AN INTRODUCTION TO

INTERMODAL COMMERCE AND LAW

INTERMODAL COMMERCE

History – from break-bulk to “The Box”

Break-Bulk at the Piers – Chaos, Injuries, and Freight Loss,

Damage, and Theft

The Long Move Toward Containerization

Containers Became the Norm for Shipping, Railroading

INTERMODAL COMMERCE

Railroads and Ocean Carriers have and use Chassis

Different sizes for ships and trains

No wheels . . .

INTERMODAL COMMERCE

. . . The Solution – The Intermodal Chassis

Functional equivalent of a trailer – a Motor Vehicle . . .

Connects to a tractor just as a trailer

Wheels, brakes and air lines, lights and wiring, on

a frame that holds a Container

INTERMODAL COMMERCE

The Chassis qualifies as a Motor Vehicle under 49 U.S.C. §30102(a)(7)

(7) “motor vehicle” means a vehicle driven or drawn by

mechanical power

And manufactured primarily for use on public streets, roads,

and highways . . .

INTERMODAL COMMERCE

How does a Container get from a Ship or Train onto the Highways?

Offloaded by cranes from Ships or Trains at Seaports or

Rail Terminals

Mounted onto Intermodal Chassis

Driven off terminals by truckers (“Outgated”) . . . at that point

Interchanged to the trucker

INTERMODAL COMMERCE

Containers are also interchanged from Ships to Railroads –

Rail lines extending to the piers

Containers are removed from Ships and placed directly

upon Trains

No “motor vehicle” is involved in this operation

INTERMODAL COMMERCE

Who Owns the Chassis, and Where are they kept?

Owned primarily by independent companies who lease

Chassis to their Customers

Customers include ocean carriers, railroads, and motor carriers

INTERMODAL COMMERCE

Where are they Kept?

At Seaports – in Chassis Pools

Proprietary or Contributory

At Rail Terminals – generally leased to the rail carrier

Management, maintenance and repair, accounting, record-keeping,

and Interchanging

INTERMODAL LAW

Why is the Interchange important? Because it starts the –

Rental obligations under lease agreements

Indemnity and liability obligations under contracts

Insurance attachment under contracts

INTERMODAL LAW

How Do Intermodal Equipment Owners and Lessors Protect Against

Liability?

Uniform Intermodal Interchange & Facilities Access Agreement

Equipment Interchange Agreements

Insurance Requirements – Additional Insured Status

The Graves Amendment – 49 U.S.C. §30106

INTERMODAL LAW

Uniform Intermodal Interchange & Facilities Access Agreement (“UIIA”)

Managed by the Intermodal Association of North America

Signatories – Ocean Carriers, Railroads, and Motor Carriers

wishing to haul intermodal containers and chassis

Third-Party Beneficiaries – Intermodal Equipment Owners and

Providers

INTERMODAL LAW

UIIA – Features

Regulation of Parties’ Relationships

Indemnification Provisions, especially for Equipment Owners

and Providers

Insurance Requirements

INTERMODAL LAW

UIIA – Features – Indemnification

Section F.4. Indemnity

“Motor Carrier agrees to defend, hold harmless and fully indemnify

the Indemnitees [includes container and chassis owners] (without

regard to whether the Indemnitees’ liability is vicarious, implied in

law, or as a result of the fault or negligence of the Indemnitees) . . .

against any and all claims resulting from the Motor Carrier’s use or

maintenance of the Equipment during an Interchange Period.”

INTERMODAL LAW

UIIA – Features – Insurance

Section F.6.a. Insurance Required

A motor carrier participant shall maintain a “commercial automobile

policy with a combined single limit of $1,000,000 or greater, insuring

all Equipment involved in Interchange including vehicles of its agents

or contractors, and shall name the Provider as additional insured.”

INTERMODAL LAW

UIIA – Features – Insurance

Section F.6.c. Insurance – Endorsement UIIE-1

“Motor carrier shall have in effect, and attached to its commercial

automobile policy a Truckers Uniform Intermodal Interchange

Endorsement (UIIE-1), which includes the coverages specified in

Section F.4. * * * Evidence of the endorsement of the policy and the

coverage required by this provision shall be provided to IANA by the

insurance company.”

INTERMODAL LAW

UIIA – Governing Law

MD law applies to the UIIA – permits indemnity for one’s own

negligence. NY, NJ, MA, TN agree.

MA and TN liken the obligations to insurance, even in the face of

TN’s Anti-Indemnification Statute.

TX has refused to apply MD law and applied the TX statute barring

indemnity for one’s own negligent acts.

INTERMODAL LAW

Protecting Against Vicarious Liabilities

State Vicarious Liability Statutes – E.g., New York Vehicle and

Traffic Law Section 388

State Decisions imposing vicarious liability on innocent owners

Joint Venture Liabilities

INTERMODAL LAW

Protecting Intermodal Equipment Owners and Lessors Against Liability

The Graves Amendment – 49 U.S.C. § 30106 (2005)

(a) An owner of a motor vehicle that rents or leases the vehicle to a

person shall not be liable under the law of any State or political

subdivision thereof, by reason of being the owner of the vehicle, for

harm to persons or property that results or arises out of the use,

operation, or possession of the vehicle during the period of the

rental or lease [the Interchange Period], if --

INTERMODAL LAW

Protecting Intermodal Equipment Owners and Lessors Against Liability

The Graves Amendment – 49 U.S.C. § 30106 (2005)

(1) the owner is engaged in the trade or business of leasing motor

vehicles; and

(2) there is no negligence or criminal wrongdoing on the part of

the owner.

INTERMODAL LAW

Protecting Intermodal Equipment Owners and Lessors Against Liability

The Graves Amendment – 49 U.S.C. § 30106 (2005) –

Potential Legal Issues

A. What constitutes “renting or leasing”?

B. What constitutes a “motor vehicle”?

C. What constitutes “negligence on the part of the owner”?

PUTTING IT ALL TOGETHER – Eisenberg v Cope Bestway Express, Inc.*

Interpool, Inc., leased a fleet of chassis to CSX pursuant to an

Equipment User Agreement, with chassis positioned at various CSX rail

terminals throughout the U.S.

A CSX container was offloaded at the CSX Buffalo terminal onto an

Interpool Chassis. The container and chassis were outgated from the

rail terminal by the trucker, Cope Bestway Express, Inc., and

transported the load to the railroad’s customer in Rochester.

* 17 N.Y.S.3d 457, 2015 N.Y.App.Div. LEXIS 6935 (App.Div. 2015)

PUTTING IT ALL TOGETHER – Eisenberg v Cope Bestway Express, Inc.*

In Rochester, the truck ran a red light and collided with a car occupied

by three college students. All were injured.

One female student sustained debilitating neurological injuries.

Suits were brought in New York.

* 17 N.Y.S.3d 457, 2015 N.Y.App.Div. LEXIS 6935 (App.Div. 2015)

Eisenberg v Cope Bestway

Interchange of the container/chassis to Cope Expressway – Triggered indemnities and insurance coverage for Interpool:

• against CSX under the Equipment User Agreement

• against Cope Bestway Express under the UIIA and a separate EIA

Eisenberg v Cope Bestway - The Railroad and Trucker Honor their Obligations:

CSX and its insurer extended significant indemnity and insurance rights

Cope Bestway and its insurer extended defense, indemnity, and insurance

Cope Bestway’s insurer paid all of our fees through the Appeal

Eisenberg v Cope Bestway - Interpool obtains Dismissal

Summary Judgment granted on the Graves Amendment

Upheld on Appeal

Issues Decided under Graves Amendment:

• The Chassis was leased to CSX

• The Chassis is a motor vehicle under 49 U.S.C. § 30102

• Interpool was free from Negligence

Eisenberg v Cope Bestway – The Outcome

The Trucker’s Policy was paid out among the three Plaintiffs

CSX was exonerated but nevertheless contributed to an overall settlement to avoid an appeal to the New York Court of Appeals

Interpool paid nothing toward the settlement

Interpool’s legal expenses were fully paid by the trucker’s insurer

YOUR TAKEAWAY

Intermodal Equipment Lessors have favorable contract rights with Ocean Carriers, Railroads, and Motor Carriers

They have favorable defenses under the Graves Amendment

They will use them in your cases!