The Bureau of Labor Statistics’ (BLS)just-released annual report on unionmembership in the U.S. workforce showsthat for the first time in nearly 30 years,total union membership actually rose.The number of union members increasedby more than 300,000 (133,000 in theprivate sector) and rose from 7.4% to7.5% of the private sector workforce.

Union leaders hailed the increase, but,obviously, one year does not herald atrend. In fact, union membership hasbeen in steady decline for decades,nowhere more so than in thetransportation industry.

The 2007 BLS statistics have not yetbeen disaggregated by industry, but itappears that much of the increase is

attributable to organizational gains inhealth care. Union membership in thetransportation industry has been inmarked declined, losing more than150,000 workers in the past two years.The steepest decline has occurred intrucking and warehousing, where unionmembership percentages dropped bymore than 50% between 1996 and 2006.The total number of organized truckdrivers fell from 446,619 in 1996 to182,020 in 2005, with a modest uptick to 194,128 in 2006.

Current Labor Organization Trends in Trucking

WINTER 2008

InterConnectA PUBLICATION OF BENESCH FRIEDLANDER COPLAN & ARONOFF LLP’S TRANSPORTATION AND LOGISTICS GROUP

COUNSEL FOR THE ROAD AHEAD®

IN THIS ISSUE:

Current Labor Organization Trends in Trucking

Peter N. Kirsanow Returns to Benesch

Ignorance is Not Bliss: The Importance of Knowing What “Transportation” Really Is

More on the Battle for the Hours of Service Rules

Mandatory Training for Truck Drivers

On the Horizon

We are pleased toannounce that ourpartner, Peter N.Kirsanow, has returnedto the firm, where hewill resume his practicein the Labor &

Employment Practice Group with asubpractice in Transportation & Logistics.Peter has been in Washington, D.C., forthe past two years serving on the five-member, President-appointed NationalLabor Relations Board. Peter has alsobeen reappointed by President Bush tothe U.S. Commission on Civil Rights,where he will serve his second six-year term. This is a part-time position.

Peter will once again focus his lawpractice upon representing managementin employment-related litigation as well as in contract negotiations, NLRB proceedings, EEOC matters andarbitration. He will continue to testify

before and advise members of the U.S. Congress on various employmentlaws and issues.

Peter formerly served as Senior LaborCounsel of Leaseway TransportationCorp. and Labor Counsel for the City ofCleveland. He has extensive experiencein public sector employment matters aswell as in industries such as trucking andemployee leasing.

Peter is Past Chair of the Board ofDirectors of the Center for New BlackLeadership, has been an adjunct professorat the Cleveland Marshall College of Lawand testified before the Senate JudiciaryCommittee on the nominations of John Roberts and Samuel Alito to theSupreme Court. He is a valuable additionto our Transportation Group, with hisindustry background and his access and exposure to the corridors of power in Washington.

Peter N. Kirsanow Returns to Benesch

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2 COUNSEL FOR THE ROAD AHEAD®

Soon after Democrats gained a majorityin Congress in November 2006, unionleaders began a vigorous push forlegislation aimed at combating thedecline in union membership by easingand expediting union organization. The centerpiece of the effort was theEmployer FreeChoice Act(EFCA). EFCAwould, among otherthings, amend theNational LaborRelations Act sothat a union couldbe certified as a collectivebargainingrepresentative uponpresentation of validauthorization cardssigned by a majorityof employees in thebargaining unit. EFCA would eliminatethe ability of employers to demand aNational Labor Relations Board-conducted secret ballot election.

A cloture vote on EFCA failed last year,but it remains a priority for labor. This isparticularly true in light of the NLRB’srecent decision in Dana Corp., 351NLRB No. 28, 182 LRRM 1457 (2007),that provided a window period of 45 daysfor employees to file a decertificationpetition (or for a rival union to file anelection petition) after receiving noticethat an employer has voluntarilyrecognized a union. Many labor leadersmaintain that Dana reduces theincentive for employers to voluntarilyrecognize unions pursuant to a cardcheck. Therefore, it is nearly certain that EFCA will be reintroduced should

a Democrat win the 2008 Presidentialelection, and its chances of passage are good.

EFCA’s passage will be followed by an era of vigorous organizational activity,especially in the trucking industry, where

unionized carriershave struggled over the last 15 yearsagainst non-unioncompetition.Further augmentingthe organizationalactivity would beanother priority oflabor—amendmentof Section 2(11) ofthe National LaborRelations Act tosignificantly narrowthe definition of asupervisor. The

contemplated Amendment wouldeliminate “assign” and “responsiblydirect” from Section 2(11)’s definition of a supervisor, reducing the probabilitythat someone would be excluded fromthe bargaining unit by virtue ofsupervisory status and permitting unions to organize potentially millions of additional workers.

The Section 2(11) Amendments are adirect response to the NLRB’s decisionin Oakwood Healthcare, Inc., 348 NLRBNo. 37 (2006), that expounded upon thedefinition of a supervisor under theNational Labor Relations Act. Oakwoodhad been severely criticized by organizedlabor even prior to its issuance. Laboranticipated that the Oakwood decisionwould significantly expand the definitionof a supervisor, thereby removing

millions of employees from existingbargaining units and making it moredifficult to organize other bargainingunits. Indeed, some labor commentatorspredicted that as many as 15 millionemployees would be effected by theOakwood decision. A complaint waseven filed with the International LaborOrganization maintaining that Oakwoodviolated principles of international law.

The dire predictions regarding Oakwooddid not come to pass. Had Oakwoodresulted in massive restructuring ofexisting bargaining units, at some pointthe NLRB should have seen a significantincrease in unit clarification petitionswith the Board. There has been no suchphenomenon.

Nonetheless, the absence ofconsequences adverse to organized labor as the result of Oakwood has not impeded the push to pass theAmendments.

EFCA and the Section 2(11)Amendments are only two of a raft oflegislative proposals that are likely to be introduced in a political climatefavorable to organized labor. Shouldeither EFCA or the Section 2(11)Amendments pass, employers in thetrucking industry should expect strategicorganizational efforts to be waged incertain sectors of the trucking industry,particularly dedicated operations andcarriers that service Big Box stores, theemployees of which may be the big prizein the organizational efforts.

For more information, please contactPeter Kirsanow at pkirsanow@bfca.com or(216) 363-4481.

Current Labor Organization Trends in Truckingcontinued from page 1

Should either EFCA or the Section2(11) Amendments pass, employersin the trucking industry should expectstrategic organizational efforts to bewaged in certain sectors of thetrucking industry, particularlydedicated operations and carriers thatservice Big Box stores, the employeesof which may be the big prize in theorganizational efforts.

InterConnectA PUBLICATION OF BENESCH FRIEDLANDER COPLAN & ARONOFF LLP’S TRANSPORTATION AND LOGISTICS GROUP WINTER 2008

COUNSEL FOR THE ROAD AHEAD® 3

In today’s dynamic marketplace, an everincreasing number of businesses offerservices that are “related to” interstatetransportation to one extent or another.Moreover, transportation companiesthemselves offer a wide variety ofancillary services “related to”—butwhich they may believe are distinctfrom—the actualphysicaltransportation they provide. These companies risk forfeiture ofimportant rights andremedies if they areignorant of theexpansive definitionof “transportation”under federal law. In particular, the broad, federaldefinition of “transportation” is crucialin two areas: (1) liability for freightclaims and (2) liability for freightcharges.

49 U.S.C. § 13102(19) provides a verybroad definition of “transportation”:

Transportation.—The term“transportation” includes—

(A) a motor vehicle, vessel,warehouse, wharf, pier, dock yard,property, facility, instrumentalityor equipment of any kind relatedto the movement of passengers orproperty, or both, regardless ofownership or an agreementconcerning use; and

(B) services related to thatmovement, including arrangingfor, receipt, delivery, elevation,transfer in transit, refrigeration,icing, ventilation, storage,handling, packing, unpacking and interchange of passenger and property.

[emphasis added] In other words, aparty providingservices “related to” an interstatemovement of goodsmay be engaged intransportation evenif that party isengaging in tasksother than thephysical movementof goods.

Freight Claims

The disposition of a freight claim canvary dramatically depending on whetheror not the allegedly bad actor wasengaged in “transportation” underfederal law. For instance, in addition tomoving goods, a motor carrier might alsostore certain goods in a warehouse for aperiod of time. If the goods are damagedor lost while in storage, the motor carriermay nonetheless be able to assert thatthe damage or loss occurred during“transportation” since the definition of“transportation” quoted above includes“storage.” Consequently, courts haveconsistently applied the CarmackAmendment to claims for recovery ofgoods being shipped interstate that wereallegedly damaged during storage of thegoods.

For instance, in Margetson v. United VanLines, Inc., 785 F.Supp. 917 (D.N.M.1991), the Court found that claimsagainst a warehouseman were preemptedby federal law:

This preemptive effect extends todamages allegedly occurring as aresult of improper storage methods.The Carmack Amendment is to bebroadly construed; … [t]he Courtfinds that Congress clearly intendedto legislate limitations on liabilitywith respect to services generallyperformed by a common carrier suchas defendant, and not to limit thelegislation to damage incurred while articles were actually beingmoved. Storage comes within theambit of the legislation … Clearly,transportation is to be broadlyconstrued and the drafterscontemplated that transportationwould extend to storage facilities.

Id. at 919-20 [emphasis added]; see alsoPNH Corp. v. Hullquist Corp., 843 F.2d586, 590-91 (1st Cir. 1988) (“[Thedefendant] … insists that … storage isnot “transportation,” … however, [the]broad definition of transportation …includes all of a motor carrier’s servicesincident to carriage and delivery. ...Therefore, if [the defendant] is otherwisea motor carrier, its storage facilities are“transportation” within the meaning ofthe Act.”) (citations omitted); GreatNorthern Ins. Co. v. McCollister’s Moving& Storage, Inc., 190 F.Supp.2d 91, 93 n.1(D. Mass. 2001) (“The CarmackAmendment defines ‘transportation’under 49 U.S.C. § 13102(19) to includewarehouses and storage.”); S. R. Co. v.Reid, 222 U.S. 424, 440 (1912)(“transportation means not only the physical instrumentalities, but allservices in connection with receipt,delivery, and handling of property

Ignorance is Not Bliss: The Importance ofKnowing What “Transportation” Really Is

The bottom line is that any companythat provides actual transportationservices must keep in mind that itsancillary services may likewiseconstitute “transportation” evenwhen those services do notnecessarily involve the physicalmovement of freight.

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4 COUNSEL FOR THE ROAD AHEAD®

transported”); Centraal StikstofVerkoopkantoor, N.V. v. Alabama StateDocks Dept., 415 F.2d 452, 456 (5th Cir.1969) (“services rendered by a commoncarrier in connection with transportationof goods shall be covered by the Act”).[emphasis added]

In short, companies that have providedancillary services, such as storage, thatare “related to” interstate transportationshould carefully consider whether or notthey might successfully claim that theyare engaged in “transportation” forpurposes of responding to a freight claim.A successful argument along these linescan provide that party with strongdefenses that would otherwise beunavailable (federal preemption, ashorter statute of limitation, etc.).

Freight Charges

Another area where the broad definitionof “transportation” can be critical is inthe area of freight charges. However,whereas the broad definition of“transportation” may benefit carriers in defending freight claims (andobviously burden shippers), the samedefinition may delay pursuit of paymentfor services rendered (and obviouslybenefit shippers). For instance, a carrierwho claims that it has not been paid forproviding “transportation” services mustgenerally commence an action within18 months of its claim accruing.Therefore, determining the scope of the services that actually constitute“transportation” services is an essentialfirst step. As carriers provide more andmore ancillary services, this task canbecome more and more complicated.

For example, in the recent Ninth Circuitcase of Emmert Industrial Corporation v.Artisan Associates, Inc., 497 F.3d 982,2007 U.S. App. LEXIS 19180 (9th Cir.2007), the party attempting to collectmoney for services rendered, EmmertIndustrial Corporation (“Emmert”), did business as “an engineering andtransportation” company. Emmertprovided a range of services to itscustomers that were related totransportation of extremely heavy loads.These services included inspecting thegoods, surveying port facilities, preparingpre-moving analyses and route surveys,assembling route plans and detectingstrains on bridges that would be crossed.Emmert claimed that it was owedsubstantial sums by one of its customers,Artisan Associates, Inc. (“Artisan”).Artisan claimed that Emmert had waitedtoo long to pursue recovery as more than18 months had passed since the expenseswere incurred. However, Emmert tookthe position that much of its bill relatedto services distinct from “transportation”and were, therefore, not barred by thestatute of limitations.

However, the court once again looked atthe broad definition of “transportation”contained in 49 U.S.C. § 13102(19) andconcluded that all of the servicesEmmert provided were in fact “relatedto” transportation:

Taking the evidence in the light most favorable to Emmert, each of the services for which it seeksreimbursement—engineering,research and operational costs—isdirectly related and incidental to

the actual transportation of presscomponents, and each was aimed atfurthering that purpose. Although notevery service directly involved thephysical shipment of goods, each wasundertaken specifically as a meanstoward that end. Given the expansivestatutory definition of ‘transportation’in 13102(23) we follow the broadconstruction our sister circuits haveapplied to similar definitions ....

Id. at *19. As a result, the court foundthat Emmert was barred from recoveringpayment for any of these allegedlydistinct services. Emmert simply waitedtoo long to commence its lawsuit.

The bottom line is that any companythat provides actual transportationservices must keep in mind that itsancillary services may likewise constitute“transportation” even when thoseservices do not necessarily involve the physical movement of freight. Aprudent carrier will rely upon the broaddefinition of “transportation” whendefending claims for freight damage orloss that likely occurred while the carrierwas performing an ancillary service.Likewise, a prudent shipper will relyupon the broad definition of“transportation” when defending claims for payment of ancillary services rendered.

For more information please contact Marc Blubaugh at mblubaugh@bfca.comor (614) 223-5382.

Ignorance is Not Bliss: The Importance of Knowing What“Transportation” Really Iscontinued from page 3

InterConnectA PUBLICATION OF BENESCH FRIEDLANDER COPLAN & ARONOFF LLP’S TRANSPORTATION AND LOGISTICS GROUP WINTER 2008

COUNSEL FOR THE ROAD AHEAD® 5

The Federal Motor Carrier SafetyAdministration (FMCSA) has adoptedan Interim Final Rule (IFR) amending itsMotor Carrier Safety Regulations to allowdrivers of commercial motor vehicles upto 11 hours of drivingtime within a 14-hournon-extendablewindow from the start of theworkday, following 10 consecutive hoursoff duty. In addition,under the IFR, driversmay restart calculationof the week’s on-dutytime limits after the driver has had at least34 consecutive hours off duty. Althoughframed in terms of a new rule, the IFR, ineffect, reestablished the same hours ofservice rules in effect before the DCCourt of Appeals overturned some of therules in July 2007.

According to FMCSA, the IFR isnecessary to prevent disruption in hoursof service enforcement compliance andnegative effects in the timely delivery ofessential goods and services. FMCSA wasrequired to adopt the IFR to meet theDecember 27 deadline imposed by theDC Court of Appeals. In 2004, and againin 2007, the Court of Appeals overturnedsome of the hours of service rules becausethe rules were not properly adoptedunder the Administrative Procedure Act.The Court of Appeals gave FMCSA untilDecember 27 to fix the problems.Otherwise, the rules in effect before 2004 would again become effective.

As part of its support for the IFR,FMCSA published scientific datademonstrating that motor carrieroperations were safer under the 11-hour/14-hour limit and the 34-hourrestart than operations under the oldrules. FMCSA based its analysis onstudies it completed after the new rules went into effect in 2004.

In addition to the research, FMCSA’ssupport for the IFR includes affidavitsand supporting documentation insupport of the IFR filed by some of thelarge trucking companies.

As of the end ofJanuary 2008,approximately3,000 commentshave been filed.Based on asample of Januarysubmissions, themotor carriersfiling commentswere very much

in support of the new rules. Individualtruck drivers, while preferring the newrules to the old ones, were notnecessarily supportive of everything,particularly the new sleeper berth rule.

As FMCSA admits in its comments tothe IFR, the scientific evidencesupporting the new rules could not havebeen published before the new rulesbecame effective and carriers had achance to develop an operating history.As a practical matter, FMCSA couldhave had no data on fatigue-relatedaccidents in the 11th hour of drivingbecause the old rules did not permit the11th hour of driving. Therefore, asopponents of the new rules have argued,FMCSA did not have a sound scientificbasis supporting the new rules at thetime they were adopted.

Notwithstanding the above, many of uswho follow the trucking industry arehopeful that the DC Circuit will besatisfied that the IFR will provide safetybenefits for drivers not available under theold rules and that the IFR will becomefinal. As expected, Public Citizen is againtaking its opposition to the new rules backto the DC Court of Appeals.

In the middle of the controversy overthe DC Court of Appeals Decision on

the hours of service rules and the IFR asdiscussed above, Dart Transit Companyfiled an application for exemption from the hours of service rules. Theapplication was on behalf of 200 ofDart’s owner operators who provide anover-the-road service requiring sleeperberths. Apparently, these drivers preferthe old rules to the extent theypermitted a driver to continue to workafter the 14th hour after coming on duty.In addition, the Dart drivers wouldprefer to be allowed to have two sleeperberth periods rather than the onerequired under the new rules. For themost part, the Dart proposal addressesrules included in the IFR that were notoverturned by the DC Court of Appeals.

Under Section 4007 of the 1998highway legislation (TEA-21), FMCSAis obligated to consider applications forexemptions from the Federal MotorCarrier Safety Regulations. Notice of theproposed exemption must appear in theFederal Register and the public musthave the opportunity to comment.FMCSA is to grant the exemption if theexemption would likely achieve a levelof safety equal to or better than the levelachieved under the existing rule.

Dart’s application for exemption issupported by scientific data developed byDart following the effective date of thenew rules. The Dart drivers found thatthe 14-hour rule and the new “oneperiod” sleeper berth rule interfered withtheir ability to obtain good quality sleep.

Comments filed, including comments bythe American Trucking Association, theOwner-Operators Independent DriversAssociation and some individual drivers,were highly supportive of the exemptionrequested by Dart. However, FMCSAmay not want to tinker with the newrules before they are final. Even then, ifFMCSA wins its fight at the DC Courtof Appeals, it may prefer to leave wellenough alone for a while.

For more information please contact Bob Spira at rspira@bfca.com or (216) 363-4413.

According to FMCSA, the IFR isnecessary to prevent disruption inhours of service enforcementcompliance and negative effects in thetimely delivery of essential goods andservices.

More on the Battle for the Hours of Service Rules

On the Horizon

Marc Blubaugh and Eric Zalud will be attending the International Warehouse Logistics Association’s Annual Convention & Exposition in Indian Wells, CA, from March 9 – 11, 2008.Bob Spira will be presenting Litigation for Logistics at the Council of Supply ChainManagement Professionals Cleveland Roundtable Monthly Meeting in Cleveland,OH, on March 20, 2008.Eric Zalud will be speaking on Protecting the Assets of Transportation Companies and LearningAbout the Latest Legal Developments and How They Impact 3PL’s at the Annual Conferenceof the Transportation Intermediaries Association in Washington D.C., on April 12,2008. Bob Spira and Martha Payne will also be attending this event.Marc Blubaugh, Martha Payne and Eric Zalud will each be attending and speaking at theTransportation & Logistics Council, Inc. and Transportation Loss Prevention andSecurity Administration 34th Annual Conference in San Diego, CA, on April 21 and22, 2008. Mr. Blubaugh will present Cargo Claims – A Short Course, Ms. Payne is Co-Chair ofthe Educational Program and will speak on Transportation Contracts and Mr. Zalud will bediscussing Freight Intermediary Issues Relating to Registration, Liability and Contracting.Eric Zalud will be inaugurated as President of the Transportation Lawyers Associationat the group’s Annual Conference, which will be held in Fort Lauderdale, FL, May 6 – 10,2008. Bob Spira will be presenting China: Transportation To, From and Within at theconference. Marc Blubaugh, who is an Executive Committee Member of TLA, and Martha Payne will also be attending. Frank Reed will be presenting An Update on the Enforcement Initiatives of U.S. EPA and OhioEPA and their Impact on Ohio Businesses at the Ohio State Bar Association AnnualConvention on May 15, 2008, in Columbus, OH.David Neumann, Frank Reed and Eric Zalud will be attending the National Tank TruckCarriers Annual Conference and Equipment Show May 18 – 20, 2008, in New York, NY.

For more information about theTransportation and LogisticsGroup, please contact one of the following:

Eric Zalud, Chair(216) 363-4178 | ezalud@bfca.com

Marc Blubaugh(614) 223-9382 | mblubaugh@bfca.com

Peter Kirsanow(216) 363-4481 | pkirsanow@bfca.com

David Neumann(216) 363-4584 | dneumann@bfca.com

Martha Payne(541) 764-2859 | mpayne@bfca.com

Frank Reed(614) 223-9304 | freed@bfca.com

Nicole Schaefer(216) 363-4593 | nschaefer@bfca.com

Robert Spira(216) 363-4413 | rspira@bfca.com

Clare Taft(216) 363-4435 | ctaft@bfca.com

Thomas Washbush(614) 223-9317 | twashbush@bfca.com

For further information and registration, please contact Lindsay Wise, Client ServicesCoordinator at lwise@bfca.com or (216) 363-4174.

Pass this copy of InterConnect on to acolleague, or e-mail ehighley@bfca.comto add someone to the mailing list.

The content of the Benesch, Friedlander, Coplan & Aronoff LLP InterConnect Newsletter is for general informationpurposes only. It does not constitute legal advice or create an attorney-client relationship. Any use of this newsletteris for personal use only. All other uses are prohibited. ©2008 Benesch, Friedlander, Coplan & Aronoff LLP. All rightsreserved. To obtain permission to reprint articles contained within this newsletter, contact Liz Highley at (216) 363-4538.

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Mandatory Training for Truck Drivers

FMCSA is proposing to revise the mandatory training requirements for entry-leveloperators of commercial motor vehicles who are required to have a commercial motorvehicle license (CDL). Persons applying for a CDL will be required to complete aminimum classroom and behind-the-wheel training session from an accredited instituteor program.

The new requirement would not apply to drivers who currently have a CDL or whoobtain a CDL before a date three years after a final rule goes into effect.

Under current FMCSA rules, a CDL driver is required to have 10 hours of training.Although details are preliminary, FMCSA contemplates a 120-hour requirement for aClass A CDL. A Class A CDL applicant would be required to have 76 hours of classroom training and 44 hours behind the wheel. Class B/C applicants would be required tohave 90 hours of training, 58 in the classroom and 32 behind the wheel.

FMCSA estimates 40,200 drivers would need training every year at a cost of $167.8million per year. A crash reduction of 19.7% in the affected population (i.e., first yeardrivers who otherwise would not be trained) would result in benefits of $167.8 millionannually. The reduction amounts to 19.1 and 507.2 fewer fatal and non-fatal crashes.FMCSA is confident that the training would reduce enough crashes to be cost effective.

Comments are due March 25, 2008.

For more information please contact Bob Spira at rspira@bfca.com or (216) 363-4413.