarder, under the new Law is required to obtain a license as a property broker, and place the Surety Bond. UPS and FEDEX are forwarders by every measure and will not qualify as a licensed property broker alone by their trucking acts of transportation.

The roles mixed, creates an uncertain future, clearly, the new Law, was promulgated by

someone other than a licensed property broker. I believe the new LAW is a feeble lobbyists attempt to give every one involved in the act and purchase of transportation, forwarders included, a free pass from their obligation to provide for the public safety. I feel, Lord Coke, (Southcote v Bennett) would roll over in his grave at the new Laws passage, as he was the first English jurist to extend the concept of strict liability to the class of people known to transport. Bennett was found to be a common carrier and could not use the fact that he was formerly a common laborer in his own mind, in Common Law.

Having been a truck broker, I can attest that a motor carrier insurer will look at your truck

brokering, dimly. During my trucking company ownership tenure, insurers would completely exclude my brokered loads from coverage, after I refused to include the mileage of those brokered loads from their Premium determinations. When loss occurred I was without insurance coverage, and had to pay the brokering claims under Carmack. (Both trucking and brokering company’s had the same name.)

Truck Broker’s operations mirror that of a motor carrier and their relationships to their

company driers and owner/operators, and to other motor carriers they are brokering to. Such

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control is perhaps why the FMCSA eliminated that type of brokering from consideration in brokering. This is the principle reason truck brokers are unable to extricate themselves from the liability for a loss.

Truck Brokers control over the actions of those authorized motor carrier that accept their

loads, eliminate them from being considered brokers. Control or time and rate of service, the linking of unrelated settlements of money for the payment of unrelated claims, demands that such truckers call in or be fined for failure, mean that truck broker is in possession of the cargo, and must exercise a high degree of control to insure the outcome of the act of transportation. A travel agent is always sorry the plane crashes, but is liable by conduct for too little of the act of transportation to be considered culpable, as properly operated licensed property broker should be. Plaintiff Against a Shipper Shippers are, in common practice, not liable in a transportation loss. If a shipper fails to use prudent judgment in the selection of a motor carrier, they could be subject to a negligent hire situation. If shippers fail to meet normal and sensible packaging processes, and the cargo escapes and injures someone of the environment, then they are liable for the consequences by negligence. Shippers can be found negligent in loading and unloading of trucks, and providing an unsafe working environment. Shippers and receivers of commerce may not coerce a driver into loading or unloading their own trucks, and must provide assistance to the driver, and pay for that assistance [49 USC 14103]. In general, shippers have a non delegable duty to provide for the public safety in their acts of purchasing and/or enabling the loading and unloading of trucks.

Shippers who own trucks are in a different category, based on the extent of integration of trucking activity with the shipping activity occurring in their acts of purchasing. These shippers are corporately aware of the motor carrier safety Regulations, by their ownership of an “authority” of a motor carrier. Shippers’, who completely integrate their trucking authority with their own distribution network, must be scrupulous in separating the two activities in their application and operations. I have actually seen an instance where the shipper used the trucking personnel to train their traffic and purchasing people on the proper dispatching of trucks, created a BOL requiring the driver to call in on time or pay a fine, and disallowing shippers load and count (SL&C) liability limitation stipulations reserved exclusively to the motor carrier. SL&C legally allows the motor carrier to limit his liability to shrink wrapped pallet count rather than a piece count because the shrink-‐wrap denies driver access to count the pieces. More importantly, this shipper assumed the power to offset revenue owed to settle claims for loss by deducting loss from carriers pay. All of these activities are the realm of a truck broker, not a shipper. In normal arms length business practice shipper-‐carrier relationships, the carrier invoices the shipper and the shipper pays that invoice and then makes the claim for loss. This integration of trucking operations did not include training in safety procedures or Hours of Service rules, which I will argue, is a minimum effort to provide for the public safety. Shippers like this, have a default process for carrier selection, I that the least cost would be to load a corporate owned vehicle, failing there, to select a carrier amongst those they considered “dedicated” to shippers cause, failing to find availability there, default to normal carrier purchasing, failing there, default to the most expensive choice, licensed property brokers. In all of these defaults, the dedicated carrier should be held to arms length relationship, ad

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not treated as one of their own trucks and drivers. Certainly the training of the traffic and purchasing managers in the act of dispatch should have included intense safety training.

Shippers are not brokers by definition, even if they own their own brokerage and separate

the two activities of shipping and brokering. Shippers who consign freight, and deny the motor carriers rights in his own Bill of Lading

(BOL) are too deeply involved in carrier’s activity to extricate them from acting as a motor carrier. Shippers who require trucking companies to call in or pay a fine, or exercise any form of driver control are acting as a motor carrier. Shippers who make appointments with out motor carriers participation or consent may be liable for undue control of the rights of the transporter

Shippers who deny the motor carry his rights to limit liability in a consignment by denying

access to count the cargo pieces enumerated on the BOL are assuming the responsibility of a motor carrier even if the cargo is sealed (SL&C in common practice – shippers load and count) and then holding the carrier responsible for loss by piece count, are assuming the role of a principle, in a supposed arms length transaction. Shippers who assume the power to control the motor carrier money assume a principal relationship to the motor carrier acting as their agent, and reap the whirlwind in doing so. Shippers, who create extensive contracts with brokers and assume the role of transporter, may be considered a motor carrier as well. Plaintiff or Defense of a Forwarder It is clear from Sigmon’s (Ibid; Millers Law…) definition of a forwarder, and that definition in common practice, that a forwarder is a hybrid of broker, as defined, and a motor carrier, in practice. The extent of the liability of the Forwarder is easily determined by their conduct. In logistics, (the actions involved in creating an entire supply chain), the conduct can be squarely determined by the concept and actions of taking possession of freight, or having a beneficial interest in the cargo, which forwarders have by Statute and Regulation. That conduct of possession may indeed separate the possession and responsibility for the cargo from the public liability in a loss. Most Logistics companies then should be judged by their conduct. A forwarder, who assumes the responsibility for a cargo loss, may not necessarily be liable for an accident to public safety, because they in fact my not be undertaking the acts of a transporter (Kaleta’s opinion, in that a Forwarder would be considered an “offeror” would have to register for the RSPA Haz Mat regulations, but not physically undertake the acts of a Transporter as she defines). According to Sigmon, a forwarder would be liable for the cargo loss as a “receiving or delivering” motor carrier, but not be liable for the actions of a transporter. A forwarders conduct, then can be separated from the liability of a motor carrier. Again all parties to an act of transportation have a non-‐delegable obligation to protect the public safety, even property brokers in their exception. The degree of motor carrier conduct of either a forwarder or a broker will determine liability in any loss.

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Coda

I do not believe that Congress, in creating a Property Broker License in 1936, ever intended to give a FREE PASS to those engaged in providing an act of transportation, from the concomitant strict liability established when the TERM “Common Carrier” was first established. Kaleta’s Opinion essentially re established the broker’s non-‐liability with respect to who must register and become liable as a motor carrier, and distinguished one from the other. The net affect of the HAZ MAT Law regarding licensed property brokering essentially eviscerated the FREE PASS policy, without Kaleta’s opinion.

The FMCSA intended by the interpretation and then establishment of the rules and

guidelines, to provide a narrow field of broker conduct and endeavor, for those arranging transportation, without the strict liability aforementioned. I believe; however, that many common motor carriers believe that their conduct as a motor carrier, and their conduct as a Licensed Property Broker should be the same, and thus both brokering (truck broker and licensed property brokering) types are excepted from liability. It is your job to complete a pattern of intent and conduct.

A logical examination of the FMCSA Regulation implies and directs different conduct for the

Licensed Property Broker as opposed to that conduct of an authorized motor carrier.

I hope this Guide will provide the distinctions necessary for you to properly proceed in the American System of Justice. I find no one, who has taken the time to write logically, about the subject of the brokering license, Harvard certainly doesn’t teach truck driving or brokering for that fact, but may train others in the field of “logistics” a catchphrase for the study of the entire supply chain, of which brokering plays a very specific and small role. Many brokers take on the airs that they do all logistics, but the industry is so large and complex, few if any, attain such exalted status. Indeed some do all logistics and the confusion of what they do, both the roles of shippers and carrier is seen in their slogan “ tightest ship in the shipping business” yet in fact they are a trucking company, comes to mind. Brokering and trucking are the issues discussed in this paper, and the confusion that most observe when the broker is describing what he/she does, is extant. There is a logical explanation of brokering and this paper addresses the logic as seen from an old experienced person has used that logic to thrive, in the logistics’ industry, since 1980.

This Guide was derived from the experience of serving many Attorneys (both plaintiff and defense) and Courts, who have sought my counsel over the last 12 years, and from aiding over 18,000 individuals, and the transportation brokering business plans of those individuals and of their company’s business plans, at my training school www.LoadTraining.com, since 1987. From this body of work, some have come to consider me, an expert in the field of truck brokering and the field of Licensed Property Brokering, as defined. To me, an expert will always be defined as my father, William G. Dwinell, once said “ an expert is a fool away from home”, which you may find this treatise to be.

Respectfully submitted David G Dwinell, Master Broker®

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Documents

An Attorneys Guide to Brokering - David G. Dwinell · 7/31/92 Mr. Allen I Roberts, Associate Administrator Hazardous Materials Safety Research & Special Program Administration 400