Opinion ID: 800570
Heading Depth: 2
Heading Rank: 2

Heading: Federal Regulation of Motor Carriers Transporting Passengers for Hire

Text: As indicated in Part I.B. above, § 18 of the 1982 Bus Act, which was applicable at the time of the accident at issue here, required the promulgation of financial responsibility regulations to apply to the transportation of passengers for hire by motor vehicle in the United States from a place in a State to a place in another State  or from a place in a State to another place in such State through a place outside of such State, or between a place in a State and a place outside of the United States. Bus Act § 18(a) (emphases added). Pursuant to this authority, the Secretary of Transportation issued regulations requiring, inter alia, that an insurance policy, to evince such responsibility, include the MCS-90B endorsement requiring the insurer to pay, within the limits of the policy, any final judgment recovered against the insured for personal injury to a member of the public or property damage resulting from negligence in the operation, maintenance or use of motor vehicles subject to the financial responsibility requirements of Section 18 of the Bus Regulatory Reform Act of 1982, 49 C.F.R. § 387.39 (Illustration I). Neither party has called to our attention any casesnor are we aware of any dealing with the applicability of an MCS-90B endorsement in circumstances such as those at issue here, where a carrier's vehicle was involved in an accident while performing a contract that called for travel solely intrastate and where the carrier had an unrelated contract that would likely involve travel between two places in the same State over a route passing through a second State. In various contexts relating to the transport of property, involving such questions as whether a particular vehicle or driver was covered by an MCS-90 endorsement (which, for vehicles transporting goods rather than passengers, parallels the MCS-90B endorsement, see, e.g., Canal Insurance Co. v. Coleman, 625 F.3d 244, 249 (5th Cir.2010)), see, e.g., The Integral Insurance Co. v. Lawrence Fulbright Trucking, Inc., 930 F.2d 258, 260-62 (2d Cir.1991); Century Indemnity Co. v. Carlson, 133 F.3d 591, 595 (8th Cir.1998), or whether a motor carrier's employees are exempt from federal wage-and-hour requirements because the carrier's business as a whole is regulated by the Secretary of Transportation, see, e.g., Bilyou v. Dutchess Beer Distributors, Inc., 300 F.3d 217, 221-22 (2d Cir.2002) (Bilyou) ; Collins v. Heritage Wine Cellars, Ltd., 589 F.3d 895, 896-97 (7th Cir.2009); Klitzke v. Steiner Corp., 110 F.3d 1465, 1467-68 (9th Cir. 1997), this Court and others have noted that the existence of the requisite interstate nexus may be determined by looking to the intent of the goods' seller or shipper with respect to the goods' destination: Whether the transportation is of an interstate nature can be determined by reference to the intended final destination of the transportation when that ultimate destination was envisaged at the time the transportation commenced. Project Hope [v. M/V Ibn Sina], 250 F.3d [67, 74 (2d Cir.2001)]; see also Atlantic Coast Line [R. Co. v. Standard Oil Co. of Kentucky], 275 U.S. [257, 269, 48 S.Ct. 107, 72 L.Ed. 270 (1927)] (determining continuity of transportation by examining whether the destination of the goods  is arranged for or fixed in the minds of the sellers ); Klitzke v. Steiner Corp., 110 F.3d 1465, 1469 (9th Cir.1997) (Whether transportation is interstate or intrastate is determined by the essential character of the commerce, manifested by shipper's fixed and persisting transportation intent at the time of the shipment . . . .) (citation omitted) (emphasis in original); Foxworthy[ v. Hiland Dairy Co.], 997 F.2d [670, 672 (10th Cir.1993)] (Crucial to a determination of the essential character of a shipment is the shipper's fixed and persisting intent at the time of shipment.) (quotation marks and citation omitted); 29 C.F.R. § 782.7(b)(2) (intrastate transportation can satisfy the interstate commerce requirement of the M[otor Carriers Act] if the shipper has a fixed and persisting transportation intent beyond the terminal storage point at the time of shipment). Bilyou, 300 F.3d at 223-24 (second emphasis in original) (other emphases added). Plaintiffs cite most of these cases and characterize the bus that collided with the Lyons vehicle as having commenced an interstate trip, pointing out that bus 287 was not licensed to operate in the City of Yonkers and arguing that TFD had a fixed and persisting intent to send bus 287 to Armonk to bring the senior citizens back to Mount Vernon. Thus, characterizing the Emerson students as goods, plaintiffs argue that the nature of the goods being transported does not determine whether the trip was of an interstate or intrastate nature since their transportation was unauthorized and only involved a portion of that interstate trip which was performed by the driver without authority and contrary to the fixed and persisting intent of the shipper at the time of dispatch of bus 287. . . . . . . . [B]us 287 was only dispatched because T.F.D. had procured and begun performance of an interstate contract with senior citizens and . . . the fixed and persisting intent of T.F.D., as a shipper, at the time of bus 287's dispatch, was that bus 287 would be engaged in interstate transportation of those senior citizens with a final intended destination of Mount Vernon. (Lyons brief on appeal at 58 (emphases added).) We reject these contentions as analytically flawed and lacking in evidentiary foundation. First, plaintiffs' characterization of T.F.D. as the shipper (Lyons brief on appeal at 16, 48; see, e.g., id. at 18, 19, 23, 24, 25, 26, 29, 58), is analytically unsound. TFD was not a shipper; it was a carrier. The shipper is the entity that purchases the transportation services of the carrier. Further, the term shipper is not normally associated with passenger travel. For example, federal regulations define various categories of shippers with respect to shipments of goods, see, e.g., 49 C.F.R. § 375.103, referred to in 49 C.F.R. § 387.301(b), whereas regulations applicable to Motor Carriers of Passengers, see, e.g., 49 C.F.R. § 387.29, do not mention or otherwise refer to shippers. See generally S. Sorkin, Goods in Transit § 3.03 (2011) (It has been held that the destination intended by the passenger or shipper at the commencement of the journey or shipment and known to the carrier determines the character of the commerce. (emphases added)). Assuming that shipper is a concept applicable to non-adult passengers, the shippers of the students to and from Emerson Junior High School would have been the students' parents and the school. As there is no dispute that TFD's route to pick up and drop off those students was entirely within the City of Yonkers (Rule 56.1 Statements ¶ 17), no rational juror could find that the parents or the school intended that the school bus, in transporting the students between the school and the specified drop-off locations, would travel through a State other than New York. Nonetheless, we cannot say that the plans or actions of the carrier itself will never have a bearing on whether a trip is interstate or intrastate, for we doubt that the parents or the school would have any interest in the bus's itinerary after all of the students were dropped off at the prearranged locations. And viewing the record in the light most favorable to plaintiffs and drawing reasonable inferences in their favor, we accept that a TFD bus's route between Armonk and Mount Vernon would have been through Connecticut. Thus, our conclusion as to the intent of the parents and the school leaves open the question discussed belowof whether on the afternoon of February 14, 1989, bus 287, if it had completed its transport of the students in Yonkers, was to have been driven to Armonk to pick up the senior citizens. Second, plaintiffs' description of the students' transportation [ ]as unauthorized is contrary to the record. Although it is beyond dispute that TFD had a charter contract to transport the senior citizens back to Mount Vernon from Armonk, it is also indisputable that TFD had a contract with Yonkers or the Yonkers school district to transport students to and from Emerson Junior High School. Further, although it is undisputed that bus 287 was unlicensed by the City of Yonkers to operate in Yonkers, that fact does not support an inference that that bus was dispatched to Armonk. There is nothing in the record to suggest that bus 287 was the bus that had transported the senior citizens to Armonk that morning; indeed, the evidence is to the contrary, as Thomas testified that that was the bus he had used to take the students to Emerson that morning ( see Thomas Dep. 30-32). Plaintiffs have pointed to no evidence to the contrary. The uncontradicted evidence that bus 287 was used in Yonkers on the morning of February 14, 1989, defeats plaintiffs' theory that, on that afternoon, bus 287 could only have been dispatched to go to Armonk. Although plaintiffs suggest that the senior citizens had an intent to travel interstate ( see Lyons brief on appeal at 49) and one could reasonably infer that the senior citizens intended that they would be transported between Mount Vernon and Armonk over the most efficient route, i.e., through Connecticutsuch an intent provides no basis for an inference that that interstate trip was to be carried out by bus 287. There is no evidence whatever that the senior citizens had arranged for bus 287or any particular busfor their trip to or from Armonk. Further, even if the senior citizens expected to be brought home on the same bus that had taken them to Armonk, the evidence, as discussed above, is that the bus that had taken them to Armonk in the morning was not bus 287. Finally, although plaintiffs argue, apparently as an alternative, that the trip to pick up and drop off the Emerson students after school was only . . . a portion of [an] interstate trip to Armonk (Lyons brief on appeal at 58), that Thomas began [an] interstate trip [to Armonk] by picking up and transporting a group of students through the City of Yonkers where he intended to discharge them at three stops ( id. at 15; see, e.g., id. at 50), and that even if Thomas had completed his transport of the Emerson students that afternoon he had ample time to pick[ ] up and return[ ] th[ ]e senior citizens from Armonk through Connecticut to Mount Vernon ( id. at 15-16), no rational juror could so find. Groccia testified that the senior citizens were to be picked up in Armonk at 2 p.m.; plaintiffs have not pointed to any evidence to suggest a different pick-up time. The police report showed that the time of the accident in Yonkers was 2:51 p.m. When the accident occurred, Thomas had yet to reach even the first of the several drop-off locations for the students. And as Groccia testified, if Thomas had gone to Armonk, he would not have been in Yonkers. No rational juror could find that only a single trip was intended to fulfill both TFD's contract to transport the students after school in Yonkers and its contract to pick up the senior citizens in Armonk at 2 p.m. We conclude that the district court did not err in ruling that Lancer was entitled to judgment as a matter of law on the basis of the evidence that TFD had to have intended two trips in order to perform both its Yonkers and its Armonk-to-Mount Vernon obligations, that the accident occurred on the trip that was wholly intrastate, and that the MCS-90B endorsement therefore did not apply. Plaintiffs also argue, as an alternative to their contention that bus 287 was, or should have been, on an interstate trip at the time of the accident, that the MCS-90B endorsement imposes federal liability on Lancer even if bus 287 was on a purely intrastate trip. In support of that contention, they rely principally on two district court cases, Reliance National Insurance Co. v. Royal Indemnity Co., No. 99 Civ. 10920, 2001 WL 984737 (S.D.N.Y. Aug. 24, 2001) ( Reliance ), and Insurance Corp. of New York v. Monroe Bus Corp., 491 F.Supp.2d 430 (S.D.N.Y.2007) ( Insurance Corp. ), which not only are not binding on us but also bear no significant similarity to the present case. In Reliance, the district court was called on principally to unravel the interrelated obligations of five insurance companies with regard to various theories of vicarious liability where an interstate carrier had sign[ed] an exclusive lease with a trucker for the trucker's services to perform interstate transport for some six months using his own tractor and a trailer provided by the interstate carrier; and the tractor-trailer, displaying the carrier's interstate permit, was involved in an accident while the trucker perform[ed] a single intrastate transport, 2001 WL 984737, at . The insurer for the carrier disclaimed coverage for the trucker on the ground that the accident occurred on a trip that was wholly intrastate. However, as the intrastate trip was aberrational, the court ruled that the proper focus was not on that trip but rather on the relationship between the trucker and the carrier, see id. at , and that the carrier's insurer's MCS-90 endorsement covered the trucker because it was clear that [the carrier] intended to procure [the trucker]'s services for interstate transport, id. at . And in Insurance Corp., the principal issues were whether the insurer (InsCorp)which had paid a judgment against the insured and was seeking indemnificationhad been given proper notice of the claim against the insured and whether federal law preempted state-law principles with respect to disclaimers based on lack of notice. The court was not presented with an intrastate-coverage issue, given that [i]n seeking [indemnification], InsCorp ma[de] a three-part argument, the first part of which was in fact that  it was obligated to pay the [injured party's] judgment by virtue of the Endorsement, 491 F.Supp.2d at 433 (emphases added). Plaintiffs also argue that Lancer is federally liable with respect to an accident on an intrastate trip because the MCS-90B endorsement attached to the Policy was accompanied by Forms E and F. ( E.g., Lyons brief on appeal at 42.) We see no merit in this argument. Form Fthe record does not indicate that plaintiffs submitted a Form E to the district court deals with proof of financial responsibility under the provisions of any State motor carrier law or regulations promulgated by any State Commission having jurisdiction and assures coverage in accordance with the provisions of such law or regulations to the extent of the coverage and limits of liability required thereby.  (Policy Form F (emphases added).) Neither Form F nor any of the authorities cited by plaintiffs persuades us that the MCS-90B endorsement required by Section 18 of the Bus Regulatory Reform Act of 1982, 49 C.F.R. § 387.39 (Illustration I)a statutory section whose scope is expressed in terms of passenger transport that crosses one or more State boundariesapplies to an accident of a primarily intrastate carrier on a trip that neither did nor was intended to cross a State border. In light of the above conclusions, we need not reach alternative bases for affirmance argued by Lancer.