William J. Augello was one of the country’s foremost transportation lawyers and a champion of shippers’ rights. In this column, we attempt to answer readers’ questions as we believe he would. Previous columns, including Bill Augello’s, may be found in the “Content Library” on the PARCEL website (www.PARCELindustry.com).
 
Past installments of this column have focused on the legal aspects of relationships between shippers, carriers and intermediaries. Another way to put it is that the column is focused on the intersection of the supply chain with the laws governing transportation.
 
This leads to the question, “What is transportation law?” In the United States, transportation law consists of statutes, regulations and court decisions.
 
Statutes are laws passed by either Congress at the federal level or by an individual state at the state level. For transportation, the laws passed by Congress are the most significant, especially those dealing with relationships between the parties. This is because Article I, Section 8 of the United States Constitution gives Congress the power to regulate commerce “among the several states.” This provision is known as “the commerce clause.”
 
At one time most states had their own set of laws relating to the economic regulation of intrastate transportation. Over time, many states repealed these laws, thus “deregulating” intrastate transportation. Then in 1994, Congress passed the Federal Aviation Administration Appropriations Act (FAAAA) and preempted the state regulation of intrastate transportation by prohibiting a state from regulating a carrier’s “price, route or service.” However, states are still permitted to pass and enforce laws relating to issues such as insurance, hazardous materials and safety.
 
Regulations are rules passed by an administrative agency charged with administering a particular set of laws. For instance, the Federal Motor Carrier Safety Administration (FMCSA) establishes and administers regulations relating to, for example, insurance, brokers and credit terms that affect shippers and intermediaries as well as regulations directed toward carrier operations (e.g., vehicle and driver safety).
 
A state or federal agency has broad latitude as to how it arrives at a particular regulation, but the final regulation adopted must be consistent with the relevant statutes. While a regulation may be challenged in court if it is claimed to conflict with a statute, for a business person conducting his or her day-to-day activities, a regulation should be considered to have the same legal effect as a statute.
 
Court decisions consist of all of the cases decided by courts over time. Collectively these decisions are known as “case law.” The Federal Court system includes District Courts (trial courts), 11 Circuit Courts of Appeals and one Supreme Court of the United States. The decisions of the U.S. Supreme Court are binding upon all lower Federal Courts and usually, but not always, also binding upon State Courts. The decisions of a Circuit Court of Appeals are binding upon the U.S. District Courts for the geographical area encompassed by that Federal Circuit.
 
Most states have a similar tiered arrangement of courts starting at the trial level, then perhaps one or more intermediate court(s) of appeals, and then finally a “highest court.” The reader should be aware that different states use different nomenclature. Thus in some states a “supreme court” is lower in status than the highest court of that state notwithstanding its name. The significance of this is that when considering the precedential value of a court decision, one needs to know where the court stands in the judicial hierarchy.
 
Court decisions tend to either interpret a particular statute or set a “rule” for situations not addressed by a statute. When a court decision addresses an issue that has not come up before, it is called “a case of first impression.” With the passage of time, if more and more courts adopt the reasoning of the first decision, these decisions become “the weight of authority.”
 
An example of this is Hadley v. Baxendale, decided in 1843. This was a loss and damage case decided at the dawn of the industrial era. It held that the carrier was liable to the owner of a mill for the damage in transit to a mill wheel, but not for the financial loss resulting out of the mill being “down” for lack of the mill wheel. Put another way, the court held that in a loss and damage case the owner of the goods is entitled to actual damages, but not consequential damages. Although decided over 150 years ago, this decision is still good law and has been discussed and expanded upon by thousands of subsequent cases.
 
It also must be kept in mind that courts do not always agree with each other. This situation is described as a “split in authority” or by saying that a certain line of cases reflects the “majority view;” another, the “minority view.”
 
For Federal Courts, where most transportation cases get decided, it can also be that one or more Circuit Courts of Appeals have differing opinions. This situation is described as a “split in the circuits,” which ultimately must be resolved by the U.S. Supreme Court.
 
In the next issue, we will answer the question, “Where can I find the law?”
 
All for now!
 
Brent Wm. Primus, J.D., currently serves as the General Counsel for the Freight Transportation Consultants Association and is the CEO of transportlawtexts, inc. and Primus Law Office, P.A. Your questions are welcome at brent@transportlawtexts.com